Best Spot Bitcoin ETFs to Buy in 2024

Bitcoin ETFs (Exchange Traded Funds) have recently become a hot topic in the investment world, especially after the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs on January 10, 2024. The SEC's green light for spot Bitcoin ETFs marks a monumental shift. Gone are the days of clunky futures-based ETFs that only tracked Bitcoin's price indirectly. Now, you can invest directly in the real deal, enjoying the potential benefits of rising Bitcoin prices while benefiting from traditional markets' regulatory oversight and convenience. 

Meanwhile, the success of the US-based spot Bitcoin ETFs has encouraged the Hong Kong Securities and Futures Commission (SFC) to expedite the potential approval of four spot Bitcoin ETFs too. Applicants include the Hong Kong units of China Asset Management, Harvest Fund Management, and Bosera Asset Management. At the time of writing, news reports suggest this approval could happen as soon as mid-April.

If you are curious about buying Bitcoin ETFs and diversifying your portfolio, this guide offers a comprehensive overview of all you need to know and how you can get started. 

A Bitcoin ETF, or Exchange-Traded Fund, is an investment vehicle that tracks the price of Bitcoin but trades on traditional stock exchanges like the NYSE or the NASDAQ. This means you can invest in Bitcoin without actually having to buy and store the cryptocurrency itself.

Imagine, if you will, a gold bar sliced into tiny slices and neatly packaged into shares. That's essentially what a Bitcoin ETF is – a basket of Bitcoin shares traded on traditional stock exchanges like the NYSE. It lets you gain exposure to Bitcoin's price movements without the hassle of storing your own crypto or navigating complex exchanges.

Bitcoin ETFs come in two types: Spot Bitcoin ETFs, which directly hold Bitcoin, and Bitcoin Futures ETFs, which invest in Bitcoin futures contracts. Shares of the ETF are bought and sold like regular stocks, with their prices fluctuating based on Bitcoin's price and market demand. Benefits include easier access to Bitcoin, regulatory security, portfolio diversification, and potentially lower volatility.  

Here are the 11 new spot Bitcoin ETFs approved by the SEC and available in the US market: 

1. ARK 21Shares Bitcoin ETF (ARKB): Launched by ARK Invest, this ETF trades on the CBOE and has an expense ratio of 0.21%, which is waived for the first six months or the first $1 billion of assets, whichever comes first.

2. Bitwise Bitcoin ETP Trust (BITB): Managed by Bitwise, this fund trades on the NYSE ARCA with a fee of 0.20%, also waived under the same conditions as ARKB.

3. Fidelity Wise Origin Bitcoin Trust (FBTC): Offered by Fidelity, this ETF is available on the CBOE and features a 0.25% expense ratio, waived until July 31, 2024.

4. Franklin Bitcoin ETF (EZBC): Franklin Templeton's offering, EZBC, trades on the CBOE with a 0.29% fee without a fee waiver.

5. Grayscale Bitcoin Trust (GBTC): This ETF by Grayscale, converting from a trust, trades on the NYSE ARCA. It has a relatively high expense ratio of 1.5%.

6. Hashdex Bitcoin ETF (DEFI): From Brazil's Hashdex, this ETF is listed on the NYSE ARCA and has an expense ratio of 0.90%.

7. Invesco Galaxy Bitcoin ETF (BTCO): A collaboration between Invesco and Galaxy Digital Holdings, this ETF trades on the CBOE and charges 0.39%, waived for the first six months or the first $5 billion in assets.

8. iShares Bitcoin Trust (IBIT): BlackRock's offering, IBIT, trades on the NASDAQ with a 0.12% fee for the first year or the first $5 billion in AUM, then increasing to 0.25%.

9. Valkyrie Bitcoin Fund (BRRR): Valkyrie's fund, trading on the NASDAQ, starts with no fee for the first three months, then 0.49% thereafter.

10. VanEck Bitcoin Trust (HODL): VanEck's ETF, named HODL, trades on the CBOE with a 0.25% expense ratio.

11. WisdomTree Bitcoin Trust (BTCW): This ETF from WisdomTree trades on the CBOE and has a 0.3% fee, waived for the first six months or the first $1 billion in AUM.

In addition to the above list of new entrants, here are some time-tested global Bitcoin ETFs that have been around in the markets for some time now: 

1. ProShares Bitcoin Strategy ETF (BITO): This US-based ETF invests in Bitcoin futures contracts. It's listed on the NYSE and offers a way to invest in Bitcoin without direct exposure to the asset.

2. Evolve Bitcoin ETF (EBIT): Listed on the Toronto Stock Exchange (TSX), this ETF provides exposure to the daily price movements of Bitcoin in U.S. dollars.

3. Purpose Bitcoin ETF (BTCC): This ETF is available on the Toronto Stock Exchange (TSX) and holds physical Bitcoin.

4. Jacobi FT Wilshire Bitcoin ETF (BCOIN): Listed on Euronext – Amsterdam, this ETF also holds physical Bitcoin.

5. Valkyrie Bitcoin Futures Strategy ETF (BTF): Trading on the Nasdaq, this ETF focuses on Bitcoin futures contracts.

These ETFs offer various ways to invest in Bitcoin, either directly or indirectly through futures, and are traded on reputable exchanges. They provide an accessible option for investors looking to add Bitcoin or related assets to their portfolios, with the added benefits of liquidity and regulatory oversight typical of ETFs.

The rise of Bitcoin ETFs has ignited a debate amongst investors: Is it better to hold the raw cryptocurrency (HODLing), actively trade it, or take the middle ground with ETFs? Each approach has its own advantages and disadvantages, and the right choice depends on your risk tolerance and investment goals.

Buying Bitcoin ETFs 

Pros:

• Easier access: ETFs trade on traditional stock exchanges, making them accessible to investors familiar with existing financial markets.

• Lower volatility: Some Bitcoin ETFs, especially futures-based ones, may experience less price volatility than direct Bitcoin holdings.

• Regulation and security: ETFs are regulated by financial authorities, potentially offering greater security than the self-custody of Bitcoin.

Cons:

• Fees: ETFs typically charge management fees and other expenses, which reduce your potential returns.

• Indirect ownership: You don't directly own Bitcoin through an ETF, limiting control and potential uses.

• Limited choice: The range of available Bitcoin ETFs and their characteristics may not perfectly align with your investment goals.

HODLing Bitcoin

Pros:

• Potentially high returns: Bitcoin has a history of explosive price surges, which could lead to significant profits for long-term holders.

• Direct ownership: You have complete control over your Bitcoin and can use it for transactions or other purposes.

• No fees: Holding Bitcoin doesn't incur any ongoing management fees or expenses.

Cons:

• High volatility: Bitcoin's price can fluctuate wildly, leading to significant losses in the short term.

• Technical complexity: You must learn how to store your Bitcoin securely and navigate cryptocurrency exchanges.

• Regulatory uncertainty: Bitcoin's regulatory landscape is still evolving, which could pose risks in the future.

Trading Bitcoin 

Pros:

• Potential for short-term gains: Skilled traders can capitalize on Bitcoin's volatility to make profitable trades over short periods.

• Liquidity: Bitcoin is a highly liquid asset, making it easy to buy and sell quickly.

• Hedging potential: Using Bitcoin as part of a broader portfolio can help manage risk and hedge against inflation.

Cons:

• High risk: Trading requires experience and skill, and significant losses are possible due to market movements.

• Time commitment: Active trading requires constant monitoring and execution of trades, demanding a significant time investment.

• Tax implications: Frequent trading can lead to complex tax calculations and reporting requirements.

Buying Bitcoin ETFs involves a process similar to purchasing stocks or other ETFs on traditional financial markets. Here are the different ways to buy Bitcoin ETFs:

How US-Based Investors Can Buy Bitcoin ETFs

1. Online Brokerages: Popular platforms like Charles Schwab, Fidelity, TD Ameritrade, and Robinhood offer access to US-listed Bitcoin ETFs. 

2. Financial Advisors: US investors can use financial advisors with access to US financial markets to invest in Bitcoin ETFs.

3. Retirement Accounts: Certain retirement accounts in the US, like IRAs and 401(k)s, may allow investment in Bitcoin ETFs.

4. Mobile Trading Apps: Apps like E-Trade or Webull that operate in the US market provide a platform for buying Bitcoin ETFs.

How Non-US-Based Investors Can Invest in Bitcoin ETFs

1. International Brokerages: Non-US investors may use international brokerage platforms that provide access to US markets (like Interactive Brokers) or local markets offering Bitcoin ETFs.

2. Local ETFs: Some countries have their own Bitcoin ETFs listed on local exchanges. For instance, Canada has several Bitcoin ETFs listed on the Toronto Stock Exchange.

3. Global Investment Platforms: Platforms like eToro or Revolut, which offer services in multiple countries, may provide access to Bitcoin ETFs.

4. Cross-Listed ETFs: In some cases, US-listed Bitcoin ETFs may be cross-listed on international exchanges, accessible to non-US investors.

The availability of specific Bitcoin ETFs and the means to invest in them can vary significantly depending on your country due to local regulations and market offerings. You should always check your local regulations, available platforms, and the specific ETFs accessible in your region before investing.

Remember, investing in Bitcoin ETFs involves risks, just like any other investment. It's important to do your research and consider seeking advice from a financial professional if you're unsure about the best approach for your individual circumstances and investment goals.

Depending on your location and desired platform, you can buy Bitcoin ETFs through various avenues. Here's a breakdown of the main options:

1. Buy Bitcoin ETF Via Online Brokerage Accounts

This is the most common and user-friendly method. Many mainstream platforms now offer a selection of Bitcoin ETFs alongside traditional stocks and bonds. Popular options include Robinhood, Fidelity, E-Trade, and Charles Schwab.

• Requirements: Open an account, meet any KYC/AML verification requirements, and fund your account with USD or your preferred currency.

• Process: Search for the desired Bitcoin ETF ticker symbol (e.g., BITO for ProShares Bitcoin ETF) and enter your purchase order, specifying the amount you want to invest.

2. Use Direct ETF Issuer Portals for Buying Bitcoin ETFs

Some ETF issuers like VanEck or Valkyrie allow direct purchases through their websites.

• Requirements: You may need an existing account with a broker that works with the issuer.

• Process: Like online brokerages, navigate to the desired ETF on the issuer's website, choose your broker from the dropdown, and follow the on-screen instructions to complete the purchase.

3. Buy Bitcoin ETFs Through Traditional Financial Advisors

If you prefer a managed approach, some financial advisors now offer the option to invest in Bitcoin ETFs within their portfolios.

• Requirements: Consult with your advisor to discuss their policy on Bitcoin ETFs and any associated fees.

• Process: Work with your advisor to determine the appropriate allocation for Bitcoin ETFs within your portfolio and follow their instructions for executing the purchase.

Here’s a general guide on how to buy Bitcoin ETFs: 

1. Research Bitcoin ETFs: Compare fees, performance, and underlying assets before making your choice.

2. Choose Your Platform: Consider factors like fees, user-friendliness, and available ETF options.

3. Open an Account: Provide your personal information and complete KYC/AML verification.

4. Fund Your Account: Deposit funds using your preferred method, such as bank transfer or credit card.

5. Place Your Order: Specify the amount and ticker symbol of the Bitcoin ETF you want to buy.

6. Monitor Your Investment: Track your holdings and adjust your strategy as needed.

Here are some key things to keep in mind when you invest in a Bitcoin ETF: 

• Fees: Compare expense ratios, trading commissions, and other charges.

• Liquidity: Choose an ETF with high trading volume to ensure easy buying and selling.

• Underlying assets: Some ETFs hold actual Bitcoin, while others use derivatives like futures contracts.

• Investment goals: Align your choice with your risk tolerance and desired exposure to Bitcoin price movements.

In conclusion, the approval of spot Bitcoin ETFs and the availability of various Bitcoin futures ETFs have marked a significant milestone in the investment landscape. The door to Bitcoin investment has just swung wide open with the arrival of spot Bitcoin ETFs. Anyone can own a piece of the digital gold rush without the complexities of direct crypto trading. 

For those looking to diversify their portfolio or explore new investment horizons, Bitcoin ETFs provide an accessible and regulated way to tap into the potential of Bitcoin. Do your research, choose your platform and ETF wisely, and invest responsibly. 

With the proper knowledge and a bit of caution, you can join the ranks of those capitalizing on this groundbreaking wave in the financial landscape. Stay informed, consider your options carefully, and you may find that investing in Bitcoin ETFs is a smart addition to your investment strategy.

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