A Guide How to Buy a Bitcoin ETF in 2024
After receiving approval from the U.S. Securities and Exchange Commission, the first round of spot Bitcoin ETFs has been officially greenlit. As a result, crypto investors are now seeking ways to access these newly christened crypto stocks.
Exchange products traded on the crypto market encompass a wide range of investment options, such as exchange-traded funds, commodities, and notes. However, there is a tendency for the terms ETP and ETF to be used interchangeably, especially in the realm of crypto stocks.
ETF, short for exchange-traded funds, is a common form of investment traded on exchanges, like crypto stocks. These stocks contain diversified assets, such as traditional stocks, bonds, or Bitcoin in the instance of Bitcoin ETFs. Spot ETFs, a particular form of crypto stocks, are specifically fashioned to mirror the price of their underlying asset.
A Bitcoin ETF grants investors the privilege of having Bitcoin exposure without the necessity of owning and storing Bitcoin themselves, echoing the gold ETFs serving gold enthusiasts. This offers a more accessible route for small-scale crypto investors, enabling them to experiment with Bitcoin without having to navigate through cryptocurrency exchanges or digital wallets directly, thereby promoting the broader adoption of crypto stocks.
What sets ETFs apart from stocks?
Investment vehicles known as stocks enable individuals or businesses to possess shares of a company that is traded publicly. Similar to a stock, an ETF is also a publicly traded investment vehicle that follows the performance of an underlying asset or index, rather than just a single company.
An example of this would be an ETF that focuses on a certain theme, such as the technology sector. Alternatively, one could invest in a currency ETF to protect against changes in currency exchange rates.
Understanding the Concept of a Bitcoin ETF
A Bitcoin Exchange-Traded Fund (ETF) operates similarly to other ETFs. Shareholders can purchase shares of the ETF through a brokerage such as Robinhood or eToro. These Bitcoin ETFs follow the current value of Bitcoin, providing investors with exposure to the asset without the need to directly purchase and hold the digital asset.
The approval of 11 spot Bitcoin ETF applications, including those from VanEck, BlackRock, Invesco, and Bitwise, has been granted by the SEC.
Where is a Bitcoin ETF available for purchase?
To put money into an ETF, the initial requirement for an investor is to have a brokerage account. Popular investing platforms include E-Trade, Fidelity, Robinhood, eToro, and Charles Schwab. However, both Vanguard and Merrill Lynch have announced that they will not offer Bitcoin ETF options to their customers.
In preparation for the SEC’s endorsement, providers of spot Bitcoin ETFs provided significant reductions in fees, such as a 0% rate for six months, to attract potential investors. It should be noted that certain brokerages may have conditions that dictate which investors are eligible to access a specific fund through their services.
To start trading, create an account on one of the mentioned platforms and submit the required information, including banking details. Once completed, you can begin trading. The following options are currently available:
The iShares Bitcoin Trust is offered by BlackRock.
The spot Bitcoin ETF for BlackRock’s iShares Bitcoin Trust can be obtained via a Fidelity brokerage account.
The Bitcoin Trust in Grayscale.
Individuals looking to invest in a Grayscale Bitcoin Trust (GBTC) Bitcoin ETF have the option to do so through various brokerage firms such as Fidelity, Robinhood, E-Trade, Ameritrade, Interactive Brokers, and Charles Schwab.
The Bitcoin Fund from Fidelity Wise Origin.
Fidelity not only provides various Bitcoin ETFs, but also has its own ETF called the Fidelity Wise Origin Bitcoin Fund (FBTC). Customers can easily purchase and sell FBTC through the Fidelity website.
ETF 21Shares Bitcoin ARK
The 21Shares Bitcoin ETF offered by ARK Invest is available for purchase on various brokerage platforms such as Charles Schwab, Chase, E-Trade, Fidelity, TD Ameritrade, Webull, SoFi, and Robinhood.
ETF for Bitcoin Bitwise
The Bitwise website states that individuals interested in utilizing the Bitwise Bitcoin ETF can reach out to the company for guidance on how to initiate a brokerage account and begin investing.
The Bitcoin ETF by Invesco Galaxy
Those interested in capitalizing on the Invesco Galaxy Bitcoin ETF (BTCO) can contact the company for guidance on setting up a brokerage account and getting started.
The Valkyrie Bitcoin Fund
Individuals interested in investing in Valkyrie Bitcoin Fund (BTF) have the option to do so via several platforms including Robinhood, E-Trade, Charles Schwab, Fidelity, Pershing, and TD Ameritrade.
Trust by VanEck for Bitcoin
Investors who are interested in investing in the Vaneck Bitcoin Trust by VanECk can purchase the Bitcoin ETF through several options, such as a VanEck advisor or brokerage accounts like Ally Invest, Charles Schwab, E-Trade, Robinhood, and Fidelity. These accounts allow investors to access the Vaneck Bitcoin Trust and make their investments.
The ETF for Bitcoin created by Franklin.
For those looking to invest in Franklin Templeton’s Franklin Bitcoin ETF, also known as EZBC, they can inquire with their Franklin advisor for guidance on how to invest in the company’s Bitcoin ETF.
Bitcoin Fund by WisdomTree
Those interested in investing in the WisdomTree Bitcoin Fund (BTCW), a spot Bitcoin ETF offered by WisdomTree, can acquire it through various platforms such as Fidelity, Charles Schwab, E-Trade, and Ally.
The Bitcoin Futures ETF offered by Hashdex.
The DEFI Hashdex Bitcoin Futures ETF can be acquired from various brokerage firms such as Robinhood, E-Trade, Fidelity, TD Ameritrade, and Charles Schwab.
What are the potential risks?
Although the regulatory agency has approved the launch of the new Bitcoin ETFs, SEC Chair Gary Gensler remains cautious about the potential risks associated with investing in cryptocurrency.
In a statement, Gensler declared that although the approval and trading of specific spot Bitcoin ETP shares were granted today, there was no endorsement or approval for Bitcoin. It is advised for investors to exercise caution due to the numerous risks associated with Bitcoin and assets connected to cryptocurrency.
One instance is that although it may be extremely challenging, the Bitcoin network can face an attack and be compromised.
Additionally, cryptocurrency exchanges are susceptible to breaches, which may not directly affect your Bitcoin ETF shares but can result in significant fluctuations in the market’s prices due to these exploits.
The issue of forks, which occur when a network like Bitcoin divides into two separate entities due to a disagreement among its developers, miners, or validators, is also a complex matter. Bitcoin has experienced this multiple times in the past, leading to the creation of competing networks like Bitcoin Cash and Bitcoin SV. To prepare for the possibility of another fork, Bitcoin ETF issuers have implemented contingency plans.
Despite the warnings and potential dangers, the crypto community is currently experiencing a surge of excitement, as evidenced by the fact that Gensler’s letter regarding the approval of ETFs on the Bitcoin blockchain was inscribed within an hour of its release.