Buy Bitcoin ETFs: A Complete Guide 2024. The worldwide crypto community is celebrating after the United States Securities and Exchange Commission (SEC) approved the first-ever batch of spot Bitcoin BTC $42,889 exchange-traded funds (ETFs). The agency approved eleven applications. Among these were those from BlackRock, ARK Invest, Fidelity, VanEck, and Invesco.
Many believe this turning point will allow regular people and significant institutions to put their money into the cryptocurrency with the most important market share without owning any Bitcoins. An alternative to purchasing Bitcoin directly from a cryptocurrency exchange like Binance or Coinbase is to invest in the Bitcoin Exchange-Traded Fund (ETF).
Holding Bitcoin ETFs vs. Bitcoin
Like index funds, exchange-traded funds allow investors to purchase a product whose value follows the price of a corresponding commodity or asset. With Bitcoin exchange-traded funds (ETFs), investors don’t need a cryptocurrency wallet or cold storage to manage their holdings. Institutions such as retirement funds and registered investment advisers (RIAs) can gain access to Bitcoin through Bitcoin exchange-traded funds (ETFs). Bitcoin is now in the possession of entities and ordinary people who were previously unable to access it or had doubts about investing in digital assets.
The word “spot” means holding assets, not derivative contracts, which is what a Bitcoin ETF is alluding to. Each investment will own a fraction of a Bitcoin. Alternative Bitcoin investment options include exchange-traded funds (ETFs) that allow investors to lock in a price to purchase or sell Bitcoin (BTC) at a future date and time, independent of market fluctuations. Bitcoin exchange-traded funds (ETFs) allow investors unlimited buying and selling during market hours.
Approved Bitcoin ETFs
Prominent fund managers had their spot Bitcoin ETFs approved by the SEC on January 10th. Listed below are some of the exchange-traded funds (ETFs) that have been approved: GBTC, IBIT, Bitwise, FBTC, ARK, BTCO, EZBC, BTCW, DEFI, BRRR, and IZBC.
Approved Bitcoin ETFs will be listed on multiple US stock exchanges, such as the NYSE, CBOE, and Nasdaq. The Securities and Exchange Commission (SEC) approved Bitcoin futures exchange-traded funds (ETFs) in October 2021. These funds follow contracts to purchase or sell Bitcoin. New York Stock Exchange-listed Proshares Bitcoin Strategy ETF (BITO) was the first Bitcoin-linked exchange-traded fund (ETF) to get SEC approval.
Traditional exchange-traded funds (ETFs) often offer a diverse portfolio of assets, which is an advantage. Nevertheless, since a Bitcoin ETF is associated with only one cryptocurrency, its price fluctuations are likely to mirror those of BTC.
Ways to Buy Bitcoin ETFs
There are several ways to buy Bitcoin ETFs:
Online brokerage accounts
You may typically trade funds at brokerages that offer a search feature that lets you enter the name or ticker symbol of the fund. Once spot ETFs are approved in the US, investors can purchase them through brokerages like Interactive Brokers, Charles Schwab, Fidelity, Robinhood, and many more.
Even though the regulatory landscape changes rapidly, crypto exchanges plan to launch ETFs. By 2024, Kraken hopes to have built its ETF trading platform. Coinbase, another major player in the cryptocurrency industry, is holding eight of the ETFs that the SEC has authorized.
US financial advisors showed interest in crypto equities ETFs in the Bitwise 2024 benchmark poll. According to the findings, 19% of advisors can purchase cryptocurrency using client funds. Additionally, the survey underlined that nearly all advisors (98%) want to keep or grow their client accounts’ exposure to cryptocurrency in 2024.
By offering a simple, low-cost, and automated investing platform, robo-advisors such as Betterment and Wealthfront make it easy to buy Bitcoin ETFs. New and seasoned investors can benefit from their low minimum balance requirements for cryptocurrency-related exchange-traded funds (ETFs). Automated portfolio management tailored to each investor’s goals and comfort level with risk is what robo-advisors are known for. Allocation of assets, selection of investments, and rebalancing of portfolios are all part of this.
Opening a brokerage account with the investing division of a typical bank is the usual procedure for an individual looking to buy Bitcoin ETFs through that bank. Traders can search for their preferred Bitcoin ETF when funded and activated their accounts. After identification, the individual can buy ETF shares using the bank’s brokerage services. Bitcoin ETFs may be available depending on the client’s location and the bank’s services.
It may be some time before consumers of conventional banks get the choice to invest in Bitcoin ETFs because the cryptocurrency regulatory landscape is continually changing.
Directly from ETF issuers
To purchase the product, investors need to visit the websites of the ETF issuers. Buying an ETF, though, might necessitate a broker account. For example, users are prompted to choose one of the issuer’s partner brokers when they visit the Hashdex website.
How to Buy Bitcoin ETFs
Here is the process to buy BTC ETFs via brokerage services:
- Open a brokerage account: Launch the web portals of brokerage services like BlackRock or Robinhood, or download their apps, finish the Know Your Customer checks, and log in.
- Fund the account: The trader must fund their brokerage account using their linked bank account, checking, or savings. They could make a wire transfer, deposit a check, or transfer funds from another broker.
- Research available Bitcoin ETFs: Investors should research the fund’s issuer and expense ratio before putting their money into a Bitcoin exchange-traded fund (ETF). The issuer’s cost for managing the ETF, known as the expense ratio, might affect the investment’s total returns.
- Select preferred Bitcoin ETFs: Investors can peruse various options to find the best Bitcoin ETF for their needs. To find the funds that are the most excellent fit, they must first evaluate all of the available options.
- Place an order: Order ETFs with account funds here. To buy Bitcoin ETF shares, choose the ETF and enter its ticker symbol on the brokerage account’s trading or order-placing interface. Investors might employ market, limit, or stop orders based on their trading style. Once the details are verified, the investor can submit the purchase. The brokerage will execute the order and add Bitcoin ETF shares to the portfolio after the investor selects the requirements.
- Monitor your investments: Reviewing investments regularly allows investors to adapt to changes in the market and guide their investments toward success.
With the eleven spot Bitcoin ETFs approved by the SEC, both institutional and ordinary investors now have a chance to invest in a more regulated market. The management fees of several ETFs have been significantly reduced in response to increased competition. Many believe that Bitcoin ETFs will cause a flood of new capital into the cryptocurrency market. Soon after, Bitcoin might become the mainstream of global finance if additional nations adopt it.
Even though Bitcoin ETFs are the only ones approved by regulators, many hope other big cryptocurrency ETFs will also be supported. Although the exact timing is still up in the air, the cryptocurrency industry is hopeful, seeing the recent approvals as a precursor to more expansive bitcoin ETFs.