The Best Places To Invest In Bitcoin Etfs

Bitcoin ETFs have been approved by the SEC, allowing investors to gain exposure to the cryptocurrency without needing to hold their investment in a bitcoin wallet. Instead, they can simply hold the ETFs in their brokerage account.

The SEC's approval has opened up the world of cryptocurrency investing to many investors who may not have had an appetite for it before.

There are several Bitcoin ETFs available, including:

- iShares Bitcoin Trust (IBIT)

- Bitwise Bitcoin ETF (BITB)

- Grayscale Bitcoin Trust (GBTC)

- Fidelity Wise Origin Bitcoin Fund (FBTC)

- VanEck Bitcoin Trust (HODL)

Brokerages like Fidelity, Robinhood, and Charles Schwab

Fidelity is one of the most popular brokerages for investing in Bitcoin ETFs. It has already posted several of its proposed Bitcoin ETFs on its site, and it is likely that more brokers and popular cryptocurrency exchanges will jump on the opportunity to offer Bitcoin ETFs to their users. Fidelity is a good option for beginners as it offers a simple mobile app that is easy to use and navigate.

Robinhood is another brokerage that offers Bitcoin ETFs. It is a newer and more modern alternative with a fun and simple trading platform and a focus on mobile trading. Robinhood offers $0 commission fees for stocks, ETFs, options, and cryptocurrencies. However, Robinhood lacks research tools and may not offer all the features that advanced traders are looking for.

Charles Schwab is a more traditional brokerage firm that offers multiple account types and a solid mix of traditional asset classes to invest in. It provides a variety of different individual retirement accounts, including traditional IRAs, Roth IRAs, Simple IRAs, and SEP IRAs. Charles Schwab also offers a more diverse platform for market orders and has several trading platforms to choose from, including StreetSmart Edge, an advanced platform with streaming data and sophisticated charting tools.

Overall, all three brokerages offer a good option for investing in Bitcoin ETFs, but the best choice for you will depend on your individual needs and investment goals.

SEC approval of Bitcoin ETFs

On January 10, 2024, the U.S. Securities and Exchange Commission (SEC) approved the first crypto exchange-traded funds to hold digital assets, including bitcoin. This decision opened the easiest path for regular, retail investors to invest in cryptocurrencies.

The SEC approved about a dozen applications from companies to list spot bitcoin ETFs, including Grayscale, Bitwise, BlackRock, Fidelity, Hashdex, BZX, VanExk, WisdomTree, and Franklin. Trading began as early as January 11, 2024, with over a dozen bitcoin ETF applicants eager to launch their products.

A bitcoin ETF is a basket of assets that trades on a stock exchange. In the case of a spot bitcoin ETF, each fund gathers a large number of bitcoins, and the investor buys a small piece of that pile. Unlike mutual funds, ETFs can be bought and sold as often as the investor likes during the trading day, as long as there is a buyer or seller on the other end.

The SEC's approval of bitcoin ETFs was highly anticipated, with companies seeking the SEC's approval since 2013. The approval is expected to open the crypto market to a broader audience, simplifying the process of investing in bitcoin.

However, it is important to note that investing in cryptocurrencies, even through an ETF, is still risky due to the volatile nature of the asset class. The SEC has warned investors to remain cautious about the risks associated with bitcoin and crypto-related products.

Bitcoin ETF fees

Bitcoin ETFs are a relatively new addition to the world of exchange-traded funds. While Bitcoin futures ETFs have been around since 2021, it was not until January 2024 that U.S. regulators allowed exchange-traded products tied directly to the day-to-day movement of Bitcoin prices, known as the asset's spot prices.

The fees associated with Bitcoin ETFs vary depending on the fund provider and the type of ETF. Here is a breakdown of the fee structure for Bitcoin ETFs:

Total Annual Fund Operating Expenses Fee

This fee covers the fund's operational costs, including management, administration, and compliance fees. It is expressed as a percentage of the fund's assets and directly affects the returns on your investment. For example, the ProShares Bitcoin Strategy ETF (BITO) has an expense ratio of 0.95%.

Bid-Ask Spread

The bid-ask spread represents the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. This spread is crucial for investors as it affects the overall cost of trading the Bitcoin ETF. Highly liquid Bitcoin ETFs usually have tight bid-ask spreads, while less frequently traded ETFs or those with less liquid underlying assets may exhibit wider spreads.

Custodian Fees

Custodian fees are incurred to ensure the safe storage of Bitcoin to prevent theft or loss. These fees can vary depending on the provider and the assets being stored.

When considering the fees associated with Bitcoin ETFs, it is important to note that some ETFs may offer discounted fees for a limited period. Additionally, the fee structure can vary depending on whether the ETF is a spot Bitcoin ETF or a Bitcoin futures ETF.

• Franklin Templeton Digital Holdings Trust (EZBC): Fee waived until a specified date or the first $10 billion in fund assets.
• Bitwise Bitcoin ETF (BITB): 0.20% fee, with a temporary waiver for the first $1 billion in assets.
• VanEck Bitcoin Trust (HODL): Fee waived until March 31, 2025, or the first $1.5 billion in fund assets.
• Ark 21Shares Bitcoin ETF (ARKB): 0.21% fee, with a temporary waiver for the first six months or $1 billion in assets.
• IShares Bitcoin Trust (IBIT): 0.25% fee for the first six months or $5 billion in assets, with a reduced fee of 0.12% until January 11, 2025, or the first $5 billion in assets.
• Fidelity Wise Origin Bitcoin Fund (FBTC): 0.25% fee, currently waived until August 1, 2024.
• WisdomTree Bitcoin Fund (BTCW): Fee waived until July 11 or the first $1 billion in fund assets.
• Invesco Galaxy Bitcoin ETF (BTCO): 0.25% fee, waived until July 11 or the first $5 billion in assets.
• Valkyrie Bitcoin Fund (BRRR): 0.49% fee, with a temporary waiver for the first three months.
• Hashdex Bitcoin ETF (DEFI): 0.90% fee, converted from a futures ETF to a spot ETF in March 2024.
• Grayscale Bitcoin Trust (GBTC): 1.5% management fee, with plans to reduce fees over time.

It is worth noting that the fees for Bitcoin ETFs are subject to change, and there may be ongoing volatility in the fee structure as these products are still relatively new. Additionally, the performance of Bitcoin ETFs may not exactly track the price of Bitcoin, and there are risks associated with custodianship and regulatory changes.

Bitcoin ETF trading volume

A Bitcoin ETF, or exchange-traded fund, is a basket of assets that trades on a stock exchange. In the case of a spot bitcoin ETF, each fund gathers a large amount of bitcoin, and investors buy a small piece of that pile.

How to Trade Bitcoin ETFs

The US Securities and Exchange Commission (SEC) approved the first crypto exchange-traded funds to hold digital assets in January 2024. This means that investors can now buy bitcoin ETFs from popular brokerages like Fidelity, BlackRock, Grayscale, Bitwise, Hashdex, BZX, VanExk, WisdomTree, and Franklin.

Trading Volume

Trading volume refers to the number of shares or contracts of a security traded during a specific period. In the case of Bitcoin ETFs, trading volume can be an indicator of investor interest. For example, BlackRock's spot bitcoin ETF recorded over $1 billion in daily trading volume for two consecutive days in February 2024, fuelled by bitcoin's rally.

However, it is important to note that high trading volume does not always indicate heavy buying. The "turnover ratio", or the dollar trading volume divided by the fund's net asset value, is a preferred metric for analysing trading volume.

Factors Affecting Trading Volume

Several factors can affect the trading volume of Bitcoin ETFs, including:

• Bitcoin Price: Trading volume tends to increase when the price of Bitcoin surges, as investors look to take advantage of the price movement.
• First Trading Day: The first trading day of the week, or the first trading day after a long break, often sees heightened trading volume.
• News and Headlines: Major news or headlines about Bitcoin can also impact trading volume, as investors react to new information.

Advantages of Bitcoin ETFs

Bitcoin ETFs offer several advantages to investors:

• Accessibility: Bitcoin ETFs provide a more accessible way for retail investors to gain exposure to the crypto market, as they can be traded through regular brokerage accounts.
• Diversification: ETFs are a great way to diversify one's portfolio, as they can be a combination of crypto, stocks, bonds, and other commodities.
• Affordability: ETFs are one of the most affordable ways to decrease volatility through portfolio diversification.
• Simplicity: Investing in a Bitcoin ETF is a relatively simple process, as investors can purchase them through their existing brokerage accounts.

Risks of Investing in Bitcoin ETFs

It is important to remember that investing in Bitcoin ETFs carries risks:

• Volatility: Cryptocurrencies like Bitcoin are highly volatile, and even putting Bitcoin in an ETF won't eliminate that volatility.
• Regulatory Risk: The regulatory landscape for cryptocurrencies is still evolving, and changes in regulations can impact the trading of Bitcoin ETFs.
• Fraud and Scams: The cryptocurrency market has been riddled with fraudulent activity and scams, and investors need to be cautious when investing in this space.

In conclusion, while Bitcoin ETF trading volume can provide insights into investor interest and market trends, it is important to consider other metrics and factors as well. As with any investment, it is crucial to do your own research and understand the risks involved before investing in Bitcoin ETFs.

Bitcoin ETF providers

Bitcoin ETFs have been available since January 2024, when the SEC approved them for market trading. Here is a list of some of the major providers:

Grayscale Bitcoin Trust (GBTC)

The Grayscale Bitcoin Trust is the largest fund that invests 100% of its assets directly in Bitcoin. It has been running since 2013, initially as a trust, but it is now an ETF. It has over 10 times the assets under management (AUM) of its closest competitor. However, its fee structure is higher than some of its competitors.

IShares Bitcoin Trust ETF (IBIT)

IBIT is one of the emerging leaders in the Bitcoin ETF space, thanks to a surge of shareholder money inflow. Its sponsor, BlackRock, waived a portion of fees until total assets reached $5 billion to attract new investors. IBIT has 100% of its assets invested directly in Bitcoin and is likely to survive any consolidation in the market.

Invesco Galaxy Bitcoin ETF (BTCO)

BTCO is another spot Bitcoin fund that waives its 0.25% fee to zero for the first six months on the first $5 billion in assets. While the fee is higher than some competitors, the discount is attractive to many short-term swing traders.

Bitwise Bitcoin ETF (BITB)

BITB is listed on the New York Stock Exchange's NYSE Arca platform. It has a large level of AUM thanks to a short-term fee waiver that made it free to trade until the fund hit $1 billion in AUM. Its baseline, post-waiver fee of 0.20% is still attractive to many investors.

ProShares Bitcoin Strategy ETF (BITO)

BITO was the first bitcoin futures ETF, launching in 2021. It attracted around $1 billion in assets within a few days of its launch and continues to be the leader in that category.

Fidelity

Fidelity is one of the most popular brokerages and has already posted several of its proposed Bitcoin ETFs on its site. It is likely that more brokers and popular cryptocurrency exchanges will offer Bitcoin ETFs to their users.

Other providers

Other providers of Bitcoin ETFs include BlackRock, Hashdex, BZX, VanExk, WisdomTree, Franklin, Ark Investments, and 21Shares.

Frequently asked questions