The U.S. Securities and Exchange Commission (SEC) recently gave the green light to spot bitcoin ETFs, making it easier for everyday investors to access bitcoin investments.
With this approval, buying into bitcoin no longer requires using crypto exchanges or managing complex digital wallets.
Spot bitcoin ETFs are traded just like traditional stocks or other ETFs, giving investors the opportunity to invest in bitcoin without directly owning it.
These ETFs are available through various online brokers and investing platforms that also offer services like stock trading, retirement account management, and automated investing.
You’ll find spot bitcoin ETFs listed on major exchanges such as the New York Stock Exchange (NYSE) and the Nasdaq. But before jumping in, it’s important to understand how these ETFs work and the risks they carry.
Where Can You Buy Spot Bitcoin ETFs?
You can now trade spot bitcoin ETFs through several popular brokerage firms and robo-advisors. These ETFs are also compatible with different types of retirement accounts, including Bitcoin IRAs, traditional and Roth IRAs, and solo 401(k) accounts.
When choosing a spot bitcoin ETF, pay close attention to the associated fees. Currently, some ETF providers are offering fee waivers to attract investors.
For example, the VanEck Bitcoin ETF (HODL) is waiving its management fees until March 31, 2025, or until it reaches $1.5 billion in assets under management (AUM), whichever comes first.
However, remember that these waivers are temporary and part of the competition among ETF issuers.
High fees can eat into your returns over time. For instance, Grayscale charges a hefty 1.50% annual fee for its bitcoin ETF. As a smart investor, you should aim for ETFs with lower annual management fees, ideally between 0.2% and 0.5%.
Best Platforms for Buying Spot Bitcoin ETFs
Here’s a quick comparison of some well-known platforms offering access to spot bitcoin ETFs:
Self-Directed Brokerages
| Platform | Account Minimum | Crypto Assets Available |
|---|---|---|
| Fidelity | $0 | Coins, ETFs |
| Robinhood | $0 | Coins, ETFs |
| Charles Schwab | $0 | ETFs only |
| E*TRADE | $0 | ETFs only |
| Interactive Brokers | $0 | Coins, ETFs |
| eToro | $50–$200 | Coins, ETFs |
| Webull | $0 | Coins, ETFs |
| Lightspeed | $10,000–$25,000 | Coins, ETFs |
Robo-Advisors
| Platform | Account Minimum | Crypto Assets Available |
|---|---|---|
| SoFi Automated Investing | $1 | ETFs only |
How to Start Investing in Spot Bitcoin ETFs
Investing in these ETFs is easy and can typically be done in under 30 minutes. Here’s how:
- Open a brokerage account: Choose a platform that supports spot bitcoin ETFs and sign up.
- Fund your account: You can usually transfer money from your bank or another brokerage account. Make sure you have enough to cover the cost of ETF shares, plus any fees or commissions.
- Do your research: As of now, there are 11 SEC-approved bitcoin ETFs. Look for ones with high trading volumes, significant AUM, and trustworthy issuers.
- Pick your ETF: Many platforms provide a few options and show you their differences, especially in fees. Choose one that fits your financial goals and budget.
- Buy the ETF: Place your order like you would for any stock. Use a market order for a quick buy, or a limit order if you prefer to set your own price.
- Track your investment: Keep an eye on how your ETF is performing and stay updated on bitcoin news, as it can affect the value of your investment.
Advantages of Spot Bitcoin ETFs
Spot bitcoin ETFs offer a convenient, regulated way to get involved in bitcoin investing. Here are their main benefits:
- Ease of access: You don’t need a crypto exchange account or digital wallet. Just use a regular brokerage account.
- High liquidity: These ETFs add liquidity to the bitcoin market, which helps narrow trading spreads and makes it easier to buy or sell.
- Regulatory protection: ETFs are regulated financial products, providing a higher level of investor protection compared to many crypto exchanges.
- Favorable tax treatment: Depending on where you live, holding a bitcoin ETF might result in lower taxes than holding actual bitcoin. In the U.S., for example, long-term capital gains (on assets held over a year) are taxed at a lower rate.
Risks of Spot Bitcoin ETFs
Like any investment, spot bitcoin ETFs come with risks. While they provide exposure to bitcoin in a regulated format, they are not immune to the volatility and uncertainties of the crypto market.
- Bitcoin price swings: The crypto market is known for its extreme volatility. Events like the 2024 bitcoin halving or negative press can cause huge price changes in short periods. For example, in January 2024, a fake SEC announcement caused bitcoin’s price to spike and drop within minutes.
- Changing regulations: The SEC and other global regulators are still cautious about crypto investments. New rules could be introduced that impact the availability or structure of bitcoin ETFs.
- Security issues: While the ETFs themselves are secure, the underlying bitcoins are stored by custodians like Coinbase. If a custodian or fund manager is hacked, your investment could be at risk. For example, BlackRock’s iShares Bitcoin Trust (IBIT) relies on Coinbase to hold its bitcoins.
Other Ways to Invest in Bitcoin
If you’re unsure about bitcoin ETFs or want more direct exposure to crypto, here are some alternatives:
- Buy bitcoin directly: You can purchase bitcoin through crypto exchanges like Coinbase, Binance, or Kraken. This gives you full ownership, but you’ll need to manage a digital wallet and understand how to keep your assets safe.
- Invest in crypto-related stocks: You can buy shares in companies like Coinbase, Riot Platforms, or MicroStrategy, which are tied to the performance of bitcoin and other cryptocurrencies.
- Buy traditional bitcoin ETFs or indexes: Some ETFs like the Grayscale Bitcoin Trust (GBTC) have been around for years. They may offer more stability and a proven track record, although some still come with high fees.
Final Thoughts
Spot bitcoin ETFs are a new and convenient way to invest in bitcoin without the complexities of owning crypto directly.
They’re now available through many brokerage platforms and retirement accounts, offering a regulated, user-friendly option for both new and experienced investors.
If you want to start, simply open a brokerage account, fund it, research your options, and choose the bitcoin ETF that aligns with your financial strategy.
But like any investment, keep an eye on fees, stay informed about market changes, and be aware of the risks involved.
Bitcoin Basics: What You Should Know
- What is Bitcoin?
Bitcoin is the world’s first decentralized digital currency, created in 2009 by a person or group using the name Satoshi Nakamoto. Transactions happen over a peer-to-peer network and are recorded on a public ledger called the blockchain. The smallest unit of bitcoin is called a satoshi (0.00000001 BTC). - What is a Spot Bitcoin ETF?
A spot bitcoin ETF directly holds bitcoin as its asset. This makes it different from a bitcoin futures ETF, which is based on contracts that speculate on bitcoin’s future price. - What Does BTC Mean?
BTC is the ticker symbol for bitcoin. You’ll see it used on financial websites, crypto exchanges, and trading platforms when checking prices or investing.
Should You Buy a Spot Bitcoin ETF Now?
If you’re interested in bitcoin but don’t want to manage the technical aspects of owning it, a spot bitcoin ETF might be a smart option. These ETFs provide exposure to bitcoin’s price movements while offering the safety and simplicity of traditional financial markets.
However, bitcoin remains a volatile asset. If you’re a long-term believer in its potential as digital gold or a decentralized currency, now might be a good time to invest. Just be prepared for ups and downs and consider how much risk you’re willing to take.
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