How to Buy Spot Bitcoin ETFs – A Comprehensive Guide
On January 10th, the United States Securities and Exchange Commission (SEC) put an end to speculations around a spot Bitcoin ETF after announcing that it had approved eleven ETFs. These Exchange-Traded Funds are expected to boost crypto adoption as they make it possible for traditional investors to channel capital into the digital asset market without owning any token. Are you looking to buy spot Bitcoin ETF? We have explained everything you need to know in this guide. Stay tuned!
Holding Bitcoin ETF vs. BTC
Bitcoin ETF allows investors to purchase shares that track the price of BTC. Traditional investors find this an ideal way of getting exposure to cryptocurrencies rather than buying these digital assets. The reason they feel this way is because of the complexities involved in dealing with crypto assets, from making on-chain transfers to managing Web3 wallets.
Approved Spot Bitcoin ETFs
These are the spot Bitcoin ETFs that the Gary Gensler-led Commission approved on January 10th: Grayscale Bitcoin Trust, Fidelity’s Wise Origin Bitcoin Trust, BlackRock’s iShares Bitcoin Trust, the Hashdex Bitcoin ETF DEFI, the Valkyrie Bitcoin Fund, the WisdomTree Bitcoin Fund, Franklin Templeton’s Franklin Bitcoin ETF, the Bitwise Bitcoin ETF, VanEck’s Bitcoin Trust, Invesco Galaxy Bitcoin ETF, and ARK 21Shares Bitcoin ETF.
Except for the Hashdex Bitcoin ETF DEFI, the rest of the ETFs are listed on various stock exchanges in the United States, such as the Chicago Board Options Exchange, the Nasdaq, and the New Stock Exchange. Hashdex’s leadership said on January 12th that the company’s Bitcoin ETF will be available for trade later this year.
It is worth mentioning that the SEC has dismissed several Bitcoin ETF applications in the past. However, the entrance of reputable traditional companies like BlackRock made the Commission change its stance on spot Bitcoin ETF, which it previously said was subject to market manipulation risks experienced in the crypto market.
There are several Bitcoin futures ETFs in the US market already. These track contracts to buy or sell Bitcoin at a pre-set price. One of the popular Bitcoin futures ETFs is offered by investment company ProShares.
Where Can You Buy Bitcoin ETF?
Brokerage Firms
Several brokers now support the trading of Bitcoin ETFs. You can buy the new investment vehicle on brokerage platforms like Fidelity, Charles Schwab, Interactive Brokers, and Robinhood.
Crypto Exchanges
As of January 2024, no crypto exchange lists spot Bitcoin ETF. However, Kraken announced a few days ago that it will offer an ETF trading service later this year.
Financial Advisers
In a recent report released by Bitwise, about 20% of financial advisers who have been investing in crypto using their client accounts intend to diversify by injecting funds into Bitcoin ETFs in 2024.
Robo-advisors
A good number of robo-advisors facilitate Bitcoin ETF trading. Some of them include Betterment and Wealthfront. These companies are ideal for retail investors looking to spend a small amount of money on ETFs. That’s because they implement a low minimum investment requirement.
Traditional banks
Not many traditional financial institutions offer Bitcoin ETF trading services. But if you find one that does, you will be required to register a brokerage account with the investment division of the bank. Once you fund it, you can look for your preferred spot Bitcoin ETF and purchase its shares.
How to Buy Spot Bitcoin ETF
Here are the steps to follow to buy spot Bitcoin ETF:
Register a Brokerage Account
Install a brokerage mobile app and complete the KYC process.
Deposit Funds
After creating and verifying your account, link your bank account to deposit funds. Also, you can transfer money from another brokerage firm.
Research the Available Spot Bitcoin ETFs
As mentioned, there are eleven spot Bitcoin ETFs in the American market. Not all align with your investment goals, so you need to pick those that do. Consider how the fees imposed by each Bitcoin ETF issuer will impact the ROI (Return on Investment).
Select Spot Bitcoin ETF and Place an Order
After finding your ideal Bitcoin ETF, place a buy order to acquire its shares.
Conclusion
Like any other investment, Bitcoin ETFs must be monitored. So, check the performance of your preferred Bitcoin ETF regularly to make adjustments where necessary.
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