How to Buy Bitcoin ETFs?

Bitcoin ETFs are the latest trending topics in the crypto landscape for different reasons. First of all, people want to know how to buy Bitcoin ETFs because they offer an easier way to invest in Bitcoin. ETFs or Exchange Traded Funds have served as a core component in the traditional financial services landscape for portfolio diversification.

The use of ETFs for Bitcoin could also serve the same purpose for cryptocurrencies and help investors lower the risks of investing in Bitcoin. Interestingly, the advocacy for Bitcoin ETFs gained momentum in 2013 with the first proposal for Bitcoin ETF promoted by the Winklevoss Twins. After years of rejection for proposals of Bitcoin ETF trading, the SEC finally approved ETFs on January 10, 2024. Let us learn more about BTC ETFs and how to buy them.

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What is the Importance of Bitcoin ETFs?

Bitcoin is the first ever cryptocurrency, and it is one of the reasons why cryptocurrencies have become a major highlight in the world of technology and pop culture. However, retail investors are still experiencing problems in gaining exposure to Bitcoin. Interestingly, crypto ETF trading can serve as a major tool for encouraging the participation of retail investors in crypto markets. Bitcoin or Crypto ETFs are financial products that can help investors gain exposure to price variations of Bitcoin without holding Bitcoin.

The primary value proposition of Bitcoin ETFs revolves around accessibility, as they are also available on traditional stock exchanges such as NASDAQ and the New York Stock Exchange. The growing interest in ETF Bitcoin price is a clear testament to the fact that retail investors have entered the crypto ETF market.

With the approval of regulatory authorities, retail and institutional investors have discovered an opportunity to invest in Bitcoin. ETFs offer a regulated and convenient approach to investing in Bitcoin. The importance of Bitcoin ETFs also draws the limelight on the benefit of convenience as investors would not have to worry about security and volatility of Bitcoin pricing.

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How Many Types of ETFs Can You Find?

You would find two variants of ETFs or exchange-traded funds, such as spot Bitcoin ETFs and futures Bitcoin ETFs. The interest of retail investors to buy BTC ETFs would incline prominently towards futures Bitcoin ETFs. Future ETFs do not offer ownership of Bitcoin and use futures contracts for Bitcoin to track its price movements.

Futures Bitcoin ETFs can help investors in speculating the future price of Bitcoin. On the other hand, spot Bitcoin ETFs have emerged as another alternative as they hold actual Bitcoin as underlying assets. Spot Bitcoin ETFs work by tracking Bitcoin’s real-time pricing.

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What is the Difference between Holding Bitcoin and Bitcoin ETFs?

The value proposition of Bitcoin ETFs can provide a better impression of their usability. You should buy Bitcoin ETFs rather than Bitcoin to avoid the risks. In the case of ETFs, investors could purchase a product that can help in tracking the price of associated commodity or security through same mechanism used for index funds. Bitcoin ETFs can help in simplifying things for investors with support for management of holdings without maintenance of crypto wallets or selection of cold wallets.

The advantages of Bitcoin ETF trading also focus on how they help retirement funds, registered investment advisers, and different institutions in accessing Bitcoin. People and institutions who have experienced limitations in accessing cryptocurrencies can use ETFs to own Bitcoin. With the help of spot Bitcoin ETFs, you can actually hold Bitcoin in your investment portfolio. On the other hand, Bitcoin futures ETFs are another financial product that works on the speculations about future price of Bitcoin.

Another prominent difference between Bitcoin ETFs and Bitcoin is the element of convenience. Investors can find intervention of regulatory authorities for crypto ETF trading, such as the SEC in the US. On the other hand, direct investments in Bitcoin are subject to a limited regulatory framework.

You don’t have to pay special attention to management of your Bitcoin ETFs, as the brokerage account is useful for managing all operations. However, you would need to manage direct Bitcoin investments through your crypto wallets alongside taking responsibility for security of your assets.

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Which Bitcoin ETFs Have Obtained SEC Approval?

The Securities and Exchange Commission or SEC offered approval to spot Bitcoin ETFs by major fund managers on January 10, 2024. Bitcoin futures ETFs had already obtained approval in October 2021. If you want to track ETF Bitcoin price movements, then you must know about the recently approved spot ETFs. Here are the spot Bitcoin ETFs that have obtained SEC approval recently.

• Grayscale Bitcoin Trust
• Bitwise Bitcoin ETF
• BlackRock iShares Bitcoin Trust
• Invesco Galaxy Bitcoin ETF
• Fidelity Wise Origin Bitcoin Trust
• Franklin Templeton Franklin Bitcoin ETF
• Valkyrie Bitcoin Fund
• ARK 21Shares Bitcoin ETF
• VanEck Bitcoin Trust
• Hashdex Bitcoin ETF DEFI
• WisdomTree Bitcoin Fund

All of these spot Bitcoin ETFs would be available on all stock exchanges in the US. You can find spot Bitcoin ETFs on NASDAQ, the Chicago Board Options Exchange, and the New York Stock Exchange. The interest in Bitcoin ETFs trading had gained momentum with the approval for futures Bitcoin ETFs, which track price movements for buying or selling Bitcoin at a predefined price. The Proshares Bitcoin Strategy ETF or BITO is one of the first Bitcoin ETFs to obtain SEC approval. You can find the ETF on New York Stock Exchange.

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What are the Different Ways for Purchasing Bitcoin ETFs?

The growing interest to buy BTC ETFs also creates doubts regarding the ideal channels for purchasing ETFs. Here are the most common ways to purchase Bitcoin ETFs.

• Cryptocurrency Exchanges 

The approval for spot Bitcoin ETFs by the SEC has opened up the prospects for introduction of ETFs on cryptocurrency exchanges. Most of the cryptocurrency exchanges have been struggling with the implications of a radically evolving regulatory ecosystem. However, they have plans to introduce ETFs. For example, one of the leading crypto exchanges, Coinbase, serves as a custodian for eight approved ETFs. On top of it, another popular exchange, Kraken, is all set to start its ETF trading services in 2024.

• Online Brokerage Accounts 

The most preferred way to buy Bitcoin ETFs right now is at online brokerage accounts. Online brokerage accounts help buyers access a search tool that helps in searching for the desired fund with its name or ticker symbol for the purpose of trading. You can buy the SEC-approved spot ETFs with brokerages, such as Interactive Brokers, Charles Schwab, Robinhood, and Fidelity.

• ETF Issuers

Interested buyers could also get their hands on Bitcoin ETFs directly with the help of ETF issuers. You can visit the ETF issuer portal or website directly and buy ETFs. However, you would require a brokerage account to purchase an ETF. For example, customers have to select one of the brokers on the Hashdex website to buy Bitcoin ETFs.

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Step-by-Step Guide for Buying Bitcoin ETFs

The search for ETF Bitcoin price and their advantages might lead you to multiple responses. However, it is important to look for the essential steps that can help you buy a Bitcoin ETF of your choice.

• Open Brokerage Account

You should start by downloading a brokerage services app, such as Robinhood or BlackRock. On the other hand, you can also open the web portals. Subsequently, you must complete the important Know Your Customer checks before logging in.

• Funding the Account 

Traders should fund the brokerage account with the help of a linked bank account, which may be a savings account or a checking account. As a trader, you could fund the brokerage account by making a wire transfer, depositing a check, or transferring funds from other brokers.

• Comprehensive Research on Available Bitcoin ETFs

Before you begin your Bitcoin ETF trading journey, it is important to focus on important aspects, such as expense ratio and issuer of the ETF. The expense ratio refers to the fee charged by issuers for management of the ETF, which can influence overall returns.

• Choose the ETFs You Want to Buy

Investors should explore the complete range of Bitcoin ETFs to select the ones that align with their investment goals and preferences. The process involves evaluation of different factors such as ETF Bitcoin price and other criteria for identifying the right ETFs.

• Place the Order and Monitor Regularly

Finally, you can use the funds in the brokerage account to purchase the selected ETFs. Buyers can follow different trading strategies and choose unique purchase orders such as market, stop, or limit orders. Investors can submit the final purchase order after reviewing the order details to ensure accuracy. At the same time, it is also important to review the investments regularly for effective response to market changes.

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Final Words

The approval for spot ETFs by SEC is a major milestone on the road to adoption of crypto ETFs. You can find multiple approaches to crypto ETF trading, ranging from buying them on crypto exchanges to using brokerage accounts. It is also important to note that ETFs for other cryptocurrencies would also make their way into the market. Learn more about ETFs and the value advantages they bring to the table.

*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!