The approval of spot Bitcoin ETFs in early 2024 reshaped the cryptocurrency industry and is one of the reasons Bitcoin rocketed to a new record high: The availability of Bitcoin ETFs through online brokerage firms — including within IRAs and other retirement accounts — means everyday investors can give their portfolios exposure to Bitcoin without fussing with separate cryptocurrency exchanges or Bitcoin wallets.
Spot Bitcoin ETFs directly track the price of Bitcoin — prior to 2024, there was no such product. Any ETF that touted itself as a Bitcoin ETF didn’t directly invest in Bitcoin or track its price; rather, they were based on Bitcoin futures contracts, or other investments that correlate to the price of the cryptocurrency.
Where to buy spot Bitcoin ETFs
Spot Bitcoin ETFs are available at many online brokers that offer ETFs, often with no trade commission. One major brokerage, Fidelity, had its own spot Bitcoin ETF, the Fidelity Wise Origin Bitcoin Fund (FBTC), approved. Many of the brokers that make our list of the best brokers for ETFs have confirmed they now offer some or all of the approved spot Bitcoin ETFs on their platforms, including:
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How to buy spot Bitcoin ETFs
If you don’t already have a brokerage account, you’ll need to open one to buy ETFs. (We have a full guide for how to open a brokerage account.) You can open a brokerage account online in about 15 minutes, then fund it by transferring money from a bank account.
Once you have your account open, follow these two steps to purchase Bitcoin ETFs:
1. Search for the ETF you want
The brokerage will have a search tool or ETF screener that will allow you to search for the ETF by its name or ticker symbol. If you don’t know which Bitcoin ETF you want to invest in and your brokerage offers access to several, you should compare them — one key detail is the fund’s expense ratio, which is the annual cost of owning the ETF. Spot Bitcoin ETF expense ratios currently range from 0.19% to 1.50%, which means if you invest $100, you’ll pay between 19 cents and $1.50 per year. Of course, with larger investment amounts, that fee could quickly eat into your return, so you’ll want to understand how much you’re paying.
2. Place your trade
Once you’ve funded your account and found the Bitcoin ETF you’d like to purchase, placing your trade is typically as simple as clicking a buy button. You’ll get a chance to double-check your order, which means ensuring you’ve purchased the right number of ETF shares (for the right amount of money) and selected the correct ticker symbol. Once your order goes through, you own the ETF.
Bitcoin ETF definition
One way to think about how a Bitcoin ETF works is to think about each term separately.
Similar to how a standard shipping container can hold many different types of goods and be interchangeably loaded onto any semi-truck or container ship, an ETF can ”hold” many types of investments and be bought and sold like a stock on nearly every major retail brokerage.
Some ETFs contain stocks and track a common index, like the S&P 500, by buying the stock of companies in that index. Spot Bitcoin ETFs directly track the price of Bitcoin.
This means that spot Bitcoin ETFs aren’t as diversified as many other ETFs — they are holding a single asset. But they do make Bitcoin easier to add to your portfolio, because you can purchase Bitcoin ETFs in many standard brokerage accounts, and in some cases, within your IRA or other retirement account.
Bitcoin ETF pros
Easy to buy. Many people who have access to a retail brokerage account probably already have access to Bitcoin ETFs. In contrast, investing in Bitcoin itself at minimum requires setting up an account with a crypto exchange, and perhaps looking into Bitcoin wallets for storage, too.
Easier taxes. Crypto sales are subject to taxes, but don’t count on your crypto brokerage to work with your tax software. If you buy and sell ETFs through your traditional brokerage, those sales should get rolled into the rest of your trading activity for the year.
Bitcoin ETF cons
Ongoing fees. Ongoing fees for Bitcoin ETFs — called expense ratios — can be high compared to ETFs that track stock indices. If you own Bitcoin outright, you don’t pay these fees, though you probably will pay a one-time transaction fee when you buy and sell. Some of the new Bitcoin ETF providers are waiving fees for a set period of time.
Loss of control. A central theme of many cryptocurrencies is the ability to own it without the need for institutions or governments to intervene. If you own a Bitcoin ETF, you don’t have any control over the holdings.
Other ways to invest in Bitcoin
Cryptocurrency is still relatively new and should be approached with caution. But if you’re excited about crypto and feel like you have space in your portfolio to add an investment with a little more pizazz, here are some ways you can invest:
Buy Bitcoin directly. Investing in Bitcoin directly is becoming more common — you can even use it to shop on Amazon. But it’s still wise to practice caution when adding any new investment to your portfolio.
Crypto-related investments. If you don’t want to navigate a whole new form of currency, you can still invest in the future of money. Coinbase, a major cryptocurrency exchange, went public in April 2021, meaning you can buy its company stock. (Learn how to buy Coinbase stock.) There are also other cryptocurrency stocks, which can give investors exposure to crypto technology without investing directly in the currencies themselves.
The author and editor both owned Bitcoin at the time of publication. Andy Rosen and Kurt Woock contributed to this report.
The rise of spot Bitcoin ETFs in early 2024 brought a significant transformation to the cryptocurrency industry, propelling Bitcoin to new record highs. The accessibility of Bitcoin ETFs through online brokerage firms, including integration into IRAs and retirement accounts, democratized investment in Bitcoin by eliminating the need for separate cryptocurrency exchanges or Bitcoin wallets.
Spot Bitcoin ETFs differ from previous ETFs as they directly mirror the price of Bitcoin itself, offering a more authentic investment option. Prior to the approval of spot Bitcoin ETFs, most ETFs claiming to track Bitcoin were based on Bitcoin futures contracts or correlated investments.
For individuals interested in purchasing spot Bitcoin ETFs, numerous online brokers offer these products with no trade commission. Notably, brokerage firms like Fidelity introduced their own spot Bitcoin ETFs, such as the Fidelity Wise Origin Bitcoin Fund (FBTC).
Investing in spot Bitcoin ETFs entails a simple process once a brokerage account is established. By utilizing the broker’s search tool, investors can locate their desired Bitcoin ETF and execute the purchase with a click of a button. It is crucial to compare different spot Bitcoin ETFs, considering factors like expense ratios that can impact the cost of ownership.
While spot Bitcoin ETFs offer an accessible and tax-friendly pathway to Bitcoin exposure, they come with ongoing fees in the form of expense ratios. Additionally, investors forfeit direct control over their Bitcoin holdings by opting for ETFs.
Beyond Bitcoin ETFs, investors can explore different avenues to invest in Bitcoin, including purchasing Bitcoin directly for more direct exposure or investing in crypto-related investments like Coinbase stock. As the cryptocurrency space continues to evolve, prudent investment strategies and market awareness are paramount.
The author and editor disclosed their ownership of Bitcoin at the time of publication, with contributions made by Andy Rosen and Kurt Woock to this comprehensive report on the world of Bitcoin ETFs and cryptocurrency investments.
Spot Bitcoin ETFs have become a popular investment option for many individuals looking to get exposure to the world of cryptocurrencies through a regulated and traditional financial instrument. This article will provide a detailed guide on how and where you can buy spot Bitcoin ETFs, covering everything from understanding what spot Bitcoin ETFs are to the best platforms for purchasing them.
What are Spot Bitcoin ETFs?
Spot Bitcoin ETFs, also known as physically-backed Bitcoin ETFs, are exchange-traded funds that are backed by physical Bitcoin holdings. These funds aim to provide investors with direct exposure to the price movements of Bitcoin without requiring them to own or store the underlying cryptocurrency themselves. This is different from futures-based ETFs, which derive their value from Bitcoin futures contracts rather than physical Bitcoin.
Spot Bitcoin ETFs are seen as a more straightforward and transparent investment option compared to buying Bitcoin directly. Investors can trade spot Bitcoin ETFs just like stocks on traditional exchanges, making them more accessible to a wider range of investors. Additionally, spot Bitcoin ETFs are regulated by financial authorities, adding an extra layer of security and protection for investors.
Where to Buy Spot Bitcoin ETFs
There are several platforms where you can buy spot Bitcoin ETFs, each with its own set of benefits and features. Below are some of the most popular platforms for purchasing spot Bitcoin ETFs:
1. Traditional Stock Exchanges
Many traditional stock exchanges now list spot Bitcoin ETFs, making it easy for investors to buy and trade these funds alongside other traditional assets. Examples of stock exchanges that list spot Bitcoin ETFs include the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX).
2. Online Brokerage Platforms
Online brokerage platforms provide a convenient way for investors to buy spot Bitcoin ETFs from the comfort of their own homes. Platforms such as eToro, Robinhood, and Interactive Brokers offer a wide range of ETFs, including spot Bitcoin ETFs, and provide tools and resources to help investors make informed decisions.
3. Cryptocurrency Exchanges
Some cryptocurrency exchanges also offer spot Bitcoin ETFs for trading, catering to investors who are more familiar with the cryptocurrency space. Platforms like Coinbase and Binance allow investors to buy spot Bitcoin ETFs using cryptocurrency or fiat currency, providing a seamless entry point for those already active in the crypto market.
4. Robo-Advisors
Robo-advisors are automated investment platforms that use algorithms to manage and allocate investors’ funds. Some robo-advisors may offer spot Bitcoin ETFs as part of their investment portfolios, providing a hands-off approach for investors looking to diversify their holdings.
Factors to Consider When Buying Spot Bitcoin ETFs
Before purchasing spot Bitcoin ETFs, there are several factors you should consider to ensure you make informed investment decisions:
1. Regulation: Make sure the spot Bitcoin ETF you are buying is regulated by a reputable financial authority to ensure it complies with investor protection standards.
2. Fees: Check the fees associated with buying and holding spot Bitcoin ETFs, including management fees, trading fees, and any other expenses that may impact your overall returns.
3. Liquidity: Ensure that the spot Bitcoin ETF you are buying has sufficient liquidity to enable easy buying and selling of shares. Low liquidity can result in wider spreads and higher trading costs.
4. Performance: Research the historical performance of the spot Bitcoin ETF to understand how it has performed in different market conditions and compare it to other similar funds.
5. Security: Choose a reputable platform with robust security measures to protect your investment and personal information from cyber threats.
Conclusion
Spot Bitcoin ETFs offer a convenient and regulated way for investors to gain exposure to the price movements of Bitcoin without having to directly own the cryptocurrency. By buying spot Bitcoin ETFs through traditional stock exchanges, online brokerage platforms, cryptocurrency exchanges, or robo-advisors, investors can diversify their portfolios and tap into the potential of the cryptocurrency market. Before buying spot Bitcoin ETFs, it is crucial to consider factors such as regulation, fees, liquidity, performance, and security to make well-informed investment decisions. With the right knowledge and research, investors can confidently navigate the world of spot Bitcoin ETFs and take advantage of the growing interest in cryptocurrencies.
