Instead of buying Bitcoin directly, you can invest in a Bitcoin ETF, which makes it easier and more accessible for people to gain exposure to Bitcoin. This eliminates the need to manage the actual Bitcoins themselves.
Bitcoin ETF Tracker for September 2024
| BTC ETF Name | Ticker | AUM | Volume | Fee | Flow |
|---|---|---|---|---|---|
| iShares Bitcoin Trust | IBIT | $21.49B | $262.5M | 0.25% | $56.92M |
| Grayscale Bitcoin Trust | GBTC | $14.1B | $43.11M | 1.5% | $-12,822,300.00 |
| Wise Origin Bitcoin Trust by Fidelity | FBTC | $10.81B | $54.77M | 0.25% | $0.00 |
| Ark/21 Shares Bitcoin Trust | ARKB | $2.88B | $21.74M | 0.21% | $0.00 |
| Bitwise Bitcoin ETP | BITB | $1.14B | $9.91M | 0.20% | $0.00 |
| VanEck Bitcoin Trust | HODL | $662.67M | $2.1M | 0.20% | $0.00 |
| Valkyrie Bitcoin Fund | BRRR | $542.83M | $1.35M | 0.25% | $0.00 |
| Invesco Galaxy Bitcoin ETF | BTCO | $476.88M | $2.6M | 0.25% | $0.00 |
| Franklin Bitcoin ETF | EZBC | $399.41M | $1.78M | 0.19% | $0.00 |
| WisdomTree Bitcoin Trust | BTCW | $213.65M | $621.94K | 0.25% | $0.00 |
Spot vs. Futures ETFs
There are two different types of Bitcoin ETFs:
- Spot Bitcoin ETFs: These ETFs hold actual Bitcoin, reflecting the real-time market price, allowing investors to gain exposure to Bitcoin without directly owning it.
- Bitcoin Futures ETFs: These ETFs invest in futures contracts, tracking the price of future Bitcoin trades. They come with additional risks like contract roll costs.
Essentially, a Bitcoin ETF allows investors to buy shares representing Bitcoin, traded on traditional stock exchanges.
Bitcoin ETF History
The idea of a Bitcoin ETF dates back to 2013, with the Winklevoss twins’ initial attempt.
However, the first spot Bitcoin ETF, was only approved by the US SEC on January 10, 2024, marking a significant milestone. This approval followed years of scrutiny and multiple rejections due to market manipulation and regulation concerns.
Key factors included legal pressure from a Grayscale lawsuit against the SEC, increased interest from major financial institutions like BlackRock and Fidelity, and evolving attitudes to regulation.
The eventual approval was a strong signal of mainstream acceptance, making Bitcoin investment more accessible and potentially increasing demand.
Popular Bitcoin ETFs
1. iShares Bitcoin Trust (IBIT)
The iShares Bitcoin Trust is the flagship spot Bitcoin ETF of BlackRock – the largest asset manager in the world.
It may be no surprise that the iShares Bitcoin Trust is the industry’s biggest Bitcoin ETF, benefitting from high liquidity and trading volumes. The ETF trades on the NASDAQ exchange under the ticker IBIT, with an expense ratio of 0.25%. Coinbase Custody secures its underlying Bitcoin.
| Ticker | IBIT |
| Trades on | NASDAQ |
| Expense ratio (Fees) | 0.25% |
| Custodian | Coinbase Custody |
| Administered by | BlackRock |
2. Grayscale Bitcoin Trust (GBTC)
The Grayscale Bitcoin Trust is one of the earliest Bitcoin investment vehicles, originally launched in 2013 as an investment trust rather than an ETF. It trades on the NYSE with the ticker GBTC.
Its expense ratio is 1.50%, the highest among similar products. Coinbase Custody takes care of its underlying coins.
Grayscale Bitcoin Trust previously faced trading issues and regulatory hurdles transitioning into an ETF, leading to a lawsuit against the SEC. Its eventual legal win against the SEC may have been key in paving the way to approve all spot Bitcoin ETFs, by highlighting regulatory inconsistencies.
Grayscale has also launched a Bitcoin Mini Trust ETF (ticker BTC), offering a significantly lower management fee of 0.15%. GBTC holders are permitted to transition to the Mini Trust without triggering a taxable event.
| Ticker | GBTC |
| Trades on | NYSE |
| Expense ratio (Fees) | 1.50% |
| Custodian | Coinbase Custody |
| Administered by | Grayscale Investments |
3. Bitwise Bitcoin ETF (BITB)
The Bitwise Bitcoin ETF trades on the NYSE under the ticker BITB, with the lowest expense ratio among similar products of just 0.20%. This low expense ratio makes the Bitwise Bitcoin ETF particularly attractive to cost-conscious investors.
Bitwise is known for its early attempts to launch a spot Bitcoin ETF, dating back to 2019, when it first filed with the SEC. The fund is administered by the Bank of New York Mellon, with Fidelity Digital Assets as the custodian.
| Ticker | BITB |
| Trades on | NYSE |
| Expense ratio (Fees) | 0.20% (waived for the first six months or first $5 billion in assets) |
| Custodian | Fidelity Digital Assets |
| Administered by | Bank of New York Mellon |
4. Fidelity Wise Origin Bitcoin Fund (FBTC)
The Fidelity Wise Origin Bitcoin Fund trades on the CBOE with the ticker FBTC, with an expense ratio of 0.25%. The fund is administered and custodied by Fidelity Digital Assets, reflecting Fidelity’s extensive experience in digital assets.
Fidelity has been actively involved in Bitcoin and blockchain technology since 2014, starting with Bitcoin mining. It later launched Fidelity Digital Assets in 2018, offering institutional investors custody and trading services for digital assets.
| Ticker | FBTC |
| Trades on | CBOE |
| Expense ratio (Fees) | 0.25% (waived to 0% until July 31, 2024) |
| Custodian | Fidelity Digital Assets |
| Administered by | Fidelity |
5. ARK 21Shares Bitcoin ETF (ARKB)
The ARK 21Shares Bitcoin ETF is a collaboration between Cathie Wood’s ARK Invest and 21Shares. It trades under the ticker ARKB on the CBOE and has an expense ratio of 0.21%. Coinbase Custody secures the assets.
A key feature of the ARK 21Shares Bitcoin ETF is its surveillance-sharing agreement with a US-based spot trading platform for Bitcoin, which upholds market integrity and reduces the risk of manipulation.
| Ticker | ARKB |
| Trades on | CBOE |
| Expense ratio (Fees) | 0.21% |
| Custodian | Coinbase Custody |
| Administered by | ARK Invest in partnership with 21Shares |
6. ProShares Bitcoin Strategy ETF (BITO)
The ProShares Bitcoin Strategy ETF was the first Bitcoin-linked ETF to be approved in the United States, being approved and launched on October 19, 2021.
Unlike the spot Bitcoin ETFs above, the ProShares Bitcoin Strategy ETF invests in Bitcoin futures contracts, providing regulated exposure to Bitcoin without holding the digital asset directly. It trades on the NYSE under the ticker BITO, with an expense ratio of 0.95%.
| Ticker | BITO |
| Trades on | NYSE |
| Expense ratio (Fees) | 0.95% |
| Custodian | None (Futures product) |
| Administered by | ProShares |
Why Bitcoin ETFs?
Bitcoin ETFs provide investors with a regulated and straightforward way to gain exposure to Bitcoin, without needing to directly buy, store, and secure the cryptocurrency themselves.
This is especially important for large financial institutions, hedge funds, pension funds, and diversified portfolio managers.
Here are some key benefits that Bitcoin ETFs provide:
- Regulatory Compliance: Bitcoin ETFs follow strict regulations, offering a safer investment than directly holding Bitcoin.
- Ease of Access: ETFs trade on regular stock exchanges, making buying through standard brokerage accounts easy. This avoids the complexity of crypto-only exchanges.
- Third-Party Custody: A trusted and qualified custodian holds the underlying Bitcoin on behalf of the ETF manager. Investors do not need to worry about storing coins on their own.
- Institutional Demand: Bitcoin ETFs meet the needs of institutional investors, fitting within traditional investment structures and regulations.
- Diversification: Bitcoin ETFs enable investors to add Bitcoin to their portfolios without directly holding it, aiding in diversification and risk management.
ETFs vs Buying Spot Bitcoin
Bitcoin ETFs offer a simpler, more regulated way for traditional investors to get exposure to Bitcoin through their brokerage accounts. This comes without needing to handle security and storage, but also comes with management and trading fees.
In contrast, buying Bitcoin directly allows investors to own and control their Bitcoin, move it between wallets, and trade anytime with potentially lower fees. However, this route requires more knowledge about cryptocurrencies and wallets.
| Feature | Bitcoin ETF | Buying Spot Bitcoin |
| Accessibility | Via traditional brokerage accounts | Via crypto exchange |
| What do Investors Own? | Shares of the ETF, not Bitcoin directly | Actual Bitcoin |
| Custody and Security | Held by a professional custodian | Self-custody |
| Fees | Management fee (expense ratio) and trading fees | Exchange fees |
| Market Hours | Market hours only | 24/7 |
| Ease of Use | Simple for traditional investors | Requires crypto and crypto wallet knowledge |
| Minimum Investment Amount | Dependent on ETF broker | No minimum investment |
| Withdrawable BTC? | No | Yes |
ETF Risks and Considerations
Although ETFs operate in a more traditionally regulated environment, they come with their own risks. These may include:
- Management Fees: Bitcoin ETFs come with management fees that can reduce overall returns compared to holding Bitcoin directly.
- Trading Hours: ETFs are limited to stock exchange trading hours, while Bitcoin itself trades 24/7. This can lead to missing large market moves.
- Custody: An ETF’s underlying Bitcoin is held by a custodian, rather than by yourself. Although this is usually a highly trusted third party, you’re not the one in control of your coins.
- Non-Redeemable: In most cases, Bitcoin ETFs cannot be redeemed for the underlying Bitcoin, so you can’t move the actual coins.
- Market Volatility: The formal environment doesn’t change the fact that Bitcoin’s price can be very volatile. This volatility will be reflected in the value of the ETF.
FAQ
A Bitcoin ETF offers a more convenient and regulated way to invest in Bitcoin without the complexities of buying and storing it yourself.
Yes, the risks of Bitcoin ETFs include limited trading hours, third-party custody, management fees, regulations, and inability to redeem the underlying Bitcoin.
Yes, increased demand from investors buying Bitcoin ETFs can lead to higher Bitcoin prices. Spot Bitcoin ETF purchases are backed by actual purchases of Bitcoin on the open market.
You can buy shares of a Bitcoin ETF through a regular brokerage account, just as you would with any other stock or ETF.
The Bitwise Bitcoin ETF (BITB) has the lowest expense ratio out of the most popular spot Bitcoin ETFs, at just 0.20%.
Spot Bitcoin ETFs hold actual Bitcoin and follow its current market price, giving investors exposure without needing to own it directly.
Bitcoin Futures ETFs, on the other hand, invest in contracts predicting Bitcoin’s future price and come with extra risks like the costs of renewing these contracts.
