:max_bytes(150000):strip_icc()/INV_ForeignCurrencyCD_GettyImages-1318116974-1a9f04add11441c1b2c54b4a85ddf947.jpg "Where to buy Spot Bitcoin ETFs in 2024")
Following the SEC’s recent approval of spot bitcoin ETFs, investing in bitcoin is now more accessible to average investors eager to enter the cryptocurrency space. For investors and traders, buying a spot bitcoin ETF is like buying shares in any other ETF or security. Spot bitcoin ETFs are available on a variety of traditional platforms that offer popular services such as stock and options trading, retirement planning, advisory services and automated investing. Tradable on traditional exchanges such as the New York Stock Exchange and NASDAQ, these ETFs allow investors to enjoy the leverage of investing in bitcoin without the need to hold it or understand how crypto platforms work. Before investing, you should be aware of how these ETFs work and the risks involved.
Where to buy Spot Bitcoin ETFs
Spot bitcoin ETFs are now available to trade on various online brokerage and robo-advisor platforms. These new ETFs are also eligible for use in many retirement accounts, such as Bitcoin IRAs, traditional IRAs and Roth IRA accounts, and solo 401(k) plans.
When choosing spot bitcoin ETFs, it is critical for investors to analyze the fees involved. For now, many issuers offer fee waivers to encourage investments. For example, Bitwise has decided to waive some fees, including the sponsor’s fee for the first six months, while Ark Funds is waiving all of its fees for the time being. It is important to note that these platforms that offer fee waivers for bitcoin ETFs are competing for investors, and these fee waivers are temporary.
Another thing to consider is the management fees. High management fees, such as the one charged by Grayscale (1.50%), can cut into your ETF profits. Investors should aim for funds with annual management fees between 0.2% and 0.5%.
Compare platforms for investing in Spot Bitcoin ETFs
Self Directed Broker Account Minimum Available Crypto Assets Fidelity $0 Coins, ETFs Robinhood $0 Coins, ETFs Charles Schwab $0 ETFs E*TRADE $0 ETFs Interactive Brokers $0 Coins, ETFs eToro $10 for Stocks and ETFs, $200 for ETFTrader Coins, $200 for CopyTrader Coins, , ETFs Lightspeed $10,000 (Web & Mobile), $25,000 (Software) Coins, ETFs Robo-Advisors Account Minimum Available Crypto Assets Sofi Automated Investing $1 ETFs
Steps to Invest in Spot Bitcoin ETFs
Investing in bitcoin ETFs requires a suitable account like the ones listed above, most of which you can open in 30 minutes or less. Creating an account is easy and can typically be done online.
Open a brokerage account: Choose a company that offers spot bitcoin ETFs and open an online brokerage account. Fund the account: Many brokerage platforms allow you to fund your account from other brokerage platforms or a regular bank account. Make sure you fund the account with enough money to cover the cost of your ETF shares, additional fees and commissions. Research available bitcoin ETFs: There are currently 11 bitcoin ETFs approved by the SEC. During your research, look for ETFs with high trading volume and high assets under management (AUM). Also look at what other assets make up the ETF and see if the issuer behind it is trustworthy. Choose preferred bitcoin ETFs: Many brokers give you at least two or three options, displaying the difference in fees for each offering. Choose a bitcoin ETF that matches your budget and investment goals. Place an order: Place a buy order for your chosen bitcoin ETF, as you would for stocks. You can choose between a market order, which buys the ETF in minutes, or a limit order, which will be executed at your predetermined price.
Monitor your investments regularly: Keep track of your investment, observe bitcoin charts and watch out for any bitcoin-related news, as this can often affect the volatility of your spot bitcoin ETF.
Advantages of Trading Spot Bitcoin ETFs
The introduction of spot bitcoin ETFs meets a need for individuals and institutions to invest in bitcoin in a regulated, convenient way without the need to hold it.
These are the benefits investors can enjoy from spot bitcoin ETFs.
Convenience: Since spot bitcoin ETFs are tradable on traditional exchanges, investors can easily explore them. There is no need to sign up to crypto exchanges or worry about wallet security and other custody issues. Liquidity: Bitcoin ETFs bring liquidity to bitcoin, which can be beneficial for investors. The companies that issue spot bitcoin ETF provide the liquidity needed for trading and implement smaller spreads, which encourage monetary inflows. Regulatory oversight: Spot bitcoin ETFs are a more regulated asset class than cryptocurrencies. This regulatory oversight provides a greater protective barrier for spot bitcoin ETF investors than is usually obtainable on many crypto exchanges where regulation is not far-reaching. Tax Implications: Tax laws on bitcoin ETFs will vary from country to country. In many countries they will be treated like other assets. For example, you may pay less in taxes holding a spotbitcoin ETF than you would typically spend on cryptocurrency, since you’ll likely hold the ETF much longer. The IRS tax laws on capital gains and losses indicate that you pay less for properties, including bitcoin spot ETFs, when you hold them for more than a year.
Disadvantages of Trading Spot Bitcoin ETFs
Investing in spot bitcoin ETFs involves certain risks. Bitcoin ETFs are still subject to market manipulation common with digital assets (especially cryptocurrencies).
Other risks to consider include:
Crypto Volatility: In recent years, the cryptocurrency market has experienced increased volatility when measured against the US stock market. Holding a bitcoin ETF does not insulate you from this volatility. News such as the upcoming 2024 bitcoin halving and fear, uncertainty and doubt (FUD) can cause fluctuations in the value of your investment over short periods of time. On January 10, 2024, the eve of the SEC’s mock bitcoin ETF approval, a fake tweet by the commission caused Bitcoin to rise from $46,800 to $47,860 in minutes before crashing to $45,400 when it became clear that the SEC’s X account was compromised.
Regulatory uncertainty: Spot bitcoin ETFs are regulated investment vehicles that are subject to government bodies’ control and scrutiny. The SEC is still hesitant about crypto investing and may change its stance on this asset class. New regulations may also arise that limit your investments in these ETFs. Security risks: The underlying bitcoin in your ETF is in the custody of at least one counterparty. If the counterparty is hacked, it can adversely affect your investment’s security. For example, BlackRock’s bitcoin ETF, iShares Bitcoin Trust (IBIT), is issued by BlackRock, but Coinbase holds the bitcoins. If either BlackRock or Coinbase experience a security breach, your bitcoin holdings could be at risk.
Alternatives to Spot Bitcoin ETFs
Spot bitcoin ETFs are a new asset class. While this is exciting, there are other ways to invest for anyone looking to get into bitcoin. Bitcoin ETFs are subject to much more volatility than regular ETFs and can be caught in regulatory crossfires. Here are ways to invest in bitcoin directly or indirectly without buying a spot bitcoin ETF.
Buy bitcoin directly: Buying bitcoin directly is the simplest way to gain crypto ownership, which a bitcoin ETF doesn’t give you. However, to buy bitcoin directly, you need to understand how bitcoin works, decide what kind of custody to use for your assets and choose an exchange or wallet to make a purchase. Owning bitcoin gives you more flexibility of use, but opens you up to more government control. Invest in cryptocurrency company shares: Another way to gain exposure to cryptocurrency is by buying shares in cryptocurrency companies. Popular companies include Riot, Coinbase, and MicroStrategy. Crypto-linked stocks usually correlate with market movements and can provide some volatility for investors.
Buy cryptocurrency company or index-based ETFs: Alternatively, investors can consider investing in legacy ETFs. Bitcoin ETFs such as the Greyscale Bitcoin Trust (GBTC) have been available for trading since 2013. Such ETFs have a longer track record and are more suitable for investors who need something with proven performance.
The Bottom Line
Spot bitcoin ETFs are a new class of investments that allow investors to invest in bitcoin at their convenience with much less risk. They are available through retirement accounts, and on automated investment platforms (robo-advisors), and online brokers during open market hours, but not on crypto exchanges. To get started with spot bitcoin ETFs, open and fund an account with a brokerage platform, monitor the ETF continuously and be aware of fees and commissions.
What is Bitcoin?
Bitcoin is the first virtual, decentralized cryptocurrency traded over a peer-to-peer network. Transactions on this network are recorded on the blockchain, a distributed ledger, to promote transparency and reduce intermediaries. Bitcoin is used for payments, investments and speculation, and was created by a pseudonymous entity known as Satoshi Nakamoto in January 2009. The smallest unit of a bitcoin is a satoshi (100 millionths of a bitcoin).
What is a Spot Bitcoin ETF?
A spotbitcoin ETF invests directly in bitcoins as the underlying asset. This differs from bitcoin futures ETFs, which are based on derivative contracts of their prices. Spot bitcoin ETFs consist of underlying bitcoins that are securely stored in a vault by the company offering the ETFs.
What does BTC mean?
BTC is the ticker symbol for Bitcoin, and this is how the cryptocurrency is abbreviated and represented in the financial markets. Investors can search the price of Bitcoin and find Bitcoin-related news using the ticker symbol BTC with their preferred platform or investment research site.
Should You Buy Spot Bitcoin Now?
Buying a spotbitcoin ETF is a great idea for anyone who wants exposure to cryptocurrencies without the hassle of owning and storing them. Like any investment, the potential for bitcoin to produce positive returns varies depending on the time period considered. Bitcoin’s price is volatile, affected by market sentiment and external factors. If you believe in its long-term potential as a decentralized digital currency and store of value, this may be an opportune time to buy, given its historical growth. However, be wary of short-term fluctuations, as the volatility can be unsettling for risk-averse investors.
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