Hot Features
Premium
Trade smarter, not harder: Unleash your inner pro with our toolkit and live discussions.
The long-awaited approval, often deemed the ‘holy grail’ for institutional adoption, has its roots in the Winklevoss brothers’ 2013 application. After a rejection, it took eight years for the arrival of Bitcoin futures ETFs in October 2021, and now, with SEC approval, a whopping eleven spot Bitcoin ETFs are set to launch. Discover the significance of spot Bitcoin ETFs and explore the top picks among the current providers in this insightful blog post.
SPOT Bitcoin ETFs:
Grayscale Bitcoin Trust (GBTC)
Established in 2013, GBTC stands as one of the pioneer securities dedicated to BTC investment. Initially exclusive to accredited investors, it transitioned from a private, open-ended trust to a public entity on over-the-counter markets in 2015. Despite being the world’s largest bitcoin spot ETF, boasting a substantial AUM of $26.9 billion and holding nearly 3% of the total bitcoin supply (617k BTC), GBTC has faced scrutiny for its expense ratio, even after reducing it from 2.00% to 1.50% upon its shift to a spot ETF. Consideration of alternative options is advised due to the perceived high cost.
Bitwise Bitcoin ETF (BITB)
In sharp contrast to funds like GBTC, Bitwise’s newly launched ETF, BITB, swiftly debuted on January 11, a mere 24 hours after SEC approval. This bitcoin ETF joins Bitwise’s diverse portfolio of 18 crypto investment products, including the world’s largest crypto index fund.
BITB presents an enticing proposition for investors. With an AUM of $242.9 million, Bitwise positions it as a cost-effective option, boasting a mere 0.20% expense ratio. Additionally, the fund offers a 100% fee waiver for the initial six months on the first $1 billion in assets, enhancing its appeal further.
iShares Bitcoin Trust (IBIT)
iShares has held a prominent position in the ETF space since its establishment in 1996. In 2009, the brand underwent acquisition by BlackRock from Barclays. The IBIT, iShares’ inaugural crypto ETF, was introduced on January 5, 2024, shortly preceding the SEC approval.
The IBIT fund encompasses BTC holdings valued at $497.9 million, with 4.6 million outstanding shares available. Priced competitively, the fund boasts an attractive expense ratio of merely 0.25%. In an effort to attract investors, BlackRock is implementing a 50% fee waiver for the initial 12 months on the first $5 billion in assets.
Valkyrie Bitcoin Fund (BRRR)
CoinShares secured ownership of the BRRR fund, previously under Valkyrie Investments, following SEC approval on January 12, 2024. This acquisition injects $112 million in assets into CoinShares’ already substantial $4.5 billion portfolio. In addition to BRRR, CoinShares also gained control of Valkyrie’s other crypto ETFs.
Aligning with the trend among Bitcoin ETFs in January 2024, BRRR introduces significant fee discounts to entice buyers, including a 3-month waiver in sponsor fees. Post this period, the fee settles at 0.25%. Notably, Coinbase serves as the designated bitcoin custodian for BRRR.
ARK 21Shares Bitcoin ETF (ARKB)
In a pioneering move in 2015, ARK Invest, led by Cathie Wood, became the first retail fund manager to venture into bitcoin. Despite an unsuccessful attempt in 2021 with Switzerland-based 21Shares for a spot bitcoin ETF, ARK achieved success with its second application filed in April 2023. ARKB, launched on January 10, 2024, secured a spot among the first funds to receive SEC approval.
Available on the Cboe BZX exchange, ARKB holds bitcoin assets valued at $75 million. The fund strategically set its management fees at a low 0.21%, coupled with an enticing 100% fee waiver for the initial six months or until assets reach $1 billion, whichever comes first.
What Bitcoin ETF Is About
Whether it’s gold, oil, an index, or bitcoin, an Exchange-Traded Fund (ETF) is like a stock that mirrors the price movements of these assets. Think of a bitcoin ETF as a fund keeping tabs on the value of bitcoin.
ETFs operate on exchanges, just like stocks. This means that anyone, be it retail or institutional investors, can buy or sell ETF holdings to other market participants through the stock exchange.
What makes ETFs appealing is their cost-effectiveness compared to mutual funds. As passive index-tracking funds, ETFs provide an affordable route for investors, including private ones, to enter diverse markets and specialized sectors that might otherwise be challenging to access.
Buying Bitcoin ETFs vs. Buying Bitcoin
A bitcoin ETF, like the one proposed by the Winklevoss twins in 2013, essentially allows you to indirectly invest in bitcoin without the complexities of directly holding the digital currency. The ETF mirrors the price of bitcoin, making it a regulated investment option compared to the unregulated nature of crypto assets.
Key Advantages
1. Convenience: No need to navigate the intricacies of storing bitcoin securely. Buying a bitcoin ETF streamlines the investment process, eliminating the need for wallets or dealing with crypto exchanges.
2. Regulation: Bitcoin’s decentralized and unregulated nature can pose challenges. ETFs, on the other hand, trade under strict institutional oversight on mainstream exchanges, offering legal and tax efficiency.
3. Risk Diversification: Bitcoin’s high volatility brings inherent risk. ETFs can mitigate this by combining bitcoin with other assets like altcoins, traditional commodities, and stocks, providing a diversified approach to managing risk in the dynamic crypto markets.
Investment Insight
The advent of bitcoin spot ETFs in the US marks a significant milestone, expanding the horizon for cryptocurrencies. This move not only aligns with growing mainstream acceptance but also offers investors innovative and high-yield options for portfolio diversification. While bitcoin spot ETFs are already established in the EU and Canada, their introduction in the US may usher in a substantial influx of institutional funds into the crypto space.
The SEC’s 2024 decision marks the realization of the ultimate dream – a spot bitcoin ETF. This breakthrough could pave the way for the emergence of other crypto spot ETFs, with Ethereum emerging as a likely contender. Overall, this development signifies a crucial step towards legitimizing cryptocurrencies on a broader scale.
Learn from market wizards: Books to take your trading to the next level.
They give 30000 USDT in rewards