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Even for average investors who wish to enter into the cryptocurrency business, Bitcoin is readily available as spot bitcoin ETFs after recent approval from the SEC . For both investors and traders, spot bitcoin ETFs can be bought just like any other ETF or security. Spot bitcoin ETFs are now available on many traditional platforms that offer stock and options trading, retirement planning, advisory services, and robo-investing.
Tradeable on conventional exchanges such as the New York Stock Exchange and Nasdaq, these ETFs enable investors to benefit from the leverage of investing in bitcoin technology without having to hold it or understand how crypto platforms work. But, of course, one should know how such ETFs function and also its risks.
Customers will be able to trade the new spot bitcoin ETFs on most online brokerage platforms and robo-advisors. The new ETFs will also be eligible for use with retirement accounts, including Bitcoin IRAs, traditional IRAs, and Roth IRA accounts and solo 401(k) plans.
While picking spot bitcoin ETFs, the investors haven't overlooked the kind of fees involved. For now, many issuers are offering fee waivers in order for them to encourage investments. For example, Bitwise has now dived into waiving some fees, including that of the sponsor for the first six months, while Ark Funds is waiving all its fees for now.
Note it is temporary, and such platforms providing a fee waiver for investments in bitcoin ETFs are only competing with each other for investors who are also interested in such an investment.
Remember the management fees as well. The management fee of 1.50%, like other management fees that are high as that of Grayscale, eats up your ETF profit. Normally, investors mostly aim funds with a yearly management fee between 0.2% and 0.5%.
Now, let us look at the best platforms to buy the new spot Bitcoin ETFs in 2024.
The Fidelity Wise Origin Bitcoin Fund is a spot Bitcoin ETF from asset management heavyweight Fidelity, also having a competitive 0.25% expense ratio, waived to 0% until July 31, 2024.
There's a solid reason we are saying yes to Fidelity, rather than to BlackRock's IBIT Bitcoin exchange because of the asset management's lead in all other mainstream management in Bitcoin, among other cryptocurrencies.
Fidelity began its work on Bitcoin mining 2014 when every other significant going was turning a blind eye to the then-nascent cryptocurrency. In 2018, Fidelity set up a subsidiary for its digital asset efforts. This subsidiary serves as the custodian of the BTC that the Fidelity Wise Origin Bitcoin Fund holds.
The iShares Bitcoin Trust Registered is BlackRock's foray into the spot Bitcoin ETF, the world's largest asset management company. The custodian of Bitcoin for IBIT ETF is Coinbase Custody, representing the crypto custodian arm of one of the top cryptocurrency exchanges out there, Coinbase.
If we disregard Grayscale's GBTC, which had a mammoth head start regarding assets under management, the iShares Bitcoin Trust by BlackRock has been the most successful up to now in regard to Bitcoin ETFs.
For the first 12 months the IBIT ETF is available, BlackRock is reducing the fund's fee to 0.12% for the first $5 billion in assets.
The fund charged its usual 0.25% fee on assets over $5 billion, but all investors are paying the same fee, irrespective of when they bought. Since the real fee is a weighted average of the 0.12% paid on the first $5 billion and 0.25% on everything else, it will be less than 0.25%. For the years subsequent to the first 12 months of the fund's working, the fund fees will be reset to 0.25%.
The VanEck Bitcoin Trust, offered by VanEck, is a spot Bitcoin ETF. The company has been relentlessly trying to get its spot Bitcoin ETF approved in the United States for many years. The HODL ETF has Gemini as its Bitcoin custodian and an expense ratio of 0.25%, which is quite competitive.
The HODL ETF has kind of been a flop so far with just an AUM of $175 million. However, it's an interesting choice if one wants to support the Bitcoin ecosystem, since VanEck has pledged to give 5% of the profits generated by the HODL ETF to Brink, which provides funding and other resources to Bitcoin developers.
The Ark 21Shares Bitcoin ETF (ARKB) is a physical spot Bitcoin ETF offered through a partnership of ARK Invest and 21Shares—an experienced actor in the field of cryptocurrency-based exchange traded products and funds.
At 0.21%, the ARKB ETF has the lowest expense ratio of any Bitcoin ETF currently available on the market, if not a few temporary waivers like those proposed by BlackRock and Fidelity in their spot Bitcoin ETFs. Likely this is why, it's now among the largest Bitcoin ETFs with $1.1 billion in AUM.
The Invesco Galaxy Bitcoin ETF (BTCO) is a product developed by the collaboration through the leading ETF provider, ETF, and the digital asset company, Galaxy. The fund makes use of Galaxy's bitcoin trade-execution capacity during the creation and redemption of shares in the BTCO ETF.
This leaves the ETF with an expense ratio of 0.39%, which is top end among the most efficient rivals. Since that time, BTCO has reduced its fees to 0.25%, and the whole fee is waived for the first six months of the fund.
Currently, the BTCO ETF is on the small side in terms of assets under management, sitting at $341 million. Notwithstanding it is still a sound option, particularly given the recent reductions in fees.
In conclusion, the new SEC approval for spot bitcoin ETFs has made it easier for ordinary investors to invest in Bitcoin. These ETFs may be exchanged on conventional platforms and provide the leveraging to invest in Bitcoins without necessarily having to hold them.
While purchasing spot bitcoin ETFs, an investor should look into the fees included and target funds with annual management fees ranging between 0.2% to 0.5%. The top ETFs for that include the Fidelity Wise Origin Bitcoin Fund, with the ticker FBTC, iShares Bitcoin Trust Registered, IBIT, VanEck Bitcoin Trust, HODL, Ark 21Shares Bitcoin ETF, ARKB, and Invesco Galaxy Bitcoin ETF, BTCO.
