Bitcoin ETFs: A New Way to Invest in Bitcoin Without Actually Owning It! (2024)

FAQs

Do bitcoin ETFs actually own bitcoin? ›

Spot bitcoin ETFs hold actual bitcoin, while bitcoin futures ETFs do not. Spot ETFs are designed to hold an equivalent amount of the underlying asset that is represented by the ETF. This gives investors direct exposure to the spot price of bitcoin without having to purchase or store it themselves.

While investing in spot bitcoin ETFs could save you the time and costs of exchanging and securing Bitcoins yourself, these ETFs do charge management fees or expense ratios to cover operational costs, diminishing your returns over time.

The newly approved spot Bitcoin ETFs actually hold Bitcoin, in contrast with previously available products that invest in Bitcoin futures — contracts to buy or sell an asset at a specified price at a later date. The SEC had rejected spot Bitcoin ETFs for the last decade before finally approving them in January.

You can indirectly invest in crypto through funds and cryptocurrency-related stocks. Options include spot and futures-based crypto exchange-traded funds (ETFs).

However, investing in crypto ETFs is not without risk. The market is volatile, with prices fluctuating significantly in short periods. In addition, the regulatory landscape for crypto is evolving, and changes in regulations will undoubtedly impact the performance and availability of these ETFs.

Potential Market Inaccuracy: ETF prices might not reflect real-time fluctuations in the Bitcoin market. Unlike the crypto market, the traditional markets shut down, for a while - and this means a discrepancy might enter the prices until it corrects itself.

To ensure that the ETF shares stay in sync with bitcoin prices, market makers actively buy and sell, maintaining a balance between supply and demand. If the ETF's price starts deviating from the actual bitcoin price, market makers step in to restore equilibrium – earning a profit in the process.

He said that the current demand has been largely coming from retail investors, hedge funds and independent financial advisors. Bitwise's Bitcoin Fund (BITB) is one of four spot bitcoin ETFs that have crossed $1 billion in AUM since launch.

Are bitcoin ETFs safe? ›

Given that a bitcoin ETF is likely to be considered a speculative investment, Lozano said, “I would not recommend [it], unless [investors] had the ability to lose their investment or hold it for long periods of time.” If you do decide to invest in a bitcoin ETF, certified financial planner Trent D.

Investing in Bitcoin ETFs provides price exposure without actual BTC ownership, diverging from Bitcoin's principle of financial sovereignty. Conversely, blockchain and Bitcoin ETFs broaden access for those seeking involvement in digital assets and blockchain technology without the direct management complexities.

1 USD equals 0.000017 BTC. The current value of 1 United States Dollar is -1.21% against the exchange rate to BTC in the last 24 hours. ​ The current Bitcoin market cap is $1.18T. ​Create a free Kraken account to instantly convert USD to BTC today.

Affiliate Programs. Many cryptocurrency exchanges offer affiliate programs allowing you to earn commissions on referred customers. By referring customers to an exchange, you can earn a percentage of the transaction fees they pay. It is a great way to make money with crypto without having to do any trading or investing.

The dollar price of bitcoin fluctuates, which can make it seem like stocks. But, unlike stocks, you don't need to pay in order to get started with bitcoin. If you're cautious about risky investments, earning bitcoin might be the best option for beginners like you.

Bitcoin ETF investors merely get exposure to the price of Bitcoin. They never own the asset. ETF participants don't benefit from what Bitcoin stands for in the first place, which is to allow anyone to experience financial ownership and sovereignty.

Bitcoin ETFs now hold nearly 4% of all bitcoin — and they're not slowing down. Bitcoin has new buyers in the form of some of Wall Street's biggest players, and they're gathering some enormous treasuries. Bitcoin ETFs in the US are now sitting on almost 4% of all bitcoin in existence.

While the new spot bitcoin ETFs are designed to track the bitcoin price directly, they do not impact it in the same way. Buying a share of an ETF has no real-time impact on bitcoin's price through direct means. In fact, the bitcoin represented by the share is not even purchased until the next trading day.

BITO is the first U.S. exchange-traded fund that seeks to correspond to the performance of bitcoin. BITO invests in bitcoin futures and does not invest in bitcoin. There is no guarantee the fund will closely track bitcoin returns.