2 Top Bitcoin ETFs You Can Buy Right Now and 1 to Avoid at All Costs

Many ETFs provide some level of diversification compared to owning an individual stock. ETFs are pooled investments, like a mutual fund, but that trade on stock exchanges like a stock or bond and that track a specific index, sector or asset class such as gold. Unlike traditional mutual funds, they can be bought and sold throughout the day.

Should you buy stock in iShares Bitcoin Trust right now?

A spot bitcoin Exchange-Traded Fund (ETF) is a financial product that allows you to gain exposure to bitcoin without having to own the cryptocurrency directly. ETPs, however, are not subject to this Act, and as such, generally don’t have diversified holdings like traditional ETFs. And how are they different from spot trading bitcoin and other crypto assets? Let’s explore the key differences and what to consider from an investing standpoint. For much of 2023, crypto enthusiasts hoped for the approval of a spot bitcoin exchange-traded product (ETP).

Fidelity Viewpoints®

This can be a solo or joint brokerage account, or even an IRA – the same as you’d use for stocks or mutual funds. The ETF’s value is tied to the current market price of bitcoin, providing a straightforward way to invest in bitcoin through traditional stock b2broker to integrate centroid technology to its turnkey brokerage solutions markets. When you buy shares of a spot Bitcoin ETF, the fund purchases Bitcoin on your behalf and stores it securely. The ETF’s value reflects the current market price of Bitcoin, minus any fees. Buying spot bitcoin ETPs, however, operates much like buying an index fund or sector ETF.

To be clear, this isn’t a fee you have to directly pay, but it will be reflected in the fund’s performance over time. Other pure-play Bitcoin ETFs have expense ratios as high as 1.5% (or even more), and this can have a big impact over a multi-year holding period. Setting up wallets, remembering passwords, and worrying about scams or hacks can make the process intimidating. To solve this problem, financial markets have introduced a product called a crypto exchange-traded fund or crypto ETF.

FBTC vs. Other Bitcoin Investments

While spot ETFs provide direct exposure to actual Bitcoin, futures ETFs involve rolling over futures contracts, introducing complexities and additional costs. Spot ETFs track the price of Bitcoin in real-time, whereas futures ETFs track the price of futures contracts, which might differ from the spot price due to market speculation and futures market dynamics. As the name suggests, ETFs are available on traditional regulated exchanges, including the Nasdaq and the New York Stock Exchange. You can also buy and sell shares of spot Bitcoin ETFs on just about any online brokerage platform that offers traditional assets like stocks and bonds. As mentioned above, setting up a spot Bitcoin ETF involves buying and holding BTC.

• The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
• This ensures that the ETF’s price closely follows the market value of bitcoin.
• Europe holds 8.8% of the global market share for spot Bitcoin ETFs, with a collective asset size of $3.67 billion.

Spot bitcoin ETFs vs. buying bitcoin: What’s the difference?

FBTC eliminates the need for wallet management and offers a degree of security and oversight. Spot bitcoin ETFs track bitcoin prices by directly holding bitcoin and valuing it according to a market-based index. Fidelity’s FBTC ETF uses the Fidelity Bitcoin Reference Rate, which aggregates bitcoin price data from multiple exchanges. This data is processed using a VWMP method, ensuring that the ETF reflects real-time bitcoin prices with accuracy.

• This means that the price of a futures contract is dependent on the sentiments of futures contract holders and can be higher or lower than the actual price of Bitcoin.
• Investors can access spot crypto ETFs through conventional brokerage firms, making it easier for investors to participate in the market and creating larger trading volumes and more efficient, more liquid markets.
• Once your account is set up, you can buy and sell shares of the ETF through your brokerage platform, just like you would with any other stock or ETF.
• And as demand for bitcoin rises, so too will its price, likely spurring even more investment and interest in crypto, experts say.

Unlike futures-based bitcoin ETFs, which derive their value from contracts predicting the future price of bitcoin, spot bitcoin ETFs aim to how to buy emc2 reflect the real-time price of bitcoin. Investors in a spot ETF gain exposure to bitcoin’s market performance, but without the complexities of wallet management, private key security or direct custody. A standard exchange-traded index fund (ETF) is made up of a wide selection of securities that have been specifically chosen to meet the objective of the investment fund.

While the short-term costs of trading ETFs may be lower, the expense ratios over time could make owning it more costly. While there are ways for ETFs and investors to recover their assets in the event of a Coinbase bankruptcy, it may not be immediate or automatic. Consider custodianship risks when looking for a spot Bitcoin ETF to avoid these risks. Like spot Bitcoin ETFs, spot Ethereum ETFs track the real-time value of Ether without having to buy it. The first spot Ethereum ETFs were approved in the US in May 2024, just a few months following the approval of spot Bitcoin ETFs.

ARK 21 Shares Bitcoin ETF was the first to recently file and the final decision deadline is January 10, 2024, but it’s possible that the SEC will make a decision at one of the earlier deadlines. Analytics Insight is an award-winning tech news publication that delivers in-depth insights into the major technology trends that impact the markets. The content produced on this website is for educational purposes only and does not constitute investment advice or recommendation. Always conduct your own research or check with certified experts before investing, and be prepared for potential losses. Opinions expressed herein are those of the authors and not necessarily those of Analytics Insight, or any of its affiliates, officers or directors.

Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Nevertheless, in crypto peer-to-peer lending general, the ETPs remove significant hurdles for investors who want exposure to bitcoin. Most spot Bitcoin ETFs rely on a third-party custodian to actually store the Bitcoin they hold — much like how spot gold ETFs often keep their physical gold holdings in the vault of a third-party custodian. Here’s a quick look at the five largest and most heavily traded spot Bitcoin ETFs as of 2025.

Yes, FBTC can be held in tax-advantaged accounts like IRAs, providing a way to include bitcoin exposure in retirement planning. Yes, FBTC is available to any investor with access to a brokerage account that supports the Cboe BZX Exchange. After purchasing shares of FBTC, it’s essential to regularly monitor your investment. Bitcoin’s price volatility means the value of the ETF can fluctuate significantly, so staying informed about market conditions and any relevant news is crucial.