 How to buy Bitcoin ETFs 
2025-01-26
Category: None

Key takeawaysBitcoin ETFs expose novice and experienced investors to Bitcoin’s price movements without owning the cryptocurrency directly, offering simplicity and convenience.Spot ETFs directly track Bitcoin’s price, offering transparency and lower costs, while futures ETFs involve contracts, higher expenses and tracking errors.Bitcoin ETFs offer accessibility, liquidity, professional management, regulatory safeguards, diversification and potential growth as the crypto market matures.Bitcoin ETFs carry risks such as high expense ratios, market volatility and the possibility of large losses. Custodianship risks also exist if third-party custodians face financial trouble.If the rise of Bitcoin captivates you and sparks an interest in investing to earn profits, but the complexity of the crypto ecosystem holds you back, Bitcoin exchange-traded funds (ETFs) could be an alternative solution. Bitcoin ETFs provide a simple way to obtain exposure to Bitcoin without physically owning it. These funds monitor Bitcoin’s BTCUSD performance, combining the advantages of traditional stock market investments with the promise of digital assets. Whether you are an experienced investor or a crypto novice, Bitcoin ETFs are a financial product to explore.This article will help you navigate the world of Bitcoin ETFs. You will learn what these funds are, how to make smart investing decisions and the steps to buy these ETFs.
If the rise of Bitcoin captivates you and sparks an interest in investing to earn profits, but the complexity of the crypto ecosystem holds you back, Bitcoin exchange-traded funds (ETFs) could be an alternative solution. Bitcoin ETFs provide a simple way to obtain exposure to Bitcoin without physically owning it. 
These funds monitor Bitcoin’s BTCUSD performance, combining the advantages of traditional stock market investments with the promise of digital assets. Whether you are an experienced investor or a crypto novice, Bitcoin ETFs are a financial product to explore.
This article will help you navigate the world of Bitcoin ETFs. You will learn what these funds are, how to make smart investing decisions and the steps to buy these ETFs.
What are Bitcoin ETFs
Bitcoin ETFs are investment funds that trade on stock exchanges and track the price of Bitcoin. These funds expose investors to Bitcoin’s price swings without directly owning or managing the cryptocurrency. Thanks to ETFs, Bitcoin investment becomes easily accessible as you can invest through established financial platforms.
You can invest in two types of Bitcoin ETFs — spot and futures. 

How to choose Bitcoin ETFs
When assessing Bitcoin ETFs, begin by exploring both spot ETFs and futures ETFs. You need to consider the following factors:
Did you know? On Jan. 17, 2025, iShares Bitcoin Trust (IBIT) of BlackRock was a Bitcoin ETF with the largest market share of $57.6 billion. Fidelity Wise Origin Bitcoin Fund (FBTC) stood second with $21.2 billion.
What are the various ways to buy Bitcoin ETFs
Spot Bitcoin ETFs are now accessible on various online brokerage and robo-adviser platforms. You can include these ETFs in diverse retirement accounts, such as Bitcoin IRAs, solo 401(k) plans and traditional and Roth IRAs.
In 2025, various issuers are offering temporary fee waivers to attract investors. For instance, the VanEck Bitcoin ETF (HODL) will waive sponsor fees until March 31, 2025, or its Assets Under Management (AUM) reaches $1.5 billion. These fee waivers are a competitive tactic among platforms and may not be permanent.
Investors can purchase Bitcoin ETFs in several ways, each with unique benefits and levels of convenience:

How to buy Bitcoin ETFs in five steps
To buy Bitcoin ETFs, open a brokerage account, fund it, research available ETFs, place an order and monitor your investments. 
For illustration, this example uses a brokerage account to demonstrate how to buy Bitcoin ETFs. Key considerations include choosing the right platform, verifying your identity and evaluating ETFs based on expense ratios and risk tolerance.
Step 1: Open a brokerage account
Step 2: Fund your account
Step 3: Research Bitcoin ETFs on offer
Step 4: Place an order
Step 5: Monitor your investments
An overview of Bitcoin ETFs’ global regulatory status
Regulators oversee Bitcoin ETFs, ensuring they comply with laws and protect investors. This oversight helps prevent fraud and manipulation, making Bitcoin investments safer and more reliable.
On Jan. 10, 2024, the US Securities and Exchange Commission (SEC) approved the spot Bitcoin ETFs of 11 issuers for their listing on the New York Stock Exchange (NYSE), National Association of Security Dealers Automated Quotations (Nasdaq), and the Chicago Board Options Exchange (CBOE). Bitcoin futures ETFs were already listed on the CBOE and other (Commodity Futures Trading Commission) CFTC-regulated exchanges since 2021.
The SEC approved the 19b-4 applications from ARK 21Shares, Invesco Galaxy, Valkyrie, BlackRock, Grayscale, Bitwise, VanEck, WisdomTree, Fidelity, Hashdex and Franklin Templeton.
In February 2021, Canada became the first country to approve Bitcoin ETFs. Spot Bitcoin ETFs are available in Canada, Germany, Australia, Switzerland, Brazil and Hong Kong. In the UK, only professional investors can invest in Bitcoin ETFs.
How do Bitcoin ETFs work
Bitcoin ETFs follow Bitcoin’s price movements, giving investors exposure to the performance of the underlying cryptocurrency without actually holding it. Bitcoin ETFs provide investors with a simple and familiar approach to participate in Bitcoin markets, combining the typical ETF structure with the potential rewards of the crypto ecosystem.
These ETFs are listed on stock exchanges, making their purchase more convenient for investors familiar with traditional stock markets. This reduces the complexity of trading cryptocurrencies, such as creating wallets, completing KYC processes and saving seed phrases.
Bitcoin ETFs reflect the underlying volatility of the Bitcoin market. Because Bitcoin’s price fluctuates significantly, ETFs may trade at a premium or discount to their purchase price. Various factors, such as demand, investor mood and market liquidity play roles in determining the price. 
Did you know? The SEC’s first rejection of spot Bitcoin ETFs came in 2017 when it declined an application filed by Cameron and Tyler Winklevoss for a Bitcoin ETF product.
Why invest in Bitcoin ETFs
On Jan. 11, 2025, after one year of the SEC approval, the spot Bitcoin ETFs had collectively passed $100 billion in assets under management (AUM), suggesting investor interest. There are several reasons for you to invest in Bitcoin ETFs:
Risks of investing in Bitcoin ETFs
While Bitcoin ETFs offer several benefits, they have their share of risks as well:
Did you know? Europe’s inaugural spot Bitcoin ETF, the Jacobi FT Wilshire Bitcoin ETF (BCOIN), went live on Euronext Amsterdam in August 2023. It is a green-friendly digital asset fund.
What happens if the Bitcoin custodian goes bankrupt
Issuers of Bitcoin ETFs store the underlying Bitcoin with third-party custodians such as Coinbase. It is similar to how spot gold ETFs often keep their physical gold holdings in the vault of a third-party custodian.
For now, Coinbase is the custodian of 10 (out of 12) spot Bitcoin ETFs. The Fidelity Wise Origin Bitcoin Fund (FBTC) utilizes Fidelity’s own custodial services, while the VanEck Bitcoin Trust (HODL) employs Gemini as its custodian.
Coinbase’s dominance in Bitcoin ETF custodianship has created concerns about risk. If Coinbase runs into severe financial trouble in the future, there will be doubts about whether the Bitcoin holdings will be safe. 
Custodial funds are typically held in legally segregated accounts and insured. This should safeguard the underlying Bitcoin from any potential financial collapse of a custodian. In a bankruptcy scenario, claims filed are addressed according to creditor priority.
Although unlikely, these scenarios highlight the need to consider custodianship risk when investing in Bitcoin ETFs. Always stay informed about the financial health of the custodian.