The US Securities and Exchange Commission (SEC) has approved 11 spot bitcoin exchange-traded funds (ETFs). This means you can now get exposure to bitcoin’s price through a traditional investment option and have greater access to invest in this asset through your retirement accounts.
The Winklevoss twins — owners of the Gemini crypto exchange — filed the first application for a spot bitcoin ETF in 2013. Now, 11 years later, spot bitcoin ETFs have been approved, and you can start purchasing shares when the market opens on Thursday, January 11, 2024.
So, should you buy in? Well, that depends on what you’re looking to accomplish with your investment.
There are a number of different types of bitcoin ETFs.
Some bitcoin ETFs hold bitcoin futures contracts while others hold the stocks of publicly-traded bitcoin mining companies. The most recent type of bitcoin ETF that has come to market is a spot bitcoin ETF.
A spot bitcoin ETF is a financial product that gives you price exposure to bitcoin through traditional financial brokerages.
Issuers of spot bitcoin ETFs — which include BlackRock, Fidelity and WisdomTree — buy, sell and hold bitcoin on behalf of their clients. The shares of the ETF that these institutions issue represent the value of the underlying bitcoin.
This type of product is good if you want exposure to bitcoin’s price without having to custody the asset on your own. It’s also good if you want to invest in bitcoin in your retirement accounts.
The whole process can take as little as 15 minutes. You’ll need a smartphone or computer, an internet connection, your passport or driving license and a means of payment.
You’ll likely want to buy the ETF that charges the lowest annual fee, which as of January 2024 is the Bitwise Bitcoin ETP Trust (BITB).
The following is the list of spot bitcoin ETFs as well as their stock tickers, ordered by yearly fees from lowest to highest:
| ETF issuer | Symbol | Initial fee | Long-term fee |
|---|---|---|---|
| Bitwise Bitcoin ETP Trust | BITB | 0% | 0.2% after first 6 months |
| ARK 21 Shares Bitcoin ETF | ARKB | 0% | 0.21% after first 6 months |
| Fidelity Wise Origin Bitcoin Trust | FBTC | 0% | 0.25% after July 2024 |
| WisdomTree Bitcoin Fund | BTCW | 0% | 0.3% after first 6 months |
| Invesco Galaxy Bitcoin ETF | BTCO | 0% | 0.39% after first 6 months |
| Valkyrie Bitcoin Fund | BRRR | 0% | 0.49% after first 3 months |
| BlackRock iShares Bitcoin Trust | IBIT | 0.21% | 0.25% after first 12 months |
| VanEck Bitcoin Trust | HODL | 0.25% | 0.25% |
| Franklin Bitcoin ETF | EZBC | 0.29% | 0.29% |
| Hashdex Bitcoin ETF | DEFI | 0.9% | 0.9% |
| Grayscale Bitcoin Trust | GBTC | 1.5% annual fee | 1.5% annual fee |
When determining whether to buy bitcoin (BTC) or shares of a spot bitcoin ETF, you first have to figure out the reason for your investment.
Are you looking to own bitcoin or simply speculate on its price?
If you want to truly own bitcoin, a non-confiscatable asset designed to be used permissionlessly in a peer-to-peer manner, you’ll have to buy bitcoin (BTC) directly.
If you’re simply looking to potentially increase your wealth in US dollars by speculating on bitcoin’s price, the ETF is the better product for you. An ETF is a way to purchase an asset or basket of assets that a financial service intermediary custodies on your behalf for a fee.
ETFs are a great way to invest in your 401(k) or individual retirement accounts (IRAs). You’ll also be able to buy any of these spot bitcoin ETFs through popular trading apps.
Since some refer to bitcoin as “Gold 2.0,” let’s look at what happened to the price of gold in the years that followed the first gold ETF coming to market in March 2023.
As you can see on the chart below, the price of gold (XAU) skyrocketed from about $250/ounce to over $1,750/ounce in the nine years after the first gold ETF’s launch.
If bitcoin makes a comparable move in the next nine years, we’ll see its price at $245,000 by 2032.
However, it’s also possible that we see bitcoin’s price go much higher than that by 2032, as gold had been around for 5,000 years as money and a store of value before a spot gold ETF existed, while bitcoin has only been around for about 15 years.
Given that Bitcoin adoption around the world is in its early stages, the price of bitcoin after the issuance of a spot bitcoin ETF may increase even faster than the price of gold did post the issuance of the first spot gold ETF.
This may be why Jurrien Timmer, Director of Global Macro at Fidelity, recently referred to bitcoin as “exponential gold.”
If bitcoin’s price increases at twice the rate at which gold’s price did, then bitcoin’s price would rise to $490,000 by 2032. If it increases three times the rate, we’ll see it at $735,000 by 2032. And if it increases at six times the rate, we’ll see it at just under $1.5 million per coin, which is the price that ARK Invest CEO Cathie Wood thinks it will reach by 2030.
Keep in mind that bitcoin’s price isn’t guaranteed to increase more than gold’s did (or even as much as gold’s did) in the wake of the issuance of a spot ETF. But if bitcoin does continue to be adopted more broadly as both money and a store of value and major financial institutions offer exposure to it in the form of an ETF, bitcoin’s price will likely increase significantly in the coming years.
If you’re feeling bullish on bitcoin (BTC) and ready to get exposure to the asset via a traditional financial brokerage, your day has come.
Purchase one of the 11 approved spot bitcoin ETFs through any of the best brokers, and strap in for what will likely be a volatile ride.
Disclaimer: This page is not financial advice or an endorsement of digital assets, providers or services. Digital assets are volatile and risky, and past performance is no guarantee of future results. Potential regulations or policies can affect their availability and services provided. Talk with a financial professional before making a decision. Finder or the author may own cryptocurrency discussed on this page.
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