How to buy Bitcoin ETFs

12 January 2024 - 13:00

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How to buy Bitcoin ETFs? Approved by the SEC, here’s how to invest in an exchange-traded fund and where to buy one.

How to buy Bitcoin ETFs

How to buy Bitcoin ETFs?
With the recent SEC approval of Bitcoin exchange-traded funds, many are wondering how (and where) to buy the instrument that follows the price of the number one cryptocurrency in the world.

These are the first spot ETFs to track digital assets and strong buying interest is expected, capable of pushing the Bitcoin quote upwards.

Through ETFs, investing in Bitcoin becomes simpler. Small investors can use ETFs to expose themselves to the crypto world without necessarily having the appropriate IT knowledge.

So here is a complete guide on where and how to buy Bitcoin ETFs.

What is a Bitcoin ETF

In general, Exchange Traded Funds (ETFs) are investment funds or SICAVs that faithfully replicate the performance of stocks, bonds, raw materials, cryptocurrencies, and other asset classes. With ETFs, investors can follow the performance of specific market indices, the value of which is determined by the sum of the securities that compose them. This offers the possibility of following indices such as the Ftse Mib, the DAX, or the S&P500. Investing in ETFs allows you to participate in these markets with small sums, without having to purchase each security individually.

Each Spot Bitcoin ETF - where the term “spot” indicates that each fund holds the underlying assets - expects the fund to raise a large amount of BTC. The investor who wants to buy the Bitcoin ETF is as if he were buying a small part of that quantity.

Buying Bitcoin ETFs then allows the owner to sell (or vice versa) at any time during the session, which makes investing in Bitcoin quicker and more flexible.

How to buy Bitcoin ETF

We are faced with an unprecedented situation. Never have so many ETFs on the same underlying been approved on the same day. In fact, on January 10, the SEC approved 11 requests to create spot ETFs on Bitcoin, including those from BlackRock, Fidelity, and Grayscale. The competition between these companies has already led to a cut in the commissions foreseen for the management of this type of product, well before actual approval.

Thus, with managers eager to gain new market shares and with the lowering of the costs applied to appear more competitive, the current one appears to be a good time for those who have decided to buy Bitcoin ETFs. However, access to this type of ETF is currently limited to the American public.

Please note that the newly approved Bitcoin spot ETFs soon available on the US market are the following:

  • Grayscale Bitcoin Trust;
  • Bitwise Bitcoin ETF;
  • Hashdex Bitcoin ETF;
  • iShares Bitcoin Trust;
  • Valkyrie Bitcoin Fund;
  • ARK 21Shares Bitcoin ETF;
  • Invesco Galaxy Bitcoin ETF;
  • VanEck Bitcoin Trust;
  • WisdomTree Bitcoin Fund;
  • Fidelity Wise Origin Bitcoin Fund;
  • Franklin Bitcoin ETF

1) Online broker

The purchase of ETFs, and therefore also of Bitcoin ETFs, mostly occurs through financial intermediaries.
All brokers can give access to investing in these new ETFs to the US public as soon as they are listed on the stock exchange.

To buy ETFs, choosing the best broker makes the difference. Here are some crucial aspects to consider to selecting the broker best suited to your financial needs and goals:

  • Reliability: make sure that the broker is regulated in Europe and authorized to operate in Italy by Consob. The security, quality, and transparency of operations are guaranteed by brokers compliant with industry regulations and standards.
  • Costs: carefully check the trading and management costs applied by the broker. Many platforms offer commission-free ETF trading, which may be relevant considering that ETFs are treated like stocks.
  • Customer support: Inquire about the availability of support channels and the effectiveness of the customer support provided by the broker. The quality of assistance and responsiveness of support can be crucial during your investment journey.
  • Various asset types: Check if the broker offers a wide range of tradable assets, in addition to ETFs. Some brokers may limit investment options or not provide commission-free trading on all available assets.
  • Minimum Deposit: Check if the broker requires a minimum deposit to open an account. In the case of ETFs, the minimum deposit usually corresponds to the cost of one share. Look for a broker with a low minimum deposit or one that doesn’t require an initial amount if you’re just starting out on your investing journey.
  • Analysis and support tools: Check if the broker offers additional features that can be useful for optimizing your investment strategies. You may consider access to analytics tools, automatic tax-loss harvesting services, portfolio rebalancing, or financial planning assistance.

To purchase a Bitcoin ETF, if you don’t already have one, you need to open an account with a broker. Check the requirements and choose a brokerage platform that suits your needs. Complete the registration process by providing the necessary documentation and make sure you select a reliable broker with competitive rates.

Then determine how many shares of the ETF you want to purchase and how much capital you are willing to invest.
You can use a market order to buy shares of an ETF at the current market price. Alternatively, with a limit order, you can specify the highest price you are willing to pay.

Is it worth buying a Bitcoin ETF?

So, is it worth investing and buying a Bitcoin ETF? If you want to invest in Bitcoin for the long term, Bitcoin ETFs may not be the best choice. Before buying an ETF, it is advisable to consider all factors, including the fees charged and rollover charges.

Investing in a Bitcoin ETF allows you to have exposure to the price of Bitcoin without necessarily having to go through a cryptocurrency exchange, without having to learn how Bitcoin works, and without taking on the risks of owning Bitcoin directly, without the fear of losing the wallet key. Bitcoin ETFs simplify the process.

ETFs have multiple holdings, which means a rise or fall in the price of BTC can lead to price inaccuracy. And since an ETF is not a cryptocurrency, it cannot be exchanged for other cryptocurrencies.

Finally, be careful of the possible "distortion" of Bitcoin itself. Bitcoin eliminates third parties and provides decentralization and security through its blockchain, but these benefits disappear with an ETF that, as a publicly traded instrument, is under the SEC, the US government’s financial regulator.

Original article published on Italy 2024-01-11 10:38:58. Original title: Come comprare ETF Bitcoin

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