The reasons cited have remained consistent over the years – concerns related to manipulation risk in bitcoin markets and the lack of adequate measures to protect investors.

At least ten bitcoin EFT applications have been rejected since 2017. Things then took a dramatic turn in August 2021, when the current SEC Chairman Gary Gensler voiced his approval for ETFs that looked at bitcoin futures instead of holding the actual crypto itself.

Crypto advocates were quick to latch onto the opportunity. Using the tacit approval of the SEC for a bitcoin futures ETF under the rules of the 1940 Investment Company Act, funds filed multiple applications. The first to reach the market was the Proshares Bitcoin Strategy ETF (BITO) on October 19.

The fund AUM ballooned to $1 billion within two days.

Where to buy bitcoin futures etf

Buying Bitcoin ETFsBuying BitcoinInvest in bitcoin indirectly (through a fund)Invest in bitcoin directly (by owning it)Available in brokerage accountsNot available in brokerage accountsSomeone else manages itYou have to manage it

Buying Bitcoin ETFs vs. Buying Bitcoin

A bitcoin ETF, such as the one proposed by the Winklevoss twins way back in 2013, would have the digital currency bitcoin as an underlying asset. That means that by purchasing a bitcoin ETF, an investor would be indirectly purchasing bitcoin, as they would be holding the bitcoin ETF in a portfolio, as opposed to buying and holding the digital currency itself.

However, as the ETF would closely track the price of bitcoin, for the investor, it should make little difference whether they are holding a bitcoin ETF or the actual digital currency.

The main advantage of EU exchanges is their support for crypto spot ETFs. The following are some of these bitcoin spot ETFs with their respective expense ratios:ETF NameTickerExchangeTypeFeesThe VanEck Vectors Bitcoin ETNVBTCDeutsche Böerse XetraSpot2%The Bitcoin Investment Trust from GrayscaleGBTC (on the OTCQX ticker)Off-exchange, via registered dealersSpot2%XBT Provider ETNCXBTFNasdaq Stockholm Stock ExchangeSpot2.5%WisdomTree Bitcoin ETPBTCWSIX Swiss ExchangeSpot0.95%CI Galaxy Bitcoin ETFBTCXToronto Stock ExchangeSpot0.45%

Bitcoin Futures ETFs vs. Bitcoin Spot ETFs

For the SEC, the difference between the two types of ETFs essentially boils down to regulatory oversight.

Bitcoin trades on cryptocurrency exchanges across the globe that are not under any significant regulatory oversight.

Where to buy bitcoin futures etfal

Should You Buy It?Alex Lielacher

Published on 15 Dec 2021

A day after the first Bitcoin futures ETF started trading in the US, Bitcoin hit a record high above $66,000.

If the risks of buying bitcoin deter you, but you’re keen to take advantage of the rising price, a Bitcoin Futures ETFs may be for you.

Read on to learn what Bitcoin futures ETFs are, how they work, and if they are the right choice for you.

What is the New Bitcoin Futures ETF?

A Bitcoin Futures ETF is an exchange-traded fund that allows investors to gain exposure to the price of bitcoin via a regulated investment vehicle that invests in Bitcoin futures contract to replicate the price development of bitcoin.

The ProShares Bitcoin Strategy ETF (BITO) is the first US-based exchange-traded fund that tracks the price of bitcoin by managing exposure to bitcoin futures contracts.

If the move is approved, investors would have access to an ETF that invests directly in Bitcoin, not just futures contracts.

Bitcoin ETFs may be ideal for an investor looking for convenient and safe exposure to Bitcoin, says Erin Hay, a financial advisor and chartered financial analyst for Monument Wealth Management in Alexandria, Virginia.

“Buying a small, ‘starter’ position in an asset often incentivizes investors to continue their education and understanding of the investment,” Hay said. “A Bitcoin ETF, which is highly liquid and available through traditional trading channels, is an ideal method for creating a ‘starter position.’”

Hay warns that investors should keep in mind that BITO’s underlying assets are Bitcoin futures, not the cryptocurrency itself.

Should You Buy It?Alex Lielacher

Published on 15 Dec 2021

A day after the first Bitcoin futures ETF started trading in the US, Bitcoin hit a record high above $66,000.

If the risks of buying bitcoin deter you, but you’re keen to take advantage of the rising price, a Bitcoin Futures ETFs may be for you.

Read on to learn what Bitcoin futures ETFs are, how they work, and if they are the right choice for you.

What is the New Bitcoin Futures ETF?

A Bitcoin Futures ETF is an exchange-traded fund that allows investors to gain exposure to the price of bitcoin via a regulated investment vehicle that invests in Bitcoin futures contract to replicate the price development of bitcoin.

The ProShares Bitcoin Strategy ETF (BITO) is the first US-based exchange-traded fund that tracks the price of bitcoin by managing exposure to bitcoin futures contracts.

The main difference between buying a bitcoin ETF versus bitcoin itself is that investors are purchasing a regulated investment vehicle, instead of buying and owning a crypto asset.

Thus, a bitcoin ETF has several benefits for investors:

It’s more convenient: For starters, you don’t have to worry about the security concerns of properly storing bitcoin. There’s no need to learn the intricacies of using a wallet or dealing with a crypto exchange. Buying an ETF simplifies the whole process of investing in cryptocurrencies.

It’s regulated: As a decentralized and often unregulated asset class, access to bitcoin is fraught with regulatory complications in many jurisdictions.

ETFs trade under strict institutional oversight in mainstream market exchanges.

There’s a new way to invest in the world’s largest cryptocurrency — kind of.

ProShares launched its Bitcoin exchange-traded fund on Tuesday, the nation’s first ETF linked to the $1.1 trillion cryptocurrency. The fund, known as the Bitcoin Strategy ETF, doesn’t directly invest in the cryptocurrency, though. Instead, it deals in Bitcoin futures traded on the Chicago Mercantile Exchange.

A financial advisor can help you determine whether Bitcoin and other cryptocurrencies are right for your portfolio.
Find an advisor today.

How Does the Bitcoin ETF Work?

The ProShares Bitcoin Strategy ETF debuted Tuesday on the New York Stock Exchange to much fanfare and media attention.

Such a responsibility requires you to secure a private key.

If anyone else gets access to this private key, they control your bitcoin, and if you forget your private key, you lose access to your coins.

When you buy Bitcoin ETFs, the fund you purchased the ETFs from takes responsibility for managing your shares. Although this takes a lot of weight off your shoulders, it means that you don’t actually hold any bitcoin.

Management Fee

Buying Bitcoin is subject to a vastly different fee structure than buying a Bitcoin ETF since one asset is available through the crypto market while the other is through brokerages.

When you buy bitcoin directly, there is no fee for holding your coins, no matter for how long.

In the grand scheme of things, that is not too bad – funds with an expense ratio above 1.5% are the ones to avoid among ETFs.

Valkyrie Bitcoin Strategy Fund (BTF)

The second Bitcoin ETF to launch with tacit SEC approval is slightly different from Proshares. Instead of focusing solely on bitcoin futures contracts, Valkyrie combines them with other instruments like treasury bills, bonds, corporate debt securities, and cash.

Though it collected $5 million in investments within a day after launch, Valkyrie has not evolved into a runaway success like the Proshares BTO. However, the smaller upstart may still have some legs, given the sustained investor interest in bitcoin.

1. Grayscale Bitcoin Trust

The Grayscale Bitcoin Trust isn’t an ETF, but rather an investment trust with units trading over-the-counter (traded via broker-dealer networks rather than on a centralized exchange). That means this closed-end fund isn’t open to new investment, but units can be purchased if supported by your broker. However, the fund does directly own Bitcoin.

As with other ETFs on this list, since the Grayscale Bitcoin Trust isn’t a direct investment in Bitcoin itself, units of the fund can trade at a steep discount or premium to the actual Bitcoin price.
When shares are in high demand, units will tend to trade at a premium to the underlying Bitcoin owned by the trust, and units will trade at a discount to Bitcoin when demand is low.

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