The popularity of cryptocurrencies has been growing steadily in recent years. After a decade-long wait since the first application was filed, the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs on January 10, 2024, marking a historic milestone in the financial world. This decision allows investors to gain direct exposure to Bitcoin through regulated exchange-traded funds traded on traditional stock exchanges.
This landmark approval reflects a significant shift in regulatory sentiment toward digital assets. In this guide, we’ll explore what a Bitcoin ETF is, the key differences between spot and futures-based Bitcoin ETFs, and how you can invest in them safely and efficiently.
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Understanding Bitcoin ETFs
A Bitcoin ETF (Exchange-Traded Fund) is an investment fund that tracks the price of Bitcoin and trades on traditional stock exchanges like any other publicly listed security. Unlike buying Bitcoin directly on a cryptocurrency exchange, investing in a Bitcoin ETF allows you to gain exposure to Bitcoin’s price movements without holding the underlying asset.
This means you don’t have to worry about managing private keys, securing wallets, or navigating complex crypto platforms. Instead, you can buy and sell shares of a Bitcoin ETF just like stocks—through your regular brokerage account.
If you're new to ETFs in general, think of them as baskets of assets designed to mirror the performance of a specific index, commodity, or in this case, Bitcoin.
Why This Matters
The approval of spot Bitcoin ETFs by the SEC represents a major step toward mainstream financial acceptance of cryptocurrencies. It opens the door for millions of traditional investors who may have been hesitant to enter the volatile and technically complex world of crypto.
Types of Bitcoin ETFs: Spot vs. Futures
Bitcoin ETFs are primarily categorized into two types based on how they gain exposure to Bitcoin:
- Bitcoin Spot ETF
- Bitcoin Futures ETF
Each comes with distinct characteristics, costs, and risk profiles.
Key Differences: Bitcoin vs. Spot ETF vs. Futures ETF
| Feature | Bitcoin (Direct) | Bitcoin Spot ETF | Bitcoin Futures ETF |
|---|---|---|---|
| Trading Platform | Crypto Exchange | Stock Exchange | Stock Exchange |
| Costs | Transaction Fees Only | Fees + Management Fee | Fees + Higher Management Fee |
| Tracking Accuracy | Perfect | High | Lower |
| Management Fee | None | 0.2% – 1.5% | 0.6% – 2.5% |
| Regulatory Oversight | Limited | Full SEC Oversight | Full SEC Oversight |
While all three offer exposure to Bitcoin’s price, only direct ownership gives you full control over the asset. ETFs provide convenience and regulation at the cost of fees and indirect ownership.
What Is a Bitcoin Futures ETF?
A Bitcoin futures ETF does not hold actual Bitcoin. Instead, it invests in futures contracts—agreements to buy or sell Bitcoin at a predetermined price on a future date.
Because these contracts expire, the fund must continuously "roll" them over to new ones, which introduces roll costs and potential tracking errors. Over time, especially in contango markets (when future prices are higher than spot), this can erode returns.
Example: ProShares Bitcoin Strategy ETF (BITO)
Launched on October 18, 2021, BITO was the first Bitcoin futures ETF in the U.S.
- Ticker: BITO
- Expense Ratio: 0.95%
- Payout Frequency: Monthly
- Structure: Actively managed
BITO primarily holds CME-traded Bitcoin futures contracts and some U.S. Treasury bills for cash management. While it aims to reflect Bitcoin’s performance, its long-term returns may diverge significantly due to roll costs and market structure.
💡 Important Note: Due to compounding tracking errors, futures ETFs are generally better suited for short-term trading rather than long-term holding.
What Is a Bitcoin Spot ETF?
Unlike futures-based funds, a Bitcoin spot ETF holds actual Bitcoin in custody. The fund issuer purchases and securely stores real Bitcoin, and each share of the ETF represents a fractional claim on those holdings.
This direct ownership model minimizes tracking error and eliminates roll costs associated with futures contracts.
The 2024 Breakthrough
For years, the SEC rejected applications for spot Bitcoin ETFs over concerns about market manipulation and custody risks. But on January 10, 2024, it approved 11 spot Bitcoin ETFs from major financial institutions—including BlackRock, Fidelity, and VanEck—signaling a major shift in regulatory confidence.
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List of Approved Spot Bitcoin ETFs (U.S., 2024)
| Ticker | Fund Name | Issuer | Expense Ratio |
|---|---|---|---|
| IBIT | iShares Bitcoin Trust | BlackRock | 0.25% |
| ARKB | Bitwise Bitcoin ETF | ARK & 21Shares | 0.21% |
| FBTC | Fidelity Wise Origin Bitcoin Trust | Fidelity | 0.40% |
| HODL | VanEck Bitcoin Trust | VanEck | 0.25% |
| BITB | Bitwise Bitcoin ETF | Bitwise | 0.20% |
| BTCW | WisdomTree Bitcoin Fund | WisdomTree | 0.30% |
| BTCO | Invesco Galaxy Bitcoin ETF | Invesco | 0.39% |
| BRRR | Valkyrie Bitcoin Fund | Valkyrie | 0.49% |
| DEFI | Hashdex Bitcoin ETF | Hashdex | 0.90% |
| GBTC | Grayscale Bitcoin Trust | Grayscale | 1.50% |
| EZBC | Franklin Bitcoin ETF | Franklin Templeton | 0.29% |
Several issuers offered fee waivers for the first six months, intensifying competition and making early adoption more attractive.
Advantages of Investing in Bitcoin ETFs
1. Easier Access to Crypto Markets
Buying and storing Bitcoin directly involves technical challenges: choosing secure exchanges, managing private keys, using cold wallets, and protecting against hacks.
With a Bitcoin ETF, you bypass all that complexity. You can invest through your existing brokerage account—just like buying Apple or Tesla stock.
This lowers the barrier for entry, especially for retail investors and institutional players alike.
2. Regulatory Protection
Direct crypto holdings operate largely outside government oversight. In contrast, Bitcoin ETFs are fully regulated by the SEC, offering greater transparency, auditing requirements, and investor protections.
This makes them a safer option for risk-conscious investors who want crypto exposure without sacrificing compliance.
Disadvantages of Bitcoin ETFs
1. Management Fees Apply
Holding Bitcoin directly incurs no recurring fees (aside from transaction or storage costs). However, every ETF charges an annual expense ratio—ranging from 0.2% to 1.5% for spot funds and even higher for futures-based ones.
Over time, these fees compound and can significantly impact long-term returns.
2. No Utility Beyond Price Exposure
When you own real Bitcoin, you can use it actively: stake it, lend it, trade it across DeFi protocols, or pay for goods and services.
ETF investors only benefit from price appreciation—they cannot use their shares as functional cryptocurrency.
3. Limited Trading Hours
Stock markets operate during set hours (e.g., 9:30 AM – 4:00 PM ET). Outside those times, you cannot trade your ETF shares.
In contrast, Bitcoin trades 24/7 on global exchanges—offering more flexibility for timely trades during news events or market volatility.
How to Buy a Bitcoin ETF
To invest in U.S.-listed Bitcoin ETFs like IBIT or ARKB, you need access to American financial markets.
There are two primary ways:
- International Brokers (Recommended)
- Local Dual-Commission Services (Limited Availability)
However, due to regulatory restrictions in certain regions—including Taiwan—many local brokers no longer allow purchasing crypto-linked ETFs via dual commission services.
As such, most investors must use overseas brokers such as Firstrade or Interactive Brokers.
Step-by-Step: Buying a Bitcoin ETF via Firstrade
Let’s walk through how to buy iShares Bitcoin Trust (IBIT) using Firstrade:
Step 1: Search for the Ticker
Log into your Firstrade account and enter the ETF ticker (e.g., IBIT) in the search bar. Select the correct listing from NASDAQ.
Step 2: Review Holdings
Scroll down to view the fund’s portfolio. For IBIT, you’ll see it holds mostly physical Bitcoin and some U.S. dollars—confirming its spot structure.
Step 3: Place Your Order
Click “Buy,” enter your desired number of shares and order type (market or limit), then submit.
That’s it—within minutes, you’re invested in a regulated Bitcoin ETF.
Frequently Asked Questions (FAQ)
Q: What is the difference between a spot and futures Bitcoin ETF?
A: A spot ETF holds actual Bitcoin, while a futures ETF uses derivative contracts. Spot ETFs offer more accurate price tracking and lower long-term costs.
Q: Are Bitcoin ETFs safe?
A: Yes—they are regulated by the SEC, audited regularly, and backed by reputable custodians. However, they still carry market risk due to Bitcoin’s volatility.
Q: Do I own real Bitcoin if I buy an ETF?
A: No. You own shares in a fund that holds Bitcoin—not the cryptocurrency itself. You cannot withdraw or spend the underlying BTC.
Q: Can I trade Bitcoin ETFs after hours?
A: No. They trade only during U.S. market hours (9:30 AM – 4:00 PM ET), unlike direct crypto trading which is available 24/7.
Q: Which is better: IBIT or GBTC?
A: IBIT has a lower fee (0.25%) compared to GBTC (1.5%). Both hold real Bitcoin, but GBTC previously had a significant premium/discount issue before becoming an ETF.
Q: Can I buy Bitcoin ETFs in my retirement account?
A: Yes! Many brokers allow inclusion of Bitcoin ETFs in IRAs or other tax-advantaged accounts—subject to provider rules.
👉 Start your journey into regulated crypto investing with ease and confidence today.
Final Thoughts
The launch of spot Bitcoin ETFs in early 2024 marks a transformative moment for digital asset adoption. By combining the innovation of blockchain with the safety and accessibility of traditional finance, these funds make it easier than ever for everyday investors to participate in the future of money.
Whether you're looking for long-term growth or diversified exposure within your portfolio, Bitcoin ETFs represent a bridge between old-world finance and next-generation assets—offering simplicity, security, and legitimacy without requiring deep technical knowledge.
As always, consider your goals, risk tolerance, and cost structure before investing. With careful research and the right tools, you can confidently navigate this evolving landscape.
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