In recent years, cryptocurrency has gained increasing popularity as a new asset class. A major milestone occurred on January 10, 2024, when the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs—marking the first time investors can directly access Bitcoin through regulated exchange-traded funds in the United States.
This landmark decision signals a shift in regulatory attitude toward digital assets and opens the door for mainstream investors to participate in Bitcoin’s price movements without needing to navigate complex crypto exchanges.
In this guide, we’ll break down what a Bitcoin ETF is, explain the differences between spot and futures-based ETFs, explore their benefits and drawbacks, and walk you through how to buy one—especially if you're based outside the U.S.
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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 performance without owning or storing the actual digital asset.
This means:
- You don’t need to manage private keys.
- No need to worry about wallet security.
- You can invest using your regular brokerage account.
Bitcoin ETFs are subject to financial regulation, offering greater transparency and investor protection than direct crypto holdings—making them ideal for cautious or beginner investors.
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- Bitcoin ETF
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- How to buy Bitcoin ETF
- Bitcoin investment
- SEC approval
- Crypto ETF
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Types of Bitcoin ETFs: Spot vs. Futures
There are two primary types of Bitcoin ETFs:
- Bitcoin Spot ETF
- Bitcoin Futures ETF
The key difference lies in what they hold—and how closely they track real-time Bitcoin prices.
Key Differences at a Glance
| Feature | Direct Bitcoin | Spot Bitcoin ETF | Futures Bitcoin ETF |
|---|---|---|---|
| Trading Platform | Crypto Exchange | Stock Exchange | Stock Exchange |
| Fees | Transaction fees only | Management fee + trading fees | Higher management fees |
| Tracking Accuracy | N/A | High (low tracking error) | Lower (higher tracking error) |
| Regulatory Oversight | Minimal | Full SEC oversight | Full SEC oversight |
Let’s dive deeper into each type.
What Is a Bitcoin Futures ETF?
A Bitcoin futures ETF does not hold actual Bitcoin. Instead, it invests in Bitcoin 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 by selling near-term contracts and buying longer-dated ones. This process introduces roll costs, which can erode returns over time—especially in volatile markets.
Example: ProShares Bitcoin Strategy ETF (BITO)
Launched on October 18, 2021, BITO was the first Bitcoin futures ETF in the U.S. Here are its key details:
- Ticker: BITO
- Expense Ratio: 0.95%
- Distribution Frequency: Monthly
- Underlying Assets: Primarily CME-traded Bitcoin futures and U.S. Treasury bills
While BITO aims to reflect Bitcoin’s performance, its returns may diverge significantly due to contango (when future prices exceed spot prices), roll yield, and market sentiment.
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Why Tracking Error Matters
Due to rollover mechanics and market conditions, futures ETFs often suffer from tracking error—meaning their performance doesn't perfectly mirror Bitcoin’s spot price. Over long periods, this can lead to substantial underperformance.
Important Note: A rising Bitcoin price doesn't guarantee gains in a futures ETF. Structural factors like roll costs can offset price appreciation.
What Is a Spot Bitcoin ETF?
A spot Bitcoin ETF holds actual Bitcoin as its underlying asset. This direct ownership model aligns the fund’s value much more closely with real-time Bitcoin prices.
After years of rejections, the SEC finally approved 11 spot Bitcoin ETFs on January 10, 2024, including offerings from BlackRock, Fidelity, VanEck, and ARK Invest.
This approval marks a turning point: institutional and retail investors now have a secure, regulated way to invest in Bitcoin through familiar financial channels.
List of Approved Spot Bitcoin ETFs (2024)
| Ticker | Fund Name | Issuer | Expense Ratio |
|---|---|---|---|
| IBIT | iShares Bitcoin Trust | BlackRock | 0.25% |
| FBTC | Fidelity Wise Origin Bitcoin Trust | Fidelity | 0.40% |
| ARKB | Bitwise Bitcoin ETF | ARK & 21Shares | 0.21% |
| 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% |
Many issuers are offering fee waivers for the first six months, making now an attractive entry point for cost-conscious investors.
Advantages of Investing in a Bitcoin ETF
1. Easier Access to Cryptocurrency
Buying and securely storing Bitcoin requires technical knowledge:
- Choosing reputable exchanges
- Managing cold wallets
- Safeguarding private keys
With a Bitcoin ETF, none of that is necessary. You can buy shares just like any stock or ETF through your brokerage account—no crypto-specific setup required.
This lowers the barrier for entry and brings digital assets within reach of everyday investors.
2. Regulatory Protection
Direct crypto purchases operate largely outside government oversight. In contrast, all ETFs are regulated by authorities like the SEC, ensuring:
- Regular audits
- Transparent reporting
- Investor safeguards
For those hesitant about crypto due to scams or exchange failures, ETFs offer peace of mind.
Disadvantages of Bitcoin ETFs
1. Management Fees
While holding physical Bitcoin incurs no ongoing fees (beyond storage), all ETFs charge annual expense ratios ranging from 0.2% to 1.5% for spot funds and up to 2.5% for futures-based ones.
Over time, these fees compound—especially for large positions.
2. No Utility of the Underlying Asset
When you own real Bitcoin, you can use it actively:
- Staking (in PoS networks)
- Yield farming
- Collateral in DeFi
- Everyday payments
ETF holders have no such flexibility—they only benefit from price appreciation.
3. Limited Trading Hours
Most stock exchanges operate on fixed schedules (e.g., NYSE: 9:30 AM – 4:00 PM ET). That means you can’t trade your ETF outside those hours—even though the global crypto market runs 24/7.
In fast-moving markets, this could mean missing critical entry or exit points.
Frequently Asked Questions (FAQ)
Q: Can I buy a Bitcoin ETF in my regular brokerage account?
A: Yes—if your broker supports U.S.-listed securities. Most international investors use overseas brokers like Interactive Brokers or Firstrade.
Q: Do spot Bitcoin ETFs hold real Bitcoin?
A: Yes. Unlike futures ETFs, spot ETFs purchase and securely store actual BTC, often with third-party custodians like Coinbase.
Q: Are Bitcoin ETFs safer than buying crypto directly?
A: For most investors, yes. They eliminate risks related to exchange hacks and lost keys while providing regulatory oversight.
Q: Will investing in a Bitcoin ETF give me tax advantages?
A: It depends on your country’s tax laws. In some jurisdictions, ETFs may offer more favorable capital gains treatment than direct crypto holdings.
Q: Can I take delivery of Bitcoin from an ETF?
A: No. Investors cannot redeem shares for physical Bitcoin—it's purely a financial instrument.
Q: Which is better: spot or futures ETF?
A: Generally, spot ETFs offer superior tracking accuracy and lower long-term costs, making them the preferred choice post-2024 approvals.
How to Buy a Bitcoin ETF
For non-U.S. investors—especially those based in Taiwan—there are two main options:
Foreign Brokerage Accounts (Recommended)
- Examples: Firstrade, Interactive Brokers
- Allow full access to U.S.-listed spot and futures ETFs
Dual-Commission Services (Local Banks/Securities Firms)
- Limited availability; many have banned purchases of crypto-linked ETFs
- Currently allow only selling, not buying
Due to local regulations, Taiwan does not classify Bitcoin as a "security," so domestic sales of related ETFs are restricted.
Step-by-Step Guide: Buying IBIT on Firstrade
Let’s use BlackRock’s iShares Bitcoin Trust (IBIT) as an example:
Log in and Search
- Log into your Firstrade account
- Enter “IBIT” in the search bar
- Select iShares Bitcoin Trust listed on NASDAQ
Review Holdings
- Scroll down to see the fund’s portfolio
- Confirm it holds mostly physical Bitcoin + cash reserves
Place Your Order
- Click “Buy”
- Enter number of shares and order type (market/limit)
- Submit trade
That’s it—you’re now invested in Bitcoin via a regulated U.S. exchange!
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Final Thoughts
The approval of spot Bitcoin ETFs represents a transformative moment for digital asset investing. By combining the growth potential of Bitcoin with the safety and convenience of traditional finance, these funds open new doors for millions of investors worldwide.
Whether you're new to crypto or looking for a simpler way to diversify your portfolio, a spot Bitcoin ETF offers a compelling entry point—with less hassle and more oversight than direct ownership.
As adoption grows and fees decline further, expect these products to become core components of balanced investment strategies across generations.