How is bitcoin ETF calculated?
The value of a bitcoin ETF's shares reflects the performance of bitcoin. As the price of bitcoin moves, the value of the ETF shares adjusts accordingly. To ensure that the ETF shares stay in sync with bitcoin prices, market makers actively buy and sell, maintaining a balance between supply and demand.
The ETF share price should reflect the prevailing market price of the cryptocurrency, and the shares are available for public trading on traditional stock exchanges. So the ETF shares track the price of bitcoins as closely as possible, and the ETF occasionally rebalances its holdings by buying or selling tokens.
Spot ETFs, such as the new spot bitcoin ETFs, allow for shares of the fund to be created or redeemed based on market demand. In this way, a spot bitcoin ETF allows investors to gain exposure to the current price of bitcoin without having to hold the asset itself.
Introduction to Crypto ETFs
The futures contracts are combined in the ETF's portfolio, and the fund then offers shares to investors on stock exchanges. This allows investors to gain exposure to the cryptocurrency market without buying and managing the digital assets themselves.
While the new spot bitcoin ETFs are designed to track the bitcoin price directly, they do not impact it in the same way. Buying a share of an ETF has no real-time impact on bitcoin's price through direct means. In fact, the bitcoin represented by the share is not even purchased until the next trading day.
Bitcoin ETF investors merely get exposure to the price of Bitcoin. They never own the asset. ETF participants don't benefit from what Bitcoin stands for in the first place, which is to allow anyone to experience financial ownership and sovereignty.
Diversification and Accessibility: Bitcoin ETFs provide investors with a diversified portfolio of Bitcoin holdings, reducing the risk associated with owning a single cryptocurrency. Additionally, ETFs offer ease of access, allowing investors to buy and sell shares through traditional brokerage accounts.
Plus, bitcoin ETFs will make it easier for financial advisers to access the cryptocurrency for their clients who can afford to invest in alternative asset classes. But make no mistake, the price of a bitcoin will be just as volatile whether you invest in it directly yourself or through an ETF.
| Fund (ticker) | YTD performance | Expense ratio |
|---|---|---|
| ARK 21Shares Bitcoin ETF (ARKB) | 50.0% | 0.21% |
| Bitwise Bitcoin ETF Trust (BITB) | 49.8% | 0.20% |
| VanEck Bitcoin Trust (HODL) | 49.8% | 0.25% |
| Valkyrie Bitcoin Fund (BRRR) | 49.6% | 0.25% |
If long-term price performance is your only investment goal, then the new Bitcoin ETFs make a lot of sense. However, you could prefer direct-asset ownership of Bitcoin if you are concerned about the regulatory or legal aspects of crypto.
What are the potential cons of bitcoin ETFs?
Extreme Volatility: Bitcoin is notorious for its substantial price fluctuations, making ETFs that track its price inherently high-risk investments. Investors must be prepared for the possibility of significant and rapid losses. Regulatory Uncertainty: This space for cryptocurrencies is constantly evolving.
| Symbol Symbol | ETF Name ETF Name | Previous Closing Price Previous Closing Price |
|---|---|---|
| FBTC | Fidelity Wise Origin Bitcoin Fund | $56.32 |
| ARKB | ARK 21Shares Bitcoin ETF | $64.42 |
| BITO | ProShares Bitcoin Strategy ETF | $28.10 |
| BITB | Bitwise Bitcoin ETF Trust | $35.11 |
Place an order: Place a buy order for your select bitcoin ETF, as you would for stocks. You can choose between a market order, which buys the ETF in minutes, or a limit order, which will execute at your pre-set price.
- ARK 21Shares Bitcoin ETF (NYSE:ARKB)
- Bitwise Bitcoin ETF (NYSE:BITB)
- Blackrock's iShares Bitcoin Trust (NASDAQ:IBIT)
- Franklin Bitcoin ETF (NYSE:EZBC)
- Fidelity Wise Origin Bitcoin Trust (NYSE:FBTC)
- Grayscale Bitcoin Trust (NYSE:GBTC)
- Hashdex Bitcoin ETF (NYSEARCA:DEFI)
Learn about the 11 spot Bitcoin ETFs available today — and the 8 Bitcoin strategy ETFs that offer indirect exposure to Bitcoin.
You calculate crypto profit by subtracting the selling price from the cost price of the cryptocurrency. That is one of the simplest ways to calculate your profit and loss.
Yes, but they're different: E.T.F.s that invest in Bitcoin futures contracts — or agreements to buy or sell an asset at a certain price sometime later — have been around since 2021.
The firm has made clear, most recently in a Jan. 24 message to its clients, that it has no plans to offer a bitcoin exchange-traded fund (ETF) or any other cryptocurrency-related products. Nor will it allow any such products from other firms to be offered via its brokerage arm.
iShares Bitcoin Trust (IBIT)
Like many of the new spot bitcoin ETFs, the iShares Bitcoin Trust uses a fee waiver to lower the initial cost of investing and attract more investors. For the first 12 months of trading or the first $5 billion in fund assets (whichever comes first), the annual fee will be just 0.12%.
11 Spot Bitcoin ETFs Approved
Bitwise Bitcoin ETF (BITB) Fidelity Wise Origin Bitcoin Trust (FBTC) Franklin Bitcoin ETF (EZBC) Grayscale Bitcoin Trust (GBTC)
What is the difference between self custody and bitcoin ETF?
What is the difference between Bitcoin ETFs and Bitcoin self-custody? Bitcoin ETFs allow investment exposure to BTC without direct ownership, while self-custody means holding your BTC directly with private keys for full control and responsibility.
The primary difference between them is how they're structured. Investment trusts are closed-end funds with a fixed number of shares set at an initial public offering (IPO). ETFs are open-end funds, and their shares are created or redeemed based on investor demand.
To ensure that the ETF shares stay in sync with bitcoin prices, market makers actively buy and sell, maintaining a balance between supply and demand. If the ETF's price starts deviating from the actual bitcoin price, market makers step in to restore equilibrium – earning a profit in the process.
At any given time, the spread on an ETF may be high, and the market price of shares may not correspond to the intraday value of the underlying securities. Those are not good times to transact business. Make sure you know what an ETF's current intraday value is as well as the market price of the shares before you buy.
Bitcoin ETFs have marked a significant milestone, surpassing the market capitalization of traditional silver ETFs in a remarkably short timeframe. This highlights the growing interest and acceptance of bitcoin as a legitimate asset class in the global financial market.
