What is the controversy with bitcoin ETF?
The futures-based Bitcoin E.T.F.s can end up being more expensive because the contracts expire and must be sold and repurchased, or “rolled,” each month. Those costs can be potentially significant, particularly when the new contracts cost more than the previous month's, causing managers to buy high and sell low.
Cons : Costs and Fees: ETFs might be more expensive than buying crypto directly due to ongoing management fees. So, when you are hiring a wealth manager or getting a mutual fund or index to help with your portfolio, there is an extra charge and that is exactly the case, with ETFs, as well.
Though crypto ETFs offer benefits, there are drawbacks to consider: Fees: Investing in a crypto ETF is likely to be more expensive than buying cryptocurrency directly. When buying crypto, you only need to make a one-time payment to the exchange, which can be as low as a few hundredths of the value traded.
There's no doubt that the approval of bitcoin ETFs in January was a historic moment for the U.S. crypto market. It's impactful from an acceptance as well as an access standpoint.
Optimistic Outlook
Research firm Fundstrat estimates Bitcoin to settle around $116,000-$137,000, while hedge fund SkyBridge foresees the asset hitting $170,000 by April 2025. VanEck maintained its medium-term estimate for the asset at $350,000.
Futures bitcoin ETFs
Futures ETFs do not hold actual bitcoin. Instead, they use bitcoin futures contracts to gain exposure to the cryptocurrency. A bitcoin futures contract allows investors to speculate and bet on the future price of the asset.
A spot bitcoin ETF allows investors to gain exposure to the price of bitcoin without the complications and risks of owning bitcoin directly.
Simply add up the total costs of buying Bitcoin directly on a cryptocurrency exchange such as Coinbase Global (COIN 4.79%), and then compare it to the super-low cost of owning the new ETFs. Unless Coinbase decides to lower its trading fees, it will almost always make sense to go with the lower-priced ETFs.
| ETF Name | Ticker | AUM |
|---|---|---|
| Grayscale Bitcoin Trust | GBTC | $22.7B |
| iShares Bitcoin Trust Registered | IBIT | $6.6B |
| Fidelity Wise Origin Bitcoin Fund | FBTC | $4.7B |
| ARK 21Shares Bitcoin ETF | ARKB | $1.6B |
For individual investors, IBIT, FBTC, BITB and ARKB represent the best Bitcoin ETFs choices. I particularly recommend IBIT and FBTC for their higher liquidity and narrow spreads. I believe the IBIT ETF will attract the most interest from institutional investors.
Why is bitcoin dropping after ETF approval?
They expect the bitcoin ETF to pave the way for similar funds for other cryptocurrencies, and there are already applications for regulatory ETFs tied to ethereum. But it's likely that bitcoin's decline also reflected doubts about how quickly it could shake off its reputation as a fringe asset.
Institutional investors may benefit from the approval of spot bitcoin (BTC) exchange-traded funds (ETFs) as these products will allow them to trade a proxy with low management fees and engage more actively in arbitrage strategies and options hedging, Goldman Sachs (GS) said in a report.
The U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin exchange-traded funds (ETFs) on January 10, 2024, marking a significant milestone in the world of cryptocurrency and investment.
How Might Spot Bitcoin ETFs Perform in 2024? Based upon bitcoin's price history, and with tens of billions of dollars expected to flow into spot bitcoin ETFs in 2024, BTC could surpass its $65,000 high, with crypto services firm Matrixport predicting $120,000 by year's end.
Spot bitcoin ETFs do not pay dividends, as bitcoins do not generate any income. The investment value of spot bitcoin ETFs is derived mainly from the appreciation (or depreciation) in the price of bitcoins.
Bitcoin could soar 266% to $250,000 next year if ETF inflows stay strong, Standard Chartered says. Bitcoin could reach $250,000 in 2025, Standard Chartered's Geoff Kendrick predicted. That's as long as spot ETF inflows remain strong, and reserve managers begin buying crypto.
Here's how it works: An investment company creates a subsidiary that acts as a commodity pool. The pool in turn trades bitcoin futures contracts typically in an effort to mimic the spot price of bitcoin. But there are costs involved like “roll premiums” and management fees, among others.
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.
However, Vanguard does not have plans to create a Vanguard bitcoin ETF or other crypto-related products. Additionally, such products from other issuers will not be offered on our brokerage platform.
BlackRock's iShares Bitcoin BTC -0.65% Trust (IBIT) spot bitcoin exchange-traded fund (ETF) is a financial product allowing investors to gain exposure to bitcoin's price movements without owning the cryptocurrency itself.
What is the symbol for Bitcoin ETF?
| Symbol Symbol | ETF Name ETF Name | Asset Class Asset Class |
|---|---|---|
| FBTC | Fidelity Wise Origin Bitcoin Fund | Currency |
| ARKB | ARK 21Shares Bitcoin ETF | Currency |
| BITO | ProShares Bitcoin Strategy ETF | Currency |
| BITB | Bitwise Bitcoin ETF Trust | Currency |
Blockchain technology is neither banned nor under heightened scrutiny by most regulatory agencies. Blockchain ETFs primarily track the stock market prices of companies invested in blockchain technology. The first Bitcoin futures ETFs began trading in 2021, and Bitcoin spot ETFs began trading in January 2024.
Bitcoin ETFs follow the traditional rules for capital gains and losses. First, short-term capital gains and losses (including carryovers) are netted. Next, long-term capital gains and losses (including carryovers) are netted. Finally, the net short-term gain or loss is combined with the net long-term gain or loss.
Bitcoin ETFs are traded on the stock market, just like any other stock or exchange-traded fund. That means to trade bitcoin ETFs, you need a brokerage account. If you are looking to open an account, Buy Side's top brokerage picks include Fidelity, TD Ameritrade and more.
| Fund (ticker) | YTD performance | Expense ratio |
|---|---|---|
| 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% |
| Franklin Bitcoin ETF (EZBC) | 50.2% | 0.19% |
