Bitcoin ETF: The Guide You Need to Know in 2024

Since the first Bitcoin spot ETF launched in Canada in February 2021 (Purpose Bitcoin ETF on TSX), things are moving fast in the world of crypto ETFs. But what is it really?

In Two Words: Bitcoin ETF vs Direct Cryptos

A Bitcoin ETF is an exchange-traded fund that tracks the price of BTC without you needing to: create a wallet, manage private keys, or deal with crypto exchanges. You purchase through your usual broker, period.

There are two types:

• Spot ETF (Spot): direct holding of actual Bitcoin. More authentic, but less available in the US for now.
• Futures ETF: track BTC futures contracts, not the actual price. Less precise, but this is primarily found in the United States (ProShares, VanEck, etc.).

Why Is It Important?

For institutions: finally a regulated and transparent channel. BlackRock, Fidelity, and major traditional players were waiting for this to enter.

For small investors: no more hassle with sketchy crypto exchanges, security issues, hidden fees. It's like buying SPDR S&P 500.

Historical Comparison: after the launch of the Gold ETF in 2004 (SPDR Gold Shares), gold surged in a few years. Analysts expect a similar effect on the crypto market.

The Global Overview

Canada, Switzerland, Germany: spot ETFs already exist and are popular. Purpose Bitcoin ETF (TSX: BTCC) = ~2 billion CAD under management.

United States: Two-step situation. Futures ETF OK since 2021 (BITO on NYSEArca ~17 billion USD). Spot ETF awaiting SEC but signals are improving (Grayscale, ARK, BlackRock, Fidelity all in the running).

Quick Table (January 2024) :

• ProShares Bitcoin Strategy ETF (BITO) : $17B AUM, the largest
• VanEck Bitcoin Strategy (XBTF) : $54.4M
• Valkyrie Bitcoin Strategy (BTF) : $34.5M
• Global X Blockchain & Bitcoin (BITS) : $25.4M

How to Choose?

1. Spot vs Futures ? Spot = closer to the true BTC price. Futures = more accessible ( if you are in the US ).
2. Fees? Crazy comparisons: some ETFs at 0.2%, others at 0.5%+. Over several years, it makes all the difference.
3. Liquidity? Bigger = easier to enter/exit quickly.
4. Track record ? The previous ETFs ( since 2021) have more history. Bitcoin volatility = beware of short time horizons.
5. Your risk tolerance? Bitcoin has 20%+ moves in a few days. Not for the faint-hearted.

How to Buy?

Step 1: Open a broker account (Degiro, Interactive Brokers, etc.).

Step 2: Look for the Bitcoin ETF ticker (BTCC in Canada, BITO in the US, BTCE in Germany, etc. ).

Step 3: Order like any other action. Normal broker commission fees.

Step 4: Waiting = more effort than direct crypto, but infinitely safer and regulated.

Risks Not to Forget

✗ Bitcoin = ultra-volatile. -30% in a week? It's déjà vu. ✗ Regulation: SEC could change everything tomorrow. Spot ETF ban? Unlikely but possible. ✗ Contango/Backwardation: futures ETFs can lose money in a sideways market due to contract rollovers. ✗ Fees: even small ones eat away at small gains.

Verdict

Bitcoin ETF = bridge between traditional finance and crypto. Not revolutionary ( it's just Bitcoin through a regulated intermediary ) but practical for institutions and risk-averse investors.

If you can tolerate volatility and want Bitcoin without managing keys = it's your play. Otherwise, seek a good financial advisor first.