Bitcoin exchange traded funds (ETFs) are similar to other ETFs and you'll need to follow these steps if you want to buy one of them:
Choose a broker.
Open your account – including your ID.
Fund your account by transferring money from your bank account to your broker account.
Search for the Bitcoin ETF you want to buy, select it and invest.
Bitcoin ETF market updates
On 11 January 2024, the US Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs (exchange-traded funds). This means you can now get exposure to Bitcoin's price through stock brokerages and trading platforms.
On 20 June 2024, VanEck launched the first Bitcoin ETF on the Australian Stock Exchange (ASX) under the ticker VBTC.
On 11 July 2024, Monochrome announced it would be cutting the fees on its IBTC ETF to 0.50% and launching a lending protocol where investors can borrow against their IBTC holdings.
Which companies offer Bitcoin ETFs?
BlackRock
Fidelity
Invesco
Grayscale
ARK & 21 Shares
Bitwise Invest
Franklin
VanEck
Wisdomtree
Valkyrie
Hashdex
Monochrome
Global X
Monochrome
Why buy a Bitcoin ETF?
A Bitcoin ETF allows investors to gain exposure to this volatile asset through a basket approach.
It's like any other thematic-based ETF. If you believe a certain sector, theme or market could be the major winner moving forward but are unsure of the individual winners, taking a basket approach allows you to gain exposure while offsetting individual business risk.
An ETF approach to Bitcoin also allows investors a different way to gain exposure.
While there are many Bitcoin ETFs in circulation, many of which are inaccessible, the available ones offer investors different solutions. Some track movement in price while others follow businesses that are exposed to crypto assets. And while you should know what you own, a Bitcoin ETF could be a way of gaining access to the fastest-growing trend in financial markets.
Our expert says
"Buying a spot Bitcoin ETF is a really convenient way to invest in Bitcoin for anyone who just wants to speculate on the price and not worry about safe storage. The ETF issuer manages it all on your behalf, so you don't need to learn how to use a Bitcoin wallet or manage private keys."
Physically backed. This is probably the simplest form of ETF for investors to get their heads around. In this instance, the ETF you invest in will buy Bitcoin on your behalf and store it for you, most often in an offline wallet.
Futures contracts. If you choose to buy a futures-backed ETF, you don't actually own Bitcoin. Instead, the ETF provider is trading contracts that reflect Bitcoin's price on your behalf. Should the price of Bitcoin increase, so will the next contract, lifting the price of what the ETF holds. The inverse is also true should the price of Bitcoin fall.
Picks and shovels. In this instance, you're looking at companies that are mining Bitcoin. You are investing in the underlying tech instead of the outcome. Basically, you're making money selling the picks and shovels instead of buying Bitcoin itself.
Cryptocurrency ETFs vs cryptocurrency: Benefits and risks
Simplicity. Learning how to buy and store cryptocurrency can be a confusing and daunting process. ETFs make it easy to gain exposure to digital currencies without going through the hassle of owning any coins.
Create a diverse portfolio. The compartmentalised nature of the cryptocurrency industry means that acquiring and holding a large collection of currencies all at once is complicated and time-consuming. You may have to open several wallets and maintain accounts on multiple cryptocurrency exchanges. While US choices track only Bitcoin at the moment, in theory, cryptocurrency ETFs allow you to track multiple digital coins and tokens at once, saving you a lot of time and effort.
Avoid the risk of hacking. Cryptocurrency exchanges and wallets are susceptible to hacking attacks and theft. Buying units in a cryptocurrency ETF protects you against these risks as you don't actually own any digital coins.
Lower fees. ETFs generally have lower fees than traditional managed funds, making it possible to build a diversified portfolio at reduced expenses.
Regulation. Futures markets used by current Bitcoin ETFs are federally regulated while Bitcoin has more limited regulation. Some will consider this a benefit, others a drawback.
Limited choice. There's currently limited choice available for anyone wanting to invest in cryptocurrency-related ETFs in the US. However, now that the SEC has approved its first cryptocurrency ETF, this will likely soon change.
Volatility. Cryptocurrencies are famous for their volatility. They can also experience substantial price fluctuations in a short period. If the market moves against you, the value of your cryptocurrency ETF units could take a sharp dive.
Tracking vs owning. With futures-based cryptocurrency ETFs, you're also looking at a value that tracks the coin indirectly. It won't match the asset and you could gain or lose as the asset moves in price. It's a great unknown at this point.
Lack of risk diversification. Traditional ETFs often include an extensive range of securities to help achieve diversification. They sometimes include government bonds and debt to mitigate market risk. However, most versions of cryptocurrency ETFs only provide access to a limited range of digital currencies. When you consider the correlation between the performance of Bitcoin and the value of altcoins, this only increases the level of risk.
Crypto-specific risks still apply. Just because you don't have to deal with any of the risks of owning digital currency doesn't mean these risks cease to exist. Issues such as hacking will still need to be managed by the ETF provider.
Fees apply. On top of an annual management fee, you'll need to consider brokerage fees that apply when you buy or sell ETF units.
International taxes. If you buy ETF units located in another country, such as XBT Provider's funds, be aware that foreign tax may apply.
Compare online ETF brokers
To invest in Bitcoin ETFs, you need a brokerage account. Review platform features and fees to find the account that best fits your needs.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
What Bitcoin ETFs are listed in Australia?
There are 3 Bitcoin ETFs trading in Australia, as well as 11 spot Bitcoin ETFs in the US that you may be able to trade from Australia, depending on your broker.
These are the VanEck Bitcoin ETF (ASX: VBTC), Monochrome Bitcoin ETF (CBOE: IBTC) and Global X 21Shares Bitcoin ETF (CBOE: EBTC).
This is a summary of the fees charged on the 11 spot Bitcoin ETFs that have been approved:
ETF issuer
Symbol
Initial fee
Long-term fee
Details
BlackRock
IBIT
0.20%
0.30%
First 12 months or US$5 billion AUM
Fidelity
FBTC
0%
0.39%
First 6 months or US$1 billion AUM
Invesco
BTCO
0%
0.59%
First 6 months and US$5 billion AUM
Grayscale
GBTC
1.50%
1.50%
N/A
ARK & 21 Shares
ARKB
0%
0.25%
First 6 months or $1 billion AUM
Bitwise Invest
BITB
0%
0.24%
First 6 months or $1 billion AUM
Franklin
EXBC
0.29%
0.29%
N/A
VanEck
HODL
0.25%
0.25%
N/A
Wisdomtree
BTCW
0.50%
0.50%
N/A
Valkyrie
BRRR
0.80%
0.80%
N/A
Hashdex
DEFI
0.90%
0.90%
N/A
How do ETFs affect the price of Bitcoin?
Bitcoin ETFs should positively affect Bitcoin price. Bitcoin will get more attention from mainstream investors, including financial advisers who wouldn't otherwise want to get exposure to cryptocurrency. Having Bitcoin ETFs approved by the SEC could also boost investor confidence in this alternative asset.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs comes with a higher risk of losing money rapidly due to leverage. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
Who are Bitcoin ETFs suited to?
Bitcoin ETFs are suited to a number of investors ranging from those who are already stock traders to those who are bullish on the future price of the asset class.
Buying one of the current Bitcoin ETFs means you will be investing in future contracts or in a company's exposure to Bitcoin's assets, but you will not hold the "physical" asset itself. As such, investors who are bullish on the price of the underlying asset but do not want the hassle of owning a cryptocurrency wallet could favour a Bitcoin ETF instead.
An ETF structure might also appeal to investors who own other stocks but want to gain exposure to Bitcoin assets.
Rather than signing up for 2 different accounts and having to track 2 different asset classes, investors can simply own an ETF.
Limitations of Bitcoin ETFs
While an ETF gives you the opportunity to get into the market, as it currently stands you won't own the actual underlying assets. Instead, most trade using a model based on business exposure to Bitcoin or based on contracts for difference (CFDs), meaning you are trading on the future price of Bitcoin without owning it.
If you want to own Bitcoin, an ETF approach may not be best suited to your needs.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
Cameron Micallef was an investment and utilities writer for Finder. He previously worked on titles including Smart Property Investment, nestegg and Investor Daily, reporting across superannuation, property and investments. Cameron has a Bachelor of Communication and Media Studies/ Commerce from the University of Wollongong. Outside of work Cameron is passionate about all things sports and travel. See full bio
Cameron's expertise
Cameron has written 163 Finder guides across topics including:
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs. See full bio
Kylie's expertise
Kylie has written 134 Finder guides across topics including:
If you’re looking for ways to gain exposure to Bitcoin and other digital currencies, cryptocurrency ETFs could be worth exploring. Find out what crypto ETFs are and how they work in this introductory guide.
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