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Spot Bitcoin ETFs start trading today – here’s what you need to know
Key points
- 11 spot bitcoin exchange-traded funds approved yesterday will begin trading today.
- The ETFs will be listed on three different stock exchanges NYSE Arca, Cboe BZX and Nasdaq.
- Spot bitcoin ETFs will make it easier for investors to gain exposure to bitcoin as they will be able to trade the ETF through their brokerage account.
- Several bitcoin ETFs hitting the market today have sparked a fee war between issuers, each trying to lure investors with fee waivers and reductions.
THE Securities and Exchange Commission (SEC) ended months of speculation this week approving the first ever spot market Bitcoin Exchange-traded funds (ETF). Here’s what you need to know about ETFs that can start trading today.
1) What new bitcoin ETFs are starting to trade today and where?
The SEC has approved eleven new ETFs that will be listed on the NYSE Ark, Cboe BZXAND Nasdaq exchanges. Below is a list of ETFs traded on each exchange and their tickers:
NYSE Ark will list and trade shares of the Grayscale Bitcoin Trust (GBTC), the Bitwise Bitcoin ETF (BITB) and the Hashdex Bitcoin ETF (DEFI). DEFI currently trades as a bitcoin futures ETF and has received approval to convert to a spot product, but Hashdex has corrected an initial announcement to clarify that the change in name and investment strategy will occur at a later date.
Cboe BZX will list and trade shares of the ARK 21Shares Bitcoin ETF (ARKB), the Invesco Galaxy Bitcoin ETF (BTCO), the VanEck Bitcoin Trust (HODL), the WisdomTree Bitcoin fund (BTCW), the Fidelity Wise Origin Bitcoin Fund (FBTC) and the Franklin Bitcoin ETF (EZBC).
Nasdaq will list and trade shares of the iShares Bitcoin Trust (IBIT) and the Valkyrie Bitcoin Fund (BRRR).
2)How does a Bitcoin ETF work?
When you buy a share of an ETF, you are purchasing a basket of securities that the ETF holds in its portfolio:in this case it is bitcoin. The value of your investment will be related to the change in bitcoin prices.
Using BlackRock’s iShares Bitcoin Trust as an example, the ETF will be listed on the Nasdaq exchange. The price of the ETF will be calculated daily using the CME Bitcoin CF reference rate, which “aggregates” the notional value of bitcoin trading across major bitcoin spot exchanges.
3)How can I trade Bitcoin ETFs?
Trading bitcoin in the new ETFs will be easier than buying the cryptocurrency directly on exchanges. Investors can simply buy and sell shares of the new funds through their current ones brokerage account.
Buy bitcoin (BitcoinUSD) directly implies the use of a Wallet for hot or cold storage and the requirement to maintain private and public keys, which are cryptographic strings of letters and numbers needed to make cryptographic transfers from your wallet. Complicated storage and lack of SEC regulation on exchanges have been seen as a major deterrent to retail and institutional adoption of BTC.
4) Are there any costs involved?
ETF trading involves a fee, but the impending approval of a large number of new funds has sparked competition among providers. New bitcoin investment vehicles will see a downturn commissions and exemptions for the first months of trading.
Bitwise said it will charge a management fee of 0.20% for its spot bitcoin ETF, compared to the 0.37% average for current U.S. ETF products in 2022. VanEck set its expense ratio at 0, 25% while ARK Invest’s 21Shares has planned fees of 0.21%. BlackRock, the world’s largest asset manager, will charge 0.25%.
Early investors can also benefit as Bitwise said it will waive fees on the first $1 billion invested for the first six months. Ark also announced a fee waiver for six months or the first $1 billion invested, whichever comes first. BlackRock has set an opt-out period of 12 months or the first $5 billion invested.
Correction: January. 11, 2024: This article has been updated to reflect the Hashdex correction and clarifications.