Here’s What You Need to Know About Bitcoin ETFs Trading

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This Thursday, the Securities and Exchange Commission (SEC) approved the first spot market for Bitcoin Exchange Traded Funds (ETFs), bringing an end to months of speculation. Here’s what you should know about the ETFs that can be traded starting today.

Which new bitcoin ETFs begin trading today, and where?

The SEC has approved eleven new ETFs to be listed on the NYSE Arca, Cboe BZX, and Nasdaq exchanges. The following is a list of the ETFs trading on each exchange, with their tickers:

Here's What You Need to Know About Bitcoin ETFs Trading
Here’s What You Need to Know About Bitcoin ETFs Trading

The United States Securities and Exchange Commission, “Order Granting Accelerated Approval of Proposed Rule Changes, as Modified by Amendments Thereto, to List and Trade Bitcoin-Based Commodity-Based Trust Shares and Trust Units.”

NYSE Arca will list and trade shares of the Grayscale Bitcoin Trust (GBTC), Bitwise Bitcoin ETF (BITB), and Hashdex Bitcoin ETF (DEFI). DEFI is currently traded as a bitcoin futures ETF and has acquired approval to convert to a spot product, but Hashdex clarified in an original statement that the name change and investment strategy will take place at a later date. Cboe BZX will list and trade shares of the following ETFs: ARK 21Shares Bitcoin ETF (ARKB), Invesco Galaxy Bitcoin ETF (BTCO), VanEck Bitcoin Trust (HODL), WisdomTree Bitcoin Fund (BTCW), Fidelity Wise Origin Bitcoin Fund (FBTC), and Franklin Bitcoin ETF (EZBC).

Nasdaq will list and trade shares in the iShares Bitcoin Trust (IBIT) and the Valkyrie Bitcoin Fund (BRRR).

How does a Bitcoin ETF work?

When you buy an ETF share, you are investing in a basket of securities that the ETF holds in its portfolio, which in this case includes bitcoin. The value of your investment will be proportional to the change in bitcoin prices. Using BlackRock’s iShares Bitcoin Trust as an example, the ETF will be listed on Nasdaq. The ETF’s price will be computed daily using the CF CME Bitcoin Reference Rate, which “aggregates” the notional value of bitcoin trading on major bitcoin spot exchanges.

How do I trade Bitcoin ETFs?

Trading bitcoin in the new ETFs will be easier than purchasing the cryptocurrency straight from exchanges. Investors can simply buy and sell shares in the new funds using their existing brokerage accounts.Buying bitcoin (BTCUSD) directly requires the use of a hot or cold storage wallet, as well as the maintenance of the private and public keys, which are cryptographic strings of letters and numbers required to make cryptographic transfers from your wallet. The complicated storage and lack of SEC oversight on exchanges were viewed as significant barriers to retail and institutional adoption of BTC.

Are there any expenses involved?

Trading in ETFs incurs a cost, but the impending approval of a large number of new funds has fueled rivalry among providers. The new bitcoin investment vehicles will have cheaper fees and waivers for the first several months of trading. Bitwise announced a 0.20% management cost for its spot bitcoin ETF, compared to the 0.37% average for current U.S. ETF products in 2022. VanEck’s expense ratio was set at 0.25%, while ARK Invest’s 21Shares projected 0.21% fees. The world’s largest asset manager, BlackRock, is slated to charge 0.25%.

Early investors will also benefit, as Bitwise has announced that it will remove fees on the first $1 billion invested for the first six months. Ark also announced a fee waiver for six months or the first billion dollars invested, whichever comes first. BlackRock set a 12-month waiver period for the first $5 billion invested.

 

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