How To Buy Bitcoin ETF: A Step By Step Approach

The Securities and Exchange Commission has set a new standard by approving the first Bitcoin (BTC) exchange-traded fund (ETF) in the United States. The approval is a huge step forward for the budding digital asset market.

The spot Bitcoin ETF offers an alternative way for investors to gain exposure to the asset instead of purchasing BTC from notable exchanges like Binance and Coinbase.

Should Investors Hold Bitcoin ETFs Or BTC?

Holding spot Bitcoin ETFs or BTCs by investors depends on the investment aim of the user. ETFs allow investors to buy a product that tracks the price changes of a comparable commodity or investment using the same methods as index funds. On the other hand, Bitcoin ETFs offer investors a more streamlined process, allowing them to manage their holdings without needing a cryptocurrency wallet or the complexity of cold storage.

These ETFs allow registered investment advisors (RIAs), retirement funds, and other organizations to obtain exposure to Bitcoin. Individuals and businesses previously barred from entering this asset class or hesitant to participate in digital assets can now own Bitcoin.

In the context of spot Bitcoin ETFs, the term “spot” refers to direct asset ownership without involvement in derivative contracts. Each investor here has a real stake in Bitcoin. Alternatively, investors can purchase Bitcoin futures ETFs, which involve an agreement to buy or sell BTC at a predetermined price on a specified date, regardless of market movements.

How To Buy Spot Bitcoin ETF

The process for buying Bitcoin ETF is as follows:

Step 1: Register a Brokerage Account

Select and download a brokerage service app like Robinhood or BlackRock. Alternatively, you can visit their websites, fill out the appropriate form, and log in.

Step 2: Account Funding

The trader’s brokerage account must be funded using their associated bank account through cheques or savings. They could conduct a wire transfer, deposit a cheque, or transfer monies from another broker.

Step 3: Research On Available ETF

Investors must examine the ETF’s issuer and other factors, such as the expense ratio and issuer’s fee, before investing in a Bitcoin ETF, as these factors affect investment returns.

Step 4: Select Preferred ETF

Investors can choose from a wide range of Bitcoin ETFs, allowing them to personalize their investments to their unique needs and goals. This requires thoroughly evaluating several funds to identify ones that best correspond with their financial objectives.

Step 5: Placing Order

Investors must enter the ticker symbol of the chosen Bitcoin ETF and the required number of shares into their brokerage account’s trading or order-placing interface. After verifying the order information, the investor can place the transaction. The brokerage will then add Bitcoin ETF shares per the terms to the investor’s portfolio.

Step 6: Monitoring Investment

Consistently monitoring assets is critical for investors to steer their portfolios in the right direction effectively. Regular assessments enable investors to stay current on changing market conditions, allowing for more informed decision-making and proactive adjustments to their investment plan.

Best Ways To Buy Spot Bitcoin ETFs

Investors have multiple choices for purchasing Bitcoin ETFs. One approach is to use online brokerage accounts provided by companies such as Fidelity, Charles Schwab, and Robinhood, which have a search feature that makes it easier to find and trade funds.

Crypto exchanges, like Kraken and Coinbase (serving as custodians for SEC-approved ETFs), also offer investing opportunities. The Bitwise 2024 benchmark poll shows that financial advisers in the United States are increasingly interested in crypto ETFs.

According to the findings, 19% of advisers can invest in cryptocurrency for their customers, and 98% of those who have already done so want to keep or expand their allocations in 2024. Robo-advisors such as Wealthfront and Betterment provide a low-cost, automated platform for purchasing Bitcoin ETFs based on investor objectives and risk tolerance.

Traditional banks provide another option, requiring customers to open brokerage accounts with the bank’s investment division. However, accessibility may vary by area and bank services as the regulatory landscape for cryptocurrencies evolves. Meanwhile, the developing regulatory landscape, including the regional variations, would impact the availability of Bitcoin ETFs through regular banks.