What is a Bitcoin ETF and why is it so important for investors?

If you are part of the Crypto sphere then you are well aware of all the commotion surrounding the approval of the Bitcoin ETFs. Granted, this isn’t a new concept: the Winklevoss twins said they endorse Bitcoin ETFs back in 2013; in June 2023, BlackRock filed for a spot Bitcoin ETF approval, and Bitcoin Futures ETFs have been available since 2021.

If you aren’t aware, on Tuesday, the Securities and Exchange Commission’s X account posted that BTC ETFs had been approved, causing BTC prices to jump by $1,000, but then announced that their account was “compromised” and the announcement was erroneous.

But then, on Wednesday, the Securities and Exchange Commission announced, this time officially, that it had approved Bitcoin ETFs. Before that, though, the CBOE “leaked” six ETFs that they said would be available to trade the next day.

But why is this important? How will it impact Crypto investors? And how will this affect the price of the godfather of Cryptocurrencies, Bitcoin?

Bitcoin ETFs approved by Securities and Exchange Commission

The SEC’s approval of spot Bitcoin ETFs is a truly historic event, which pushes Cryptos forward both in terms of legitimacy and mainstream acceptance.

What does an approved Bitcoin ETF mean for investors and Crypto?

This means that investors can add Bitcoin to their portfolio or even directly trade the price (also known as spot Bitcoin) on regulated exchanges, without the need to actually purchase Bitcoin.

How did the approval process for the Bitcoin ETF unfold?

SEC’s X account falsely said spot Bitcoin ETFs had been approved. Of course, this caused Bitcoin to surge by almost $1,000 and then drop to $45,400 on January 9th 2024. According to reports, this also caused $90 million worth of Bitcoin positions to be liquidated and $500 million worth of Future positions to be opened in just 10 minutes.

To add insult to injury, CBOE Global Markets, before the official approval on January 10th, said six ETFs would be available to trade on Thursday, including Invesco Galaxy Bitcoin ETF, Franklin Bitcoin ETF, Ark21, Fidelity, Vaneck Bitcoin Trust and Wisdomtree Bitcoin Fund.

What is a Bitcoin ETF and why is it so important for investors? - ac297784 e579 43ca 8554 11caed6fff39

Timeline of BTC ETF Approval

  • January 9th – Hacked Securities and Exchange Commission’s X post about approval
  • January 10th – CBOE says six spot Bitcoin ETFs with tradable on Thursday before official approval
  • January 10th – SEC officially approves BTC ETFs
  • January 11th – $4.6 Billion in volume is seen on the first day of Bitcoin ETFs trading

How do the Bitcoin ETF approvals impact Bitcoin’s price?

We’ve all seen the effect of FOMO (fear of missing out) as markets rush to certain assets, especially on the Crypto market where movements are rapid and substantial.

When Blackrock’s iShares Bitcoin Trust filed for its spot BTC ETF on June 15th 2023 Bitcoin added a stunning $4,903.87 to its value in just 10 days.

Today (28 February 2024) Bitcoin (BTC/USD) is trading at $60806.1 per BTC, with a market cap of $ USD. The 24-hour trading volume amounts to $ USD. BTC to USD price has changed by 6.5% in the last 24 hours. Bitcoin’s circulating supply is BTC.

ETFs Overview

What’s a Bitcoin ETF? 

Exchange Traded Funds (ETFs) are essentially shares for funds that can be publicly traded on registered national securities exchanges like the NASDAQ and NYSE and hold actual Bitcoin.

How does it work? 

ETFs work similarly to company shares, but your shares are in a Bitcoin fund. The funds or brokers may manage your investments for you or you may be able to place orders to open and close positions.

Spot Bitcoin ETFs allow investors to trade the price of Bitcoin without owning it.

What are the costs of BTC ETFs?

According to Barrons:

Bitwise Asset Management, which says it will charge a 0.2% annual expense ratio for its fund. A fund sponsored by ARK Invest and 21Shares will have a 0.21% fee, while VanEck, BlackRock and Fidelity come in at 0.25%.

In addition, some issuers including Bitwise, ARK/21Shares, and Invesco plan to waive their fees completely for six months for the first $1 billion to $5 billion in assets under management.

How much money will flow into BTC ETFs in 2024?

If the first day of trading volume of $4.6 Billion is any indication – the volume horizon is, to use the Crypto appropriate term, to the moon.

Spot BTC ETFs vs buying Bitcoin: key differences

If your current broker offers BTC ETFs then you don’t even have to sign up with a new broker and no Crypto wallet is needed – so ease of use is an immediate benefit.

Regulation and the protection that comes with it is another benefit since these are publicly traded exchange funds.

ETFs also allow for “shorting” i.e. allowing you to benefit from the decline of the underlying asset.

Owning actual Bitcoin requires a certain level of knowledge, a wallet, the risks related to losing access to it, and signing up for a Crypto exchange. Also, if you own BTC, you can not “short” it to benefit from a price decline, as you can with spot BTC ETFs.

Both are subject to the risks associated with Bitcoin i.e. volatility and rapid price movements.

BTC ETFs list with symbols

SymbolETF NameAsset ClassTotal Assets ($MM)YTDAvg VolumePrevious Closing Price1-Day Change
ARKWARK Next Generation Internet ETFEquity$1,644.22-4.27%308,630.00$72.66-0.11%
BETEProShares Bitcoin & Ether Equal Weight Strategy ETFCurrency$2.237.72%959$61.013.97%
BETHProShares Bitcoin & Ether Market Cap Weight Strategy ETFCurrency$2.918.47%1,553.00$63.111.02%
BITCBitwise Bitcoin Strategy Optimum Roll ETFCurrency$1.278.77%9,211.00$36.24-1.79%
BITOProShares Bitcoin Strategy ETFCurrency$1,737.569.13%16,631,256.00$22.36-1.58%
BITQBitwise Crypto Industry Innovators ETFEquity$137.03-3.88%185,817.00$11.140.18%
BITSGlobal X Blockchain & Bitcoin Strategy ETFMulti-Asset$26.362.90%7,814.00$54.70-2.20%
BITWBitwise 10 Crypto Index FundEquity$0.00N/AN/AN/A0.00%
BLKCInvesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETFEquity$3.59N/AN/AN/A0.00%
BTFValkyrie Bitcoin and Ether Strategy ETFCurrency$36.578.52%99,753.00$14.524.24%
BTOPBitwise Bitcoin and Ether Equal Weight Strategy ETFCurrency$3.537.28%3,345.00$36.633.68%
DEFIHashdex Bitcoin Futures ETFCurrency$5.078.83%1,923.00$55.21-2.01%
SATOInvesco Alerian Galaxy Crypto Economy ETFEquity$8.13-2.72%12,111.00$13.660.07%
SPBCSimplify US Equity PLUS GBTC ETFMulti-Asset$9.392.45%5,181.00$29.131.32%
STCESchwab Crypto Thematic ETFEquity$21.37-4.21%11,070.00$30.43-0.69%
WGMIValkyrie Bitcoin Miners ETFEquity$70.03-3.94%370,714.00$17.290.00%
XBTFVanEck Bitcoin Strategy ETFCurrency$59.026.47%33,534.00$41.32-1.67%

Bitcoin ETF hype: tips and strategies for Crypto traders

An obvious strategy here is to buy the rumour and sell the news.

As we saw Bitcoin surged by $1000 on the hacked SEC tweet.

Breakouts and pullbacks might also be appropriate. This strategy requires the trader to enter a trade upon the breakout and exit in the region where the price tests that level from the top again.

Conclusion

This is a very exciting milestone for Cryptos, helping legitimise them as investment vehicles and opening the door to more big Crypto ETFs like Ethereum, Tether or Ripple.

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