Investor’s Guide to the 11 Newly SEC-Approved Bitcoin Spot ETFs
The recent approval by the U.S. Securities and Exchange Commission (SEC) of 11 spot Bitcoin exchange-traded funds (ETFs) marks a significant development in the cryptocurrency market.
The launch of these ETFs saw a considerable volume of $4.6 billion on the first day of trading, indicating a strong interest from investors.
What Does It Mean for Investors?
The approval of these ETFs makes investing in Bitcoin more accessible to a broader range of investors, particularly those who are more comfortable with traditional investment vehicles. It bridges the gap between the traditional financial market and the emerging world of cryptocurrencies, potentially leading to increased mainstream adoption of Bitcoin.
These ETFs provide a regulated means for investing in BTC. This is significant for investors who may have been hesitant to invest directly in Bitcoin due to concerns over regulatory uncertainty, security risks associated with cryptocurrency exchanges, or the technical complexities of handling cryptocurrencies.
For investors looking to diversify their portfolios, Bitcoin ETFs offer an alternative investment option. Given Bitcoin’s low correlation with traditional asset classes, it can potentially offer diversification benefits.
What Does It Mean for Bitcoin?
Legitimacy and Institutional Acceptance: The SEC’s approval is a strong signal of legitimacy for Bitcoin in the eyes of institutional investors and the financial community at large. It marks a shift in perception, acknowledging Bitcoin as a viable asset class. This increased legitimacy can attract more institutional investors to the cryptocurrency market.
Market Stability and Maturity: The introduction of regulated Bitcoin ETFs suggests a move towards greater market stability and maturity. ETFs provide a more structured and secure investment option, which can help mitigate the perceived risks and volatility often associated with cryptocurrencies.
Increased Demand and Price Impact: The launch of these ETFs can lead to increased demand for Bitcoin, as they make it easier for a wider audience to invest. This demand can positively impact Bitcoin’s price, as seen with the initial price surge following the ETF approvals. However, investors should still be cautious about potential volatility.
How to Choose the Right One Out of 11 New Bitcoin ETFs?
When it comes to ETFs with the same underlying assets, in this case, all 11 ETFs are supposed to track the spot price of BTC, the decision on which one to invest in might come down to two main criteria: fees and liquidity.
Fees (Expense Ratio): This measures the fund’s operational expenses as a percentage of its average net assets. Generally, lower expense ratios mean lower costs for investors. Over time, even small differences in expense ratios can significantly impact net returns.
Liquidity: Consider the average trading volume of the ETF. Higher liquidity indicates easier entry and exit at prices closer to the market rate. This is particularly important if you anticipate the need to trade quickly or in large quantities.
The table below summarizes the fees and average daily volume of all 11 ETFs to help you make an easier decision based on your needs:
| Ticker Symbol | Name | Fees | Fee Waiver | Avg. Volume (As of market close on January 18) |
| ARKB | ARK 21Shares Bitcoin ETF | 0.21 % | The Sponsor intends to waive the entire Sponsor Fee for a six month period or the first $1 billion of Trust assets, whichever occurs first. | 3,381,975 |
| BITB | Bitwise Bitcoin ETF | 0.2 % | The Sponsor intends to waive the entire Sponsor Fee for a six month period or the first $1 billion of Trust assets, whichever occurs first. | 3,056,050 |
| FBTC | Fidelity Wise Origin Bitcoin Trust | 0.25 % | The Sponsor has agreed to waive the entire Sponsor Fee through July 31, 2024. | 11,139,175 |
| EZBC | Franklin Bitcoin ETF | 0.19 % | The Sponsor has agreed to waive the entire Sponsor Fee through August 2, 2024. | 312,031 |
| GBTC | Grayscale Bitcoin Trust | 0.30 % | The Sponsor intends to waive the entire Sponsor Fee for a six month period or the first $1 billion of Trust assets, whichever occurs first. | 7,885,195 |
| DEFI | Hashdex Bitcoin ETF | 0.9 % | N/A | 4,180 |
| BTCO | Invesco Galaxy Bitcoin ETF | 0.39 % | The Sponsor intends to waive the entire Sponsor Fee for a six month period or the first $5 billion of Trust assets, whichever occurs first. | 943,825 |
| IBIT | iShares Bitcoin Trust | 0.25 % | For a twelve-month period the Sponsor will waive a portion of the Sponsor’s Fee so that the Sponsor’s Fee after the fee waiver will be equal to 0.12% of the net asset value of the Trust for the first $5.0 billion of the Trust’s assets. | 22,386,700 |
| BRRR | Valkyrie Bitcoin Fund | 0.25 % | Sponsor is waiving all Sponsor Fees for first three months | 287,450 |
| HODL | VanEck Bitcoin Trust | 0.25 % | N/A | 280,200 |
| BTCW | WisdomTree Bitcoin Fund | 0.30 % | The Sponsor intends to waive the entire Sponsor Fee for a six month period or the first $1 billion of Trust assets, whichever occurs first. | 71,300 |
Source: Yahoo Finance for volume numbers; SEC filings for fees.
As we can see, the range of fees for these ETFs is quite broad, varying from 0.19% to 0.9%, with some firms offering fee waivers for initial periods; investors prioritizing low fees might lean towards EZBC, ARKB and BITB, while those valuing liquidity as a sign of stability and ease of entry/exit might prefer IBIT, GBTC or FBTC. ARKB from Cathie Wood’s Ark Invest offers a good balance of liquidity and low fees, plus it has a six-month fee waiver.
What is next?
Following the SEC’s approval of 11 spot Bitcoin ETFs, there are several potential developments that could be next for the cryptocurrency market.
BlackRock’s Larry Fink says that Bitcoin ETFs are just the first step in the technological revolution of finance and step two is going to be the tokenization of every financial asset.
Despite SEC Chair Gary Gensler’s statement that the approval should not signal anything about the Commission’s views on the status of other crypto assets, this development could spark increased interest in ETFs for other leading cryptocurrencies, such as Ethereum. Larry Fink expressed support for this idea, stating, “I see value in having an ETH ETF.”
Additionally, Grayscale CEO Michael Sonnenshein announced that Grayscale Investments intends to file for a covered call exchange-traded fund. This move aims to enable investors to generate income through options on its Grayscale Bitcoin Trust.
