What You Need to Know About Bitcoin ETFs

Bitcoin ETFs are exchange-traded funds that track the price of the largest cryptocurrency, bitcoin. They allow investors to gain exposure to bitcoin without having to buy or store it directly. Bitcoin ETFs can be traded on traditional stock exchanges, making them accessible and convenient for many investors.

There are two types of bitcoin ETFs: spot and futures. Spot bitcoin ETFs hold actual bitcoins in custody and aim to mirror the spot price of bitcoin. Futures bitcoin ETFs invest in bitcoin futures contracts, which are agreements to buy or sell bitcoin at a specified price and date in the future.

Spot bitcoin ETFs are generally considered to be superior to futures bitcoin ETFs, as they have lower fees, less tracking error, and no rollover costs. However, spot bitcoin ETFs were only approved by the U.S. Securities and Exchange Commission (SEC) in January 2024, after years of rejections and delays. Before that, only futures bitcoin ETFs were available in the U.S., while Canada and some European countries had already launched spot bitcoin ETFs.