What Are Spot Bitcoin ETFs and Should You Invest? CFI's Head Analyst Answers

We are pleased to inform you that the U.S. Securities and Exchange Commission (SEC) has officially approved the long-awaited Bitcoin Exchange-Traded Fund (ETF). 


What is Bitcoin?


Since Satoshi Nakamoto introduced Bitcoin to the world in 2008, the world of Financial Technology has been disrupted. The term 'cryptocurrency' originates from "Krypto logos," meaning 'secret writing.'


Bitcoin is the most widely used digital currency globally. It's the first digital currency that people around the world commonly use. You can make direct transactions without requiring banks in the middle as intermediaries, similar to many corporations worldwide, such as Tesla. This works because of a technology called blockchain.


We've all heard the term 'blockchain,' but many still don't fully understand it. So, what does it mean? It describes a method of storing information in an online decentralized ledger. The term "decentralization" means no single authority controls it.


What is an ETF?


The acronym ETF is short for Exchange-Traded Funds, first developed in the 1990s and managed by investment advisers who operate legally under registered investment companies. 


ETFs provide market access to passive investors, be it indexed funds or individual investors, and are promoted as a cheaper investment option compared to mutual funds with no minimum capital injection, aside from saving investors intensive market risk research and market volatility. 


Passive investing is an investment strategy that aims to maximize returns by minimizing the frequency of buying and selling. Exchange-traded funds contain several securities. Simply put, it's like a basket tracking an index. 


The SEC and Bitcoin ETF Story


The SEC has given the green light to 11 Exchange-Traded Funds for Bitcoin, opening the door to cryptocurrencies for many new investors after a long-awaited battle held high by many hedge funds demanding this deal be done.

Unlike Canada and several European countries, the U.S. was one of the few that still had not approved Bitcoin ETFs. The only thing similar that previously existed was a futures bitcoin ETF. However, this had little demand as it involved much higher fees.


That's why many large institutions such as BlackRock, Fidelity, and others held this fight over their shoulders to make the Bitcoin ETF a reality. Now, the SEC has approved the Spot Bitcoin ETF in the U.S.


Should I Consider Bitcoin ETFs?


There are many advantages of Trading Bitcoin ETFs. The main ones include diversification, liquidity, security, and lower fees (expense ratio), whereby integrating Bitcoin ETFs into your investment strategy can diversify your portfolio, potentially reducing overall risk. 


The advanced allocation of spot Bitcoin ensures enhanced liquidity, facilitating easy entry or exit from positions, making it more traditional and cheaper than holding actual Bitcoin.


How to Invest in Bitcoin ETFs


As one of the first brokers offering these ETFs, CFI Group remains at the forefront of financial innovation, keeping our clients one step ahead.


Now, you can be one of the first to trade them. These Bitcoin ETFs are available on our

MT5 and TraderEvolution platforms:


EZBC - Franklin Bitcoin ETF

BTCW - Wisdom Tree Bitcoin ETF

ARKB - The ARK 21Shares Bitcoin ETF

BTCO - Invesco Galaxy Bitcoin ETF

FBTC - Fidelity Wise Origin Bitcoin

HODL - VanEck Bitcoin Trust ETF

BITB - Bitwise Bitcoin ETP Trust Fund


You can also test and trade these new instruments risk-free with a CFI Demo account.


Considerations Around Bitcoin ETFs


While Bitcoin ETFs present many opportunities, it's crucial to consider the high market volatility around this market. Cryptocurrencies can be highly volatile, so it is essential to be mindful of potential price fluctuations and to manage your portfolio accordingly with the proper risk management tools.


Another aspect to consider is the common regulatory changes around this market. Investors should note that cryptocurrencies are constantly evolving, forcing traders to stay informed about any changes that may impact the overall performance of their investments.



The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.