Navigating the dynamic world of cryptocurrency investment, particularly with Bitcoin, demands caution and strategic choices. While the market’s volatility might deter some from direct ownership, investing in Bitcoin through Exchange-Traded Funds (ETFs) is a secure and accessible avenue. This method not only mitigates risk but also grants exposure to Bitcoin’s potential growth.
We have prepared this guide to explore the landscape of Bitcoin ETFs in the UK for 2024, offering insights into top-performing options. We will also briefly explain a Bitcoin ETF and other relevant information to prepare you for making your first investment.
In This Guide
List of the Best Bitcoin ETFs
As we step into 2024, the ever-evolving landscape of Bitcoin ETFs presents investors with an array of options. To assist in navigating this dynamic terrain, our team of professional researchers and investors conducted a comprehensive comparison to recommend the most promising Bitcoin ETFs for potential investment. The curated list below showcases noteworthy Bitcoin ETFs, leveraging historical performance and market positioning to help navigate the ever-changing crypto investment landscape.
1. ProShares Bitcoin Strategy ETF (BITO)
Launched in 2021, ProShares Bitcoin Strategy ETF emerged as the first US-approved Bitcoin ETF, available on the New York Stock Exchange (NYSE) under the ticker symbol BITO. This actively managed fund seeks to track Bitcoin’s value through a blend of Bitcoin futures contracts, cash, and treasury securities.
Despite experiencing recent declines in value, analysts hold an optimistic outlook, projecting potential growth in the near future. The ETF’s lower charges compared to its peers, coupled with its strategic positioning in the Bitcoin futures market, make it an attractive option for investors seeking exposure to Bitcoin’s potential upside while managing risk.
2. Valkyrie Bitcoin Strategy ETF (BTF)
Introduced shortly after BITO, Valkyrie Bitcoin Strategy ETF caters to investors seeking Bitcoin exposure without complete ownership. As the first short Bitcoin ETF to list, trading on NASDAQ under the ticker symbol BTF, it primarily invests in Bitcoin futures contracts on the NASDAQ exchange under the ticker symbol BTF. The ETF also allocates remaining assets to money market funds, government securities, and corporate bonds for a diversified investment approach.
Despite fluctuations in value akin to Bitcoin’s market behaviour, BTF’s popularity among investors continues to rise. With no direct Bitcoin investment, BTF relies on Bitcoin futures traded on the Chicago Mercantile Exchange. Notably, its annual fee of 0.95% and diversified portfolio, including trusts for various altcoins, make it an intriguing choice for investors looking beyond Bitcoin alone.
3. VanEck Bitcoin Strategy ETF (XBTF)
VanEck Bitcoin Strategy ETF, listed on the NYSE under the ticker XBTF, tracks Bitcoin’s value through futures contracts, cash, and treasuries. Similar to its counterparts, XBTF’s value oscillates in tandem with Bitcoin’s volatility. However, it distinguishes itself with a lower annual fee of 0.65%, attracting investors seeking cost-efficient exposure to Bitcoin.
Additionally, this ETF’s tax-efficient structure as a C-corporation sets it apart from other ETFs structured as Regulated Investment Corporations. This can be appealing to investors seeking tax advantages.
4. Global X Blockchain & Bitcoin Strategy ETF (BITS)
With an annual fee of 0.65%, Global X Blockchain & Bitcoin Strategy ETF stands as an affordable ETF Bitcoin traded on NASDAQ under the symbol BITS. This ETF uniquely combines Bitcoin futures with blockchain equities, positioning itself to benefit from both crypto markets and advancements in blockchain technology. BITS aims for long-term capital appreciation, making it an enticing option for investors eyeing a diversified portfolio within the crypto and blockchain sectors.
What is a Bitcoin ETF?
A Bitcoin ETF is a financial product designed to provide investors with exposure to Bitcoin’s price movements without owning the cryptocurrency directly. It functions like a traditional ETF, traded on stock exchanges, where investors buy and sell shares representing Bitcoin’s value.
Unlike buying Bitcoin through cryptocurrency exchanges, a Bitcoin ETF holds Bitcoin indirectly, typically through futures contracts or other financial instruments tied to Bitcoin’s price. This structure allows investors to gain exposure to Bitcoin without dealing with the complexities of owning and securing the cryptocurrency.
Bitcoin ETFs offer accessibility and familiarity to investors who might be hesitant about navigating cryptocurrency exchanges. They operate within regulated frameworks, providing oversight and potential liquidity advantages compared to direct cryptocurrency investments.
How to Invest in Bitcoin* ETFs
ETFs can be like a basket of opportunities, but remember, they’re not immune to market shifts. Just as the seasons change, so can the value of your ETF investments. Before diving in, take time to explore what’s inside the basket – understand the assets, their track record, and potential pitfalls.
Think of ETFs like a treasure map; you want to ensure you’re not led astray. Watch out for hidden costs and tracking errors, as these can be the dragons on your path to returns. A careful approach to ETF investing is your compass through the market’s wilderness, helping you navigate potential risks while optimising your investment journey.
Venturing into Bitcoin ETFs necessitates a strategic approach and a deep understanding of the investment process. Below, we take you through the simple procedures of investing in this asset using an ETF broker.
Select the best Bitcoin ETF UK broker from our broker recommendations page offering access to your desired ETF exchange. Visit the broker’s website, understand its terms and conditions, and confirm whether its features align with your trading requirements. For those frequently on the move, consider downloading the broker’s mobile trading app.
On the broker’s website, click “Register, Sign Up or Join Now”, and provide all necessary personal details as part of the registration. These could be your name, email, phone number, jurisdiction area, and more. If there’s a verification process, furnish the required documents, whether copies of ID or a utility bill. This ensures a seamless review, activating your account for investment purposes.
Every broker has a minimum deposit requirement, so choose one within your financial scope. Upon full account activation and notification, deposit funds following the broker’s specifications. Brokers typically support multiple payment methods, including cards, e-wallets, and bank transfers, allowing flexibility in transactions.
After approving your deposit, your broker grants access to the exchange hosting your chosen Bitcoin ETF. Use the ETF’s ticker symbol, such as ‘BITO’ for ProShares Bitcoin Strategy ETF, to find it within the exchange.
Determine your investment amount in the Bitcoin ETF and proceed with the purchase. Consider employing market, limit, or stop orders to effectively manage trading risks. Once executed, monitor your investments closely to ensure they align with your strategy.
*Don’t invest in crypto assets unless you’re prepared to lose all the money you invest.
Bitcoin ETF Fees
Investing in a Bitcoin ETF UK involves navigating annual expense ratio fees, differentiating it from directly purchasing Bitcoin on a cryptocurrency exchange. While buying Bitcoin incurs a one-time fee upon purchase and potential withdrawal fees for transferring assets to a crypto wallet, the expense ratio fees associated with Bitcoin ETF ownership can vary and potentially be higher.
It’s crucial to note that Bitcoin ETFs encompass varying annual costs. To navigate these fees effectively, consider selecting an ETF within your comfort zone and budgetary constraints. Additionally, when choosing a broker, prioritise aligning fees with your financial plans by assessing factors such as minimum deposit requirements, transaction charges, potential inactivity fees, and other associated costs.
Understanding the fee structure of Bitcoin ETFs is pivotal for informed investment decisions. Striking a balance between the costs incurred and the potential benefits of investing in a Bitcoin ETF ensures a strategic approach towards optimising your investment journey.
Buying Bitcoin vs Investing in Bitcoin ETFs
Both buying Bitcoin directly and investing in Bitcoin Exchange-Traded Funds (ETFs) offer distinct pathways to gain exposure to the world’s leading cryptocurrency. Here’s a comparative breakdown of the two investment approaches.
Buying Bitcoin involves acquiring the cryptocurrency, taking complete ownership, and storing it in a digital wallet. This method typically incurs a one-time transaction fee, which varies based on the exchange and the size of the transaction. Direct ownership exposes investors directly to Bitcoin’s price volatility, potentially resulting in significant gains or losses based on market fluctuations.
Bitcoin ETFs offer indirect exposure to Bitcoin’s value, allowing investment through shares or units of the ETF. Unlike direct ownership, ETFs charge annual expense ratio fees, covering management and operational costs. These fees might impact overall returns and add an ongoing cost to the investment. However, ETFs provide a diversified approach and can be more accessible through traditional brokerage accounts, offering convenience and potentially lower barriers to entry for some investors.
When weighing these options, investors should consider their risk tolerance. Direct ownership exposes investors to the full volatility of Bitcoin, while ETFs might offer a more diversified and potentially less volatile exposure. The cost structure is another crucial factor, as direct purchase involves one-time transaction fees and potential wallet-related charges, while ETFs incur ongoing expense ratio fees that can impact long-term investment returns.
Moreover, convenience and accessibility play a significant role. ETFs might offer a more accessible and familiar route to Bitcoin exposure for traditional investors compared to navigating cryptocurrency exchanges for direct purchases.
Pros and Cons of Investing in Bitcoin ETFs
Bitcoin ETFs present investors with unique advantages and potential drawbacks. Here’s a detailed exploration of the pros and cons associated with investing in Bitcoin ETFs.
- Bitcoin ETFs offer exposure to Bitcoin without direct ownership, enabling diversified investments
- They are accessible through traditional brokerage accounts, appealing to both institutional and retail investors
- Bitcoin ETFs come with lower minimum investment requirements compared to direct Bitcoin purchases
- Offer simplicity in buying and selling shares through familiar brokerage platforms
- Bitcoin ETFs operate within established regulatory frameworks, offering investor security
- Charges ongoing annual fees that impact overall returns
- Lack of direct ownership restricts control over the underlying asset
- May not perfectly mirror Bitcoin’s price movements due to tracking errors
FAQs
Absolutely. There are numerous Bitcoin ETFs like the ones referenced above to invest in. However, you need a reliable broker with access to the exchanges that list them for purchase, Whether NASDAQ, NYSE, etc.
Yes. If you are an investor who does not want to avoid investing directly in Bitcoin and taking full ownership, Bitcoin ETF investments are a great way to get exposure to Bitcoin. However, it is crucial to conduct thorough market research for the best Bitcoin ETF and know when to make an investment move that could bring about profits.
Buying Bitcoin or Bitcoin ETF depends on investors’ interests and how well they understand the risks involved. For instance, you can purchase Bitcoin if you do not have enough funds to pay the annual expense ratio fee that comes with investing in Bitcoin ETF. On the other hand, investors prefer Bitcoin ETFs if they do not want the hassle of owning and securing Bitcoin in crypto wallets using private keys and addresses.
No. Unfortunately, the Financial Conduct Authority (FCA) has not approved a Bitcoin-related ETF. The good news is that you can still get exposure to Bitcoin by purchasing the asset and taking full ownership[, investing in its shares and indices.
Conclusion
Stepping into the world of Bitcoin ETFs in 2024 demands strategic decision-making and caution. While this investment avenue offers secure alternatives to direct Bitcoin ownership, making prudent choices is key to maximising your investment journey. Consider the power of portfolio diversification in managing Bitcoin’s volatility. Additionally, trade with a reputable UK-based ETF broker, conducting thorough research and assessing fees in alignment with your investment goals and risk tolerance.
Remember, the cryptocurrency investment landscape is dynamic. Stay informed, adapt to market changes, and approach your Bitcoin ETF investment journey with a long-term perspective for potential success.
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25,000 hours of testing 70+ brokers. Our recommended broker is Pepperstone.
Our recommended broker is Pepperstone.