As the 2024 year kicks off, cryptocurrency enthusiasts are eagerly awaiting the approval of Bitcoin ETFs, which are rumored to take place on Friday, January 5th, 2024, almost six years after they were first proposed by the Winklevoss twins in 2018.
While we aren’t sure whether or not this approval will actually take place on this date, the SEC has leaked that it is preparing to approve Bitcoin ETFs in January 2024, regardless. This all-new investment vehicle will open Bitcoin to investors everywhere, but which one is the best?
Several companies plan to offer Bitcoin ETFs it’s important to evaluate your options when it comes to investing. Read on to learn all about the best Bitcoin ETFs to invest in.
What Companies Will Offer Bitcoin ETFs?
As part of their approval by the SEC, only certain companies in the United States will be licensed to offer Bitcoin ETFs. As of the writing of this article, 13 companies have applied, though it is not known how many of these companies will get a spot.
The current applicants are made up of large banks like Fidelity, as well as famous investment funds and hedge funds like BlackRock, Bitwise, and Valkyrie. While many of these companies are waiting to announce exactly what a Bitcoin ETF will look like, some have already begun announcing details even though the approval hasn’t technically gone through yet.
Below is a list of all the companies which have applied to host a Bitcoin ETF following approval:
· 21Shares & Ark
· Invesco & Galaxy
· Global X
Which Bitcoin ETF is Best?
Because none of these companies have a Bitcoin ETF up and running just yet, it’s impossible to know which one will be best. Plus, certain investors may find certain aspects of different funds more attractive than others.
Regardless, if you are looking for a Bitcoin ETF fund to invest in based on cost alone, Fidelity will likely be the cheapest one to use.
Fidelity’s Bitcoin ETF Fees and More
The bank Fidelity is apparently pretty confident in their ability to snag one of the ETF spots, as they have already announced many features of their Bitcoin ETF, including fee levels.
Fidelity is the cheapest of all the fee levels that have been announced, coming in at 0.39%. This is far lower than the competitors, which have announced rates between 0.59%-0.80%.
One of the reasons Fidelity is able to charge less than competitors is that they are a large bank that likely doesn’t have to do a whole lot of work to get their Bitcoin ETF up and running. Plus, Fidelity has several in-house custodians who are ready to control the fund the moment it is approved, meaning Fidelity can take customers right away. We also suspect, though, that they are keeping their fees low in hopes of attracting new customers just for the Bitcoin ETF. Whether or not this tactic will work is yet to be seen.
It’s important to remember, also, that many of the applicants haven’t yet released their fees yet, as they are waiting to be approved until they do. Though both BlackRock and Geraci have mentioned that they doubt they will be able to beat the 0.39% put forth by Fidelity, likely having rates between 0.40-0.80%
How Will Bitcoin ETFs Work?
It’s a bit up in the air exactly how Bitcoin ETFs will work since the approval is still in the process. However, many companies like Fidelity have indicated that Bitcoin ETFs will contain the asset of Bitcoin as listed across several different exchanges, as well as the possible inclusion of Bitcoin-based assets, like BitcoinCash and Wrapped Bitcoin.
Additionally, it is possible that high-risk Bitcoin derivatives may be included in these funds.
It’s possible that certain assets may be banned by the SEC from being included in Bitcoin ETFs, but the details have yet to be revealed. In the meantime, it’s important to know that Bitcoin ETFs will track the prices of Bitcoin, as well as contain some actual Bitcoin, but unlike straight Bitcoin ownership, you’ll own a share of the ETF rather than the Bitcoin itself.
Learn more in A Guide to Bitcoin ETFs.
Why Would Someone Invest in a Bitcoin ETF?
It might seem a bit weird to invest in a Bitcoin ETF rather than just Bitcoin itself, but Bitcoin ETFs have a very specific purpose.
Many institutional and older investors have steered clear of cryptocurrency assets in funds and personal investments because of the difficulty of attaining and storing these assets securely. Therefore, Bitcoin ETFs will allow those who aren’t tech-savvy to expose their portfolios to Bitcoin without needing to actually go through the process of buying and holding it.
It’s important to know that Bitcoin ETFs are likely to be just as volatile as investing directly in Bitcoin, and they will likely be considered high-risk investments no matter which fund you choose.
Are Bitcoin ETFs Good?
Overall, Bitcoin ETFs are excellent news for the cryptocurrency world, whether or not you plan to invest. Creating Bitcoin ETFs will make Bitcoin, and cryptocurrency in general, more accessible to the general public and may encourage people who were previously not invested to invest.
This doesn’t necessarily mean the price of Bitcoin will rise, but it makes it likely that it could, as institutional investors, purchase shares for their funds. At the same time, however, these companies could already have Bitcoin stashed away, meaning the price may not change at all upon approval. Therefore, we can’t say for sure whether this event will directly affect the price of Bitcoin, but it is likely that it may.
Regardless, Bitcoin ETFs are good news for the cryptocurrency world and indicate that widespread adoption could be on its way. This is a developing story, and you will need to stay tuned for updates!
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