Bitcoin - We tell you everything about ETFs

Here’s everything you need to know about Bitcoin ETFs starting this Thursday, January 11.

What is a Bitcoin spot ETF?

A Bitcoin spot ETF (Exchange Traded Fund) is a type of financial product that tracks the current, or “spot,” price of bitcoin.

Investors purchase ETF shares instead of investing directly in bitcoin. The ETF buys and holds “physical” bitcoin and its shares closely follow the value of bitcoin.

Like stocks, these shares are traded on traditional stock markets, making them accessible to a wide range of investors.

ETFs are regulated financial products that offer a much safer investment environment than exchanges like FTX…

The main advantage of an ETF is that it avoids the technical difficulties associated with buying and holding bitcoins in a personal wallet. Perfect for boomers interested only in its appreciation.

Who are the pioneering investment funds?

The SEC has approved 11 ETFs. Bitwise will have the lowest management fees at 0.2%. Here is the complete list of approved ETFs:

-Bitwise (BITB): 0.2%
-ARK 21Shares (ARKB): 0.21%
-Fidelity Wise Origin (FBTC): 0.25%
-Wisdomtree (BTCW): 0.30%
-Invesco Galaxy (BTCO): 0.39%
-Valkyrie (BRRR): 0.49%
-iShares (IBIT): 0.25%
-VanEck (HODL): 0.25% (who also applied for an ethereum etf)
-Franklin (EZBC): 0.29%
-Hashdesh (DEFI): 0.9%
-Grayscale (GBTC): 1.5%

On which exchanges will the ETFs trade?

NYSE:

• Bitwise
• Hashdesh
• Grayscale

CBOE:

• ARK 21Shares
• Fidelity Wise Origin
• Wisdomtree
• Invesco Galaxy
• VanEck
• Franklin

NASDAQ:

• Valkyrie
• iShares

Who will hold the bitcoins?

8 out of the 11 providers will use the exchange Coinbase. Coinbase is said to already hold 1 million BTC on behalf of its users, including the 620,000 BTC from the former Grayscale Trust (GBTC).

Fidelity is the only fund that will use its own custody service. Bravo. VanEck will use the exchange Gemini while Hashdesh will use BitGo.

Coinbase:

• Bitwise
• ARK 21Shares
• Wisdomtree
• Invesco Galaxy
• Valkyrie Bitcoin
• iShares
• Franklin
• Grayscale

Here is the BlackRock commercial for its ETF for Anglophiles:

JUST IN: BlackRock releases an the first explainer video for their spot #Bitcoin ETF 👀

“You might have noticed #Bitcoin make it’s way into our every day lives”

pic.twitter.com/DaOl056Kmb

— Bitcoin News (@BitcoinNewsCom) January 11, 2024

“Cash” or “In-kind”?

In the world of ETFs, the terms “in-kind” and “cash” redemption are used. They refer to the methods by which investors can sell their ETF shares.

-In-kind

In this case, the investor receives the underlying asset. For example, if the ETF holds bitcoins, the investor receives bitcoins as payment.

This method is mainly used by institutional investors. It is advantageous because it avoids selling the underlying asset, which could impact the market and trigger capital gains tax.

-Cash

Here, investors receive an amount equivalent to the value of their shares in cash. This method triggers capital gains tax.

Cash redemptions can be simpler for the average investor who prefers to receive cash rather than a basket of securities.

In the case of Bitcoin spot ETFs, the SEC did not want to authorize the in-kind method.

Let’s conclude with a “Not your key, not your bitcoin”! Bitcoin is not only a store of value but also an uncensorable payment network.

Owning your private keys enables you to lose them in a boating accident. Or to use them in a circular economy anonymously. Or else to stand up against those who plan to use CBDCs to control our lives.

Moreover, there are no management fees when you hold your bitcoins yourself..

Hold your key!