Key Points
Buying and selling Bitcoin ETFs is a little different than buying and selling spot Bitcoin directly.
While the Bitcoin exposure is the same, the tradability and cost factors of Bitcoin ETFs should be considered.
The iShares Bitcoin Trust (IBIT) is the largest and most liquid ETF in this category.
Spot Bitcoin (CRYPTO: BTC) exchange-traded funds (ETFs) have become big business since their initial launch in January 2024. Today, cryptocurrency ETFs account for nearly $150 billion in assets with nearly half of that coming from the iShares Bitcoin Trust (NASDAQ: IBIT).
But if you're choosing to go with a Bitcoin ETF this year instead of buying Bitcoin directly through one of the exchanges, there are a couple of things you should know first.
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Bitcoin ETFs don't trade 24 hours a day like Bitcoin does
Buying a Bitcoin ETF gives you the same exposure as buying Bitcoin itself. But when you own it through an ETF, you get the trading rules that come with it.
Specifically, Bitcoin ETFs trade during normal market hours. They don't trade around the clock like spot Bitcoin does. If you're a frequent crypto trader, this might make a Bitcoin ETF less attractive.
You need to consider management fees and expenses
Virtually every ETF comes with a fee known as an expense ratio. The Bitcoin ETFs do as well. The iShares Bitcoin ETF's expense ratio of 0.25% is below average within this category, but it's something that will reduce returns over time. For something that can easily move up or down 5% in a day, a 0.25% annual fee may seem negligible, but it's something to keep in mind.
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends iShares Bitcoin Trust. The Motley Fool has a disclosure policy.