How to make money with spot Bitcoin ETF

24 May 2024

At the beginning of 2024, the US SEC approved a spot Bitcoin ETF ✅. Large players began to actively invest in it. According to the May F13 report, Bitcoin funds invested over 600 companies ❗. The total investment amount is over $3.5 billion.

By the end of April Bitcoin ETF began to experience an outflow of investments 📉. Trade volume decreased from $5.5 billion on March 5, 2024 to $997 million on May 8, 2024.

The redistribution of markets between different issuers has slowed down. For example, Blackrock’s Bitcoin ETF (IBIT), which boasted 22% of total turnover, increased its share to 59% by the end of April. In May, it accounted for about 44-49% of the market.

🚦 GBTC fluctuates between 17-26%. It was the vigorous sale of this asset that led to the fall of Bitcoin in 2024.

IN In April 2024, fewer and fewer people began to want to buy bitcoin ETF. Everything turned out to be so dramatic that on May 1, the outflow for many funds turned out to be negative ➖.

$167 million was withdrawn from FBTC. $191 million was withdrawn from GBTC. The total market drawdown reached $563 million. The situation began to improve only in the 2nd week of May.

Even despite the difficulties, the Bitcoin spot ETF shows the best performance among all exchange-traded funds 📊. The crypto ETF market quickly reached 10 billion in value. According to experts, this indicates interest from investors 👀. It is necessary and extremely important to carefully study this asset. If you miss it, you can lose a lot of potential profit.

🚦 Is it still difficult to understand what a bitcoin ETF is? You have the opportunity for free ask a question to Rating Forex and get a clear, detailed answer 👏. We will explain everything in detail. You will have a new way to earn money.

Spot Bitcoin ETF – what is it?

BTC ETF is a type of investment fund that trades on exchanges like ordinary securities. They are based on the crypto basket 🧺. Their main goal is to give investors the opportunity to profit from BTC price fluctuations without directly purchasing, storing and managing them.

We can safely say that bitcoin ETF is an opportunity for investors who prefer classic investment channels to profit from an alternative financial instrument. That is, from the first cryptocurrency in the world.

Investors buy shares spot bitcoin ETFs that are pegged to the price of BTC. Funds strive to follow the chart of real crypto as much as possible 📈. They become more expensive and cheaper along with it. Thanks to this, traders can earn 💰 on Bitcoin volatility without directly owning it.

How to buy BTC ETF

To buy a Bitcoin ETF, you need to follow 3 simple steps:

Select the exchange where BTC ETFs are traded ✅.
Open an account with a broker working there ✅.
Buy shares of the fund you are interested in ✅.

The process is no different from trading regular securities, except for the very high volatility of the asset.

The US Securities and Exchange Commission has recognized 11 funds on two exchanges:

👉 NYSE. BITB, ARKB, FBTC, EZBC, GBTC, BTCO, HODL, BTCW.
👉 NASDAQ. GO, BRRR, DEFI.

American exchanges are not the only place where you can buy Bitcoin ETFs. But they are the most popular there.

🚦 Tip: When choosing a fund, you need to pay attention to the fees. For example, GBTC charges 1.5% per annum. This is the highest commission. But the fund is also the largest. This means it is the most liquid.

Cryptocurrency ETF. Advantages and disadvantages

Top 5 advantages of cryptocurrency funds:

➕ Simplicity. To purchase, it is enough to have a brokerage account on a suitable exchange. There is no need to create wallets and register on a cryptocurrency exchange, as is the case with Bitcoin.
➕ Security. Investors do not have to worry about their crypto wallets. They do not own cryptocurrency. Therefore, no one will steal it.
➕ Liquidity. The market is very active. You can trade there throughout the entire trading time of the exchange. Since the topic is popular, bidding is active.
➕ Regulation. When the Bitcoin ETF was approved in January 2024, it became an asset controlled by the government. This is an additional level of security for traders.
➕ Simplified taxes. Making deductions from the sale of ETFs is easier than from Bitcoin. Taxation is more transparent.

Disadvantages of crypto funds:

➖ Price. In addition to the cost of the cryptocurrency itself, ETFs are affected by management company fees. This reduces the effectiveness of investments. It is more profitable to invest in Bitcoin directly.
➖ Incomplete control. Owners of fund shares are deprived of some of the advantages of Bitcoin owners. They cannot fork the cryptocurrency or use other mechanisms related to it. They only get profit and loss from the movement of the price of the crypt.
➖ Dependence on the management company. The profitability, safety and reliability of investments depend entirely on the management company. If she makes the wrong decisions in managing the fund, you can lose a lot of money.

The fact that ETFs have been approved in the United States opens up many opportunities for them. Sooner or later they will appear in other markets.

Sales have already started in Hong Kong. In exchange for BTC, proprietary funds can receive other tokens. Possible candidates include ETH, LTC and even DOGE.

How to make money on Bitcoin ETFs? Myths about cryptocurrency funds

There are a number of misconceptions about cryptocurrency funds that are putting investors off. For example, there is an opinion that buying shares of an ETF gives you the right to own BTC. Nothing like this.

🚦 In essence, the buyer receives a share in the fund, a share. No one promised to exchange ETFs for Bitcoin. Management companies will not offer such options.

Another misconception – Spot BTC ETF is guaranteed to generate income. Not really.

Any investment in stock assets and cryptocurrencies is a risk. In the case of ETFs, the risk is double.

🚦 For example, when GBTC changed status from a closed-end fund to an ETF, the shares Grayscale lost 20% in just 12 days. That is, investors lost one fifth of their investments. On the other hand, after another 20 days, GBTC securities rose 91%. Everyone who entered at the minimum actually doubled their investment.

There is a misconception that ETFs can be used for settlements on the Bitcoin blockchain. This is not true.

The only place where you can work with ETFs is the exchange where they are listed. Essentially this is derivative on the stock market. It has the same functions and limitations. The fund does not give the right to a share in the company that issued it.

Countsthat ETFs are a tool only for large players. Indeed, the Bitcoin fund has helped attract the interest of institutional investors to the cryptocurrency market. Let us remember: more than 600 companies have invested more than $3.5 billion in it. But this does not mean that the average trader will not be able to deal with them. Anyone with access to the relevant exchange can buy and sell ETFs.

🚦 Moreover: the emergence of funds solved the problem of those people who cannot invest money in Bitcoin directly due to the legislation of their country. Now they have a chance to calmly make money on volatility through derivatives in the form of ETFs.

Popular Misconception: Funds are as volatile as Bitcoin. This is wrong. Firstly, the value of the asset is regulated by the organizations that issued it. As a rule, they take the average cost over a certain period and rely on it.

Funds also have expenses for managers. Therefore, their default income is lower than that of BTC.

The advantage is that funds may be delayed in responding to short-term speculation by “whales” 🐳. This will help avoid sudden fluctuations in the exchange rate. But if Bitcoin crashes sharply, getting rid of the fund will be much more difficult than getting rid of the coin.

The biggest misconception is that ETFs are not suitable for beginners. They are considered a complex, dangerous financial asset that you need to know how to handle. In fact he:

🟢strictly regulated;
🟢 works according to clear rules.

In addition, unlike classic exchange-traded ETFs, the BTC ETF is based on only one asset. Its creators, in principle, will not be able to rebalance portfolio and influence its price. Clients have to monitor the quotes of only one underlying financial asset to understand where their fund is moving.

A way to make money with Bitcoin ETF

There are currently 2 ways to make money from exchange-traded funds created from BTC:

🏹 speculation,
🏹 investments.

In the first case, the trader actively sells and buys shares of the fund in order to make a profit due to short-term price fluctuations. The high volatility of BTC helps a lot with this. Quotes very often fluctuate 🎢 within 5–10%.

🚦 For speculation, you can choose a fund that has the lowest commissions. Then the costs will be minimal.

Investments are long-term investments. You can buy a fund and hold it in your portfolio until it greatly increases in value, and then sell it.

In theory there is a chance engage in margin trading with leverage. But Bitcoin futures are better suited for this, rather than exchange-traded funds.

What investors need to know about BTC ETF right now

Bitcoin ETF is a completely legal, highly regulated financial asset. It is offered by those companies that meet SEC requirements. This indicates high investment safety from the point of view of non-market risks.

While Bitcoin has reached the resistance level. Further it will not grow so rapidly. There are forecasts for the main cryptocurrency to fall by several tens of percent. Therefore, investing in BTC-related funds is only advisable if we are talking about long-term investments. Sooner or later he will rush upward. Then the investment will pay off.