Understanding Bitcoin ETFs: How They Work and Top 5 ETFs in 2023, Latest Developments with Invesco, BlackRock, and Wisdom Tree

In recent years, the concept of Bitcoin Exchange-Traded Funds (ETFs) have gained significant attention and popularity among investors. Bitcoin ETFs provide an opportunity for investors to gain exposure to Bitcoin without directly owning the cryptocurrency.

This article will delve into the world of Bitcoin Exchange-Traded Funds, covering topics such as what they are, how they work, how to invest in them, and the latest developments in the industry. Additionally, we will discuss the top five Bitcoin ETFs in 2023 and highlight the progress made by prominent companies like Invesco, BlackRock, and Wisdom Tree in relation to Bitcoin ETFs.

Also read: Ways to earn Bitcoin

Understanding Bitcoin ETFs

Bitcoin Exchange-Traded Funds are investment vehicles that track the value of Bitcoin and trade on traditional stock market exchanges instead of cryptocurrency exchanges. These funds aim to provide investors, including those who are not comfortable directly investing in cryptocurrencies, with access to Bitcoin’s potential price appreciation.

How Bitcoin ETFs Work?

Bitcoin Exchange-Traded Funds are typically linked to Bitcoin futures contracts rather than the underlying cryptocurrency itself. This structure allows investors to gain exposure to Bitcoin’s price movements without the complexities of storing and securing the digital asset. By purchasing shares of a Bitcoin ETF, investors indirectly own a portion of the fund’s underlying Bitcoin futures contracts, which track the price of Bitcoin.

Investing in Bitcoin ETFs

To invest in Bitcoin Exchange-Traded Funds, investors can use traditional brokerage accounts and trade them on stock market exchanges, eliminating the need for specialized cryptocurrency exchanges. This offers convenience and familiarity to investors who are already accustomed to investing in traditional securities. By buying shares of a Bitcoin ETF, investors can include Bitcoin exposure within their existing investment portfolios.

Top 5 Bitcoin ETFs in 2023

1. ProShares Bitcoin Strategy ETF (BITO): The ProShares Bitcoin Strategy ETF is the first Bitcoin ETF approved to trade in U.S. Markets. It attracted significant assets within days of its debut in October 2021, becoming one of the most heavily traded ETFs in market history.
2. ProShares Short Bitcoin ETF (BITI): The ProShares Short Bitcoin ETF is currently the only ETF approved by the SEC with the goal of trading the inverse of Bitcoin’s daily performance. It aims to achieve this by returning the inverse of the S&P CME Bitcoin Futures Index for a single day at a time.
3. Bitwise Crypto Industry Innovators ETF (BITQ): The Bitwise Crypto Industry Innovators ETF is considered the cheapest ETF option. This Exchange-Traded Fund, focuses on investing in companies and assets related to the crypto industry, aiming to achieve investment returns similar to Bitcoin.
4. Valkyrie Bitcoin Strategy ETF (BTF): The Valkyrie Bitcoin Strategy ETF is an actively managed Bitcoin ETF. It aims to provide exposure to Bitcoin’s potential price appreciation through strategic investment decisions.
5. Simplify U.S. Equity PLUS GBTC ETF (SPBC): The Simplify U.S. Equity PLUS GBTC ETF is considered the best Bitcoin ETF for U.S.-based companies. This ETF combines exposure to U.S. Equities with Bitcoin exposure through its holdings in the Grayscale Bitcoin Trust (GBTC).

The other popular  Bitcoin Exchange-Traded Funds, include VanEck Bitcoin Strategy ETF (XBTF) and Global X Blockchain & Bitcoin Strategy ETF (BITS). 

Latest Developments: Invesco, BlackRock, and Wisdom Tree filed for Bitcoin EFT

Invesco

Invesco, a prominent asset management firm, has shown interest in the Bitcoin Exchange-Traded Funds, space. Invesco, with $1.4 trillion in assets under management, reapplied with Galaxy Digital for a spot bitcoin (BTC) exchange-traded fund (ETF).

BlackRock

BlackRock, the world’s biggest asset manager, has also expressed interest in Bitcoin ETFs. Though a spot Bitcoin Exchange-Traded Funds, is yet to be approved in the United States, news about BlackRock potentially filing an ETF application has fueled optimism among investors.

Wisdom Tree

Wisdom Tree, a global exchange-traded fund provider, has been actively exploring the Bitcoin Exchange-Traded Funds, space. On Tuesday, June 20, WisdomTree re-filed an application asking for approval from regulatory bodies to launch the WisdomTree Bitcoin Trust.

The key objective of WisdomTree’s investments is to have exposure to changes in the price of bitcoin while taking into consideration the costs and obligations involved in operating the ETF. Wisdom Tree has previously applied twice for spot Bitcoin Exchange-Traded Funds, approval in December 2021 and October 2022, however, both applications were rejected by SEC citing concerns about market manipulation. 

Bitcoin Price

The latest happenings and news about the companies Invesco, Wisdom Tree, and Blackrock entering into spot Bitcoin Exchange-Traded Funds, has spiked the price of  Bitcoin. Bitcoin price surged 20.79% since last week. The price of BTC touched $30k yesterday and the current price at the time of writing is $30,105.30. Bitcoin is dominating the crypto market with 49.6% with a market cap of $584,583,473,319, according to the crypto price tracking platform Coinmarketcap.  

Also read: Beginner’s Guide to Cryptocurrency Trading

Conclusion

Bitcoin Exchange-Traded Funds, have emerged as a convenient and regulated way for investors to gain exposure to Bitcoin’s potential price appreciation. By trading on traditional stock market exchanges, these investment vehicles offer familiarity and accessibility to a broader range of investors.

As the industry continues to evolve, it will be essential to stay updated on the latest developments and investment opportunities presented by Bitcoin Exchange-Traded Funds.