The ProShares Bitcoin Strategy ETF, the first crypto-based fund approved for US markets, started trading Tuesday, Oct. 19 on the NYSE under the symbol BITO.
While it is not the first Bitcoin ETF globally, BITO's launch in the U.S. represents a major milestone in the acceptance of Bitcoin (BTC) as an investable asset.
US-based Bitcoin ETFs also open the door for more US investors to own Bitcoin. Many US brokerages do not offer access to cryptocurrency or to foreign exchanges where other crypto funds might trade, while access to US-traded ETFs is common.
The ProShares ETF is the first crypto-based fund approved by the Securities and Exchange Commission for trading in the US, after a decade of applications from ETF sponsors. Many more appear to be on the way. A second has already launched, a third is expected within days, and many more are awaiting approval or being planned.
Trading opened at $41.94, and shares traded in a range from $37.34 to $43.95 in its first few days on the market, slight underperforming Bitcoin. The target is to match Bitcoin's return.
Here's how bullish investors can get involved with this Bitcoin ETF.
What we know about the BITO ETF
Launched by ETF issuer ProShares and headed by CEO Michael L Sapir, the fund is designed to give investors exposure to the Bitcoin currency.
However, investors don’t actually own Bitcoin directly through the fund. Unlike traditional ETFs that buy and sell underlying assets such as stocks, BITO uses futures contracts to profit from Bitcoin price fluctuations.
In other words, it uses contracts that speculate on the future price of Bitcoin. Depending on how volatile the market is, these prices could differ significantly, which means there are additional risks.
To check out other Bitcoin-related ETFs, check out our cryptocurrency ETF guide.
How to invest in BITO ETF
- Compare online brokers. To invest in exchange traded funds (ETFs) listed in the United States, you will need to sign up to an ETF broker with access to US markets. Our table below can help you choose.
- Open and fund your brokerage account. Complete an application with your personal and financial details. Fund your account with a bank transfer, PayPal or debit card.
- Search for the BITO ETF. Find the ETF by name or ticker symbol: BITO. Research it using the prospectus and other information at the sponsor's site to make sure you understand how it works and to confirm it's a solid investment based on your financial goals.
- Purchase now or later. Buy today with a market order or use a limit order to delay your purchase until the BITO ETF reaches your desired price.
- Decide on how many to buy. Weigh your budget against a diversified portfolio that can minimize risk through the market's ups and downs.
- Check in on your investment. Congratulations, you've invested in the BITO ETF.
Compare global ETF brokers
Bitcoin ETF or Bitcoin: Which is better for you?
Bitcoin ETFs better for
- Investors who want exposure to Bitcoin without owning the actual asset or setting up a separate account
- Frequent traders looking to avoid upfront fees for buying and selling Bitcoin
- Investors who'd rather pay an annual fee than trade fees
- Investors who don't plan to trade outside US stock-market hours
- Investors who see safety in regulatory oversight, since ETFs and futures markets are more regulated in the US than cryptocurrencies
Bitcoin better for
- Investors looking for an investment in crypto itself
- Investors who want to take full advantage of exposure to Bitcoin's price movements by owning it directly
- Long term investors looking to avoid a large annual fee
- Investors who plan to trade 24/7 or whenever there's a big price change
Are cryptocurrency ETFs a good investment?
Founder & CEO at Monochrome Asset Management
For everyday investors, accumulating physical Bitcoin comes with added hurdles of custody and operational risks.
"Bitcoin as a technology is battle-tested, but there is an inherent operator's risk when self-acquiring, holding and managing a bitcoin position even for the most experienced digital native, hence there's a market for those who prefer a safe pair of hands to manage their investment in exchange for a small management fee.
"Investing in a Bitcoin ETF offers investors the benefits of a safe yet low barrier to diversifying their portfolio into the asset class since it's a well understood financial product for most investors."
Who is the BITO ETF suited for?
ProShare's ETF is suited to a number who want to gain exposure to Bitcoin without owning the underlying asset class.
Buying a ProShare's ETF means investors are trading on future contracts.
If the price of the underlying asset goes up long-term the ETF should lead to net gains for investors. If the price of Bitcoin falls, then the value of the ETF should also decline.
Due to the structure of the ETF, an ETF approach might be suitable for retail investors who do not understand the complexities around investing in crypto assets.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.