Good Morning
Several clients have inquired about the possibility of including cryptocurrency in their investment portfolios.
The response typically falls within a spectrum between yes and no, as the risk associated with stocks is already considered high, and categorising cryptocurrencies as very high risk is a common approach due to their volatility.
However, a notable development occurred last week on Wednesday, January 10, when the Securities and Exchange Commission (SEC) approved a Bitcoin exchange-traded fund (ETF). This approval marks a significant milestone, providing traders with a straightforward avenue to invest in Bitcoin.
The approved funds include offerings from reputable issuers such as BlackRock, Fidelity, and Invesco. This regulatory approval has opened up new possibilities for investors seeking exposure to cryptocurrency within a more structured investment framework.
What are Bitcoin ETFs?
Bitcoin ETFs are publicly traded investment funds that enable investors to gain exposure to Bitcoin (BTC) without actually owning the cryptocurrency. Unlike cryptocurrencies that are traded on crypto exchanges, ETFs are traded on traditional securities exchanges such as the New York Stock Exchange and Nasdaq.
How many Bitcoins are presently listed?
ETF Ticker Expense ratio
Bitwise Bitcoin ETF BITB 0.0 percent (0.20 percent)*
ARK 21Shares Bitcoin ETF ARKB 0.0 percent (0.21 percent)*
Fidelity Wise Origin Bitcoin Trust FBTC 0.0 percent (0.25 percent)*
Wisdom Tree Bitcoin Fund BTCW 0.0 percent (0.30 percent)*
Invesco Galaxy Bitcoin ETF BTCO 0.0 percent (0.39 percent)*
Valkyrie Bitcoin Fund BRRR 0.0 percent (0.49 percent)*
iShares Bitcoin Trust IBIT 0.12 percent (0.25 percent)*
VanEck Bitcoin Trust HODL 0.25 percent
Franklin Bitcoin ETF EZBC 0.29 percent
Grayscale Bitcoin Trust GBTC 1.50 percent
Source: Bloomberg
Who can invest in ETFs
Investing in a Bitcoin ETF could be a good option for people who are looking for a more traditional way of investing in the digital currency.
However, your financial goals, risk tolerance and time horizon will be key factors in assessing whether it is worth it for you to put money in a Bitcoin ETF.
Given that a Bitcoin ETF is likely to be considered a speculative investment, I would not recommend it unless as an investor you have the ability to lose your investment or hold it for long periods of time. That seems harsh, right? I know.
Looking at how the price of Bitcoin has performed over the years, it has fluctuated wildly by hitting an all-time high of nearly $69,000 in November 2021, and falling below $17,000 during the “crypto winter” of 2022. It has mostly been trading north of $45,000 in the run-up to the SEC’s decision.
So, if you do decide to invest in a Bitcoin ETF, I would recommend making it no more than 5% to 10% of your overall portfolio.
Where do you buy Bitcoin ETFs?
Bitcoin ETFs are available through most online brokers who offer traditional securities like stocks and bonds. ETFs trade on traditional exchanges such as the New York Stock Exchange or the Nasdaq.
If you’re interested in the widest offering of cryptocurrencies and are looking to directly invest in digital coins, you’ll need an account with a crypto exchange such as Binance. These exchanges find themselves in the regulatory crosshairs of the SEC.
Will you be investing in Bitcoin ETF? Let me know and state your reasons.
And if you are a conservative investor, you could take advantage of our real estate high-yield savings that offer 20% per annum.
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