Disclosure: The following is based on my personal experience and should only be used for informational purposes. It is not financial advice as I am not a financial advisor.
In the first quarter of 2024, 11 Bitcoin ETFs had net inflows of $55 billion, making them the fastest growing type of ETFs ever1.
On January 11, 2024, two days after the Twitter (X) account of the SEC was compromised, Bitcoin (BTC) spot ETFs began trading the day after approval.
It’s hard to pinpoint the exact trigger for the early 2024 price appreciation, but this approval helped to boost institutional catalysts driving increased demand from a new class of retail investors.
For me, it's about one benefit: direct exposure to Bitcoin in a tax-advantaged account.
I can now directly invest in BTC in a Roth IRA. This means three things for me:
- I can trade in and out of these ETFs without tax consequences.
- When I withdraw for retirement, it's tax-free because I’ve already paid taxes on the initial contribution.
- If things go bust, I’ll still have over 20 years to recover.
Example: Long term capital gains of 20% can be avoided when withdrawing from your Roth IRA account at retirement. Additionally, within your Roth account you have the ability to swing trade in and out of different funds without triggering a taxable event.
What Are The Best Bitcoin Spot ETFs?
The SEC approved 11 Bitcoin ETFs3 on January 10, 2024.
Are any better or worse than the others? That depends on who you ask and what factors you’re considering.
TL;DR - I'd feel confident in buying any of the 11 funds. Even the smaller funds are considered a success. They all provide additional low-cost options with enough liquidity to be considered.
Because I'm not paying trading fees I can choose any number of the 11 options. If they're all holding 100% Bitcoin, why shouldn't I just pick one or all eleven?
- If I was buying only 1 fund, I’d invest in FBTC or IBIT.
- If I was buying 2 funds, I’d invest in FBTC and IBIT, FBTC and BITB.
- If I was buying 3 funds I’d invest in FBTC or IBIT, BITB or ARKB, HODL or BRRR.
I chose 5 options.
YSK: There isn’t an advantage to GBTC that would justify it’s outsized 1.50% fee, 6X+ that average. MicroStrategy has already stated they will be creating a new “mini” ETF fund [CITATION NEEDED] with lower fees
After checking the top search results, the answers aren’t any clearer. [CITATION NEEDED]
- The Wall Street Buy Side recommends IBIT, FBTC and BITB as the Best Bitcoin ETFs.
- Methodology: "Our initial picks for the best bitcoin ETF were based primarily on fees and trading volume.”
- Bankrate states, “Here are some of the best Bitcoin ETFs, including how much you’ll pay to invest in them.” It then lists out 7 “Top Bitcoin ETFs”: IBIT, FBTC, ARKB, BITB, HODL, BRRR and EZBC.
- Nerdwallet recommends the “Top 11 spot Bitcoin ETFs by fee”.
- Methodology: That all of them and sorts them lowest fees to highest.
- Forbes methodology requires funds to have at least $200 million in AUM (assets under management) and trade a minimum of $300,000 in shares daily.
- Methodology: That's 10 out of the 11.
- USA Today recommends only the older, more expensive futures-based ETFs, not any new spot BTC ETFs.
- US News recommends a mix of spot ETFs, futures ETFs, and other blockchain-based ETFs.
- Methodology: The two recommended spot ETFs with no established methodology are IBIT and BITB.
- The Motley Fool recommends 5 options with no established methodology: IBIT, GBTC, FBTC, ARKB and BTCO.
My approach to choosing ETF funds to buy is based on:
- Expense Fees
- Liquidity
- Custodian
- Non TradFi
- Reputation
- Flexible Swing Strategies? Alternative Strategies?
- <a id="fastest_growing_etfs">"Spot bitcoin ETFs have been the fastest-growing ETF launches in history." - Coinbase Institutional on X</a>
- "$IBIT the newest member of the $10 Billion Club, fastest ever to get there.." - Eric Balchunas Senior ETF Analyst at Bloomberg on X
- "Jan. 10, 2024 - Today, the Commission approved the listing and trading of a number of spot bitcoin exchange-traded product (ETP) shares." - Gary Gensler Chair of the SEC