What is the best bitcoin ETF to invest in?

The largest and most liquid spot bitcoin ETFs include iShares Bitcoin Trust (IBIT) from BlackRock and Fidelity Wise Origin Bitcoin Fund (FBTC), both launched in the US in January 2024. These products attracted billions in fund flows rapidly and trade with tight spreads. For Australian investors, ASX-listed bitcoin ETFs provide domestic access. Lower management fees and higher liquidity are the primary selection criteria for bitcoin ETF comparison.

How much did spot bitcoin ETF fund flows affect bitcoin price in 2024?

The launch of US spot bitcoin ETFs in January 2024 created significant new institutional demand for bitcoin, as ETF providers needed to purchase spot bitcoin to back new fund inflows. In the months following approval, spot bitcoin ETF products accumulated substantial bitcoin holdings, contributing to the 2024 bitcoin price appreciation. Daily ETF flow data became a widely followed proxy for institutional crypto sentiment.

How do spot Bitcoin ETFs differ from Bitcoin futures ETFs in terms of price tracking?

Spot Bitcoin ETFs hold actual Bitcoin in custody and track the spot price directly, meaning the ETF's net asset value closely reflects the current Bitcoin price minus fees. Futures-based Bitcoin ETFs hold futures contracts rather than actual Bitcoin, which can create tracking differences due to roll costs as expiring contracts are replaced. In markets where futures trade at a premium to spot, rolling futures positions incurs costs that cause futures ETFs to underperform spot Bitcoin over time.

What custody arrangements underpin Bitcoin ETF structures and how are investor assets protected?

Bitcoin ETFs eliminate several risks associated with direct bitcoin ownership, including custody risk (loss of private keys), exchange counterparty risk, and the operational complexity of managing digital wallets. The ETF structure uses regulated custodians and provides SIPC protection in applicable jurisdictions. The primary remaining risk for bitcoin ETF investors is the underlying bitcoin price volatility, which is inherent to the asset class.