What is a Bitcoin ETF? Spot Bitcoin ETF Guide

Cryptocurrency Exchange

Bitcoin ETF (Exchange-Traded Fund) refers to investment funds traded on traditional stock exchanges that track the price movements of Bitcoin. These products allow investors to gain exposure to Bitcoin without directly owning cryptocurrency. It becomes possible to access BTC through traditional investment methods without having to purchase Bitcoin, create a digital wallet, or manage security risks. Interest in these products increased significantly following the approval of Spot Bitcoin ETFs in 2024. In this article, we will explore the question "What is a Bitcoin ETF?" and examine the types of ETFs, how they work, and the advantages they offer to investors in detail.

What is ETF?

ETF, or Exchange-Traded Fund, is an investment instrument traded on stock exchanges that tracks the performance of a specific asset group. These funds are typically based on financial instruments such as stock indices, commodities, bonds, or currency pairs. An investor can gain access to a wide portfolio with a single ETF purchase. ETFs are widely used worldwide due to their low costs, real-time pricing, and transparent structures. In Turkey, various ETFs are also traded on BIST. The main purpose of ETFs is to provide investors with diversified and easy-to-follow investment solutions.

With the rise of crypto markets, the world of ETFs has evolved to cover this area as well. Thanks to crypto ETFs, it is now possible to invest in digital asset markets without directly entering them.

What Is an ETF in Cryptocurrencies?

Crypto ETFs are funds traded on traditional exchanges that track the price movements of a specific digital asset or a basket of assets. Investors can invest indirectly in the cryptocurrency market by purchasing these funds. Crypto ETFs serve as a bridge especially for users who lack technical knowledge. For example, instead of setting up a BTC wallet or dealing with private key security, an investor can simplify the process by purchasing a Bitcoin ETF.

Crypto ETFs have gained even more importance with increasing regulations and the growing interest of institutional investors in the market. Moreover, the fact that these products are included within regulated financial systems enables many investors to take positions with confidence. Spot ETFs and futures ETFs are the two most well-known types in the world of crypto ETFs.

What Is Bitcoin ETF?

Bitcoin ETF is a special type of exchange-traded fund that solely tracks the price of Bitcoin. These funds allow investment in Bitcoin's price movements without physically owning BTC. The first Bitcoin futures ETF was approved in 2021, but it was the Spot Bitcoin ETFs approved in 2024 that marked a real turning point in the industry. Thanks to Spot Bitcoin ETF products, investors now have access to funds based directly on BTC prices and backed by actual Bitcoin reserves.

Bitcoin ETFs attract institutional investors as they offer portfolio diversification and a regulated investment environment. These products are actively utilized by pension funds, investment advisory firms, and banks in particular. Thus, Bitcoin becomes accessible not only to individual investors but to all stakeholders in the financial world.

What Is Bitcoin Futures ETF?

A Bitcoin futures ETF is a type of fund based not on the current spot price of BTC, but on futures contracts. In these products, fund managers take positions based on Bitcoin’s future price. They are generally based on futures contracts traded on regulated platforms such as CME (Chicago Mercantile Exchange). Investors who purchase these ETFs are investing not directly in BTC but in a forecast of its future price.

Futures ETFs may be more sensitive to market fluctuations because factors like carrying cost, contract duration, and price differences directly affect performance. In other words, the price may move differently than Bitcoin in the spot market. However, since they are traded on regulated markets, these ETFs are more compliant with regulations. When the ProShares Bitcoin futures ETF was approved by the SEC in 2021, it was seen as a major milestone for traditional investors.

What is Spot Bitcoin ETF?

A Spot Bitcoin ETF is an exchange-traded fund that directly tracks the current market price of Bitcoin. These funds are managed by institutional investors who physically buy and hold actual Bitcoin. In other words, when an investor purchases a Spot Bitcoin ETF, they indirectly own real Bitcoin. In this way, it differs from futures ETFs because, in the latter, real BTC is not involved — only derivative contracts are tracked.

The approval of Spot Bitcoin ETF applications by the U.S. Securities and Exchange Commission (SEC) in January 2024 was considered a historic development in the crypto market. The approval of major investment firms such as BlackRock, Fidelity, and Ark Invest paved the way for institutional capital to enter the crypto market more easily and in a more regulated manner. The approval of Spot ETFs increased Bitcoin’s credibility among institutional investors and allowed it to reach a wider investor base despite its volatility.

How Does Spot Bitcoin ETF Work?

Spot Bitcoin ETFs purchase actual Bitcoin using the funds collected from investors. These Bitcoins are stored by secure, regulated custody services. The ETF investor holds a share of the value of the BTC assets represented by the fund. The fund’s value changes continuously in direct correlation with the spot (real-time) price of Bitcoin.

Fund managers typically choose regulated custody services such as Coinbase Custody. This allows investors to gain exposure to Bitcoin without having to create a digital wallet, store private keys, or implement technical security measures. Spot Bitcoin ETFs can be bought and sold through traditional securities accounts, making them highly convenient for users familiar with stock trading.

Moreover, investors who transact through these products can integrate Bitcoin into their portfolios more seamlessly in terms of taxation. This is because ETFs are subject to clearer taxation rules within existing financial systems. This feature provides an advantage for users who want to invest in Bitcoin but have concerns about regulations.

How to Buy a Bitcoin ETF?

Buying a Bitcoin ETF does not require a cryptocurrency exchange; instead, this transaction is carried out through traditional investment platforms and brokerage firms. Many investors can purchase a Bitcoin ETF just like they would buy a stock. Opening an investment account, selecting the appropriate ETF, and completing the purchase is sufficient.

Spot Bitcoin ETFs traded in the U.S. are generally listed on exchanges such as NASDAQ or NYSE. Investors in Turkey can also access these ETFs through international investment platforms. For example, global brokerage firms offer products like IBIT (BlackRock), FBTC (Fidelity), or ARKB (Ark 21Shares).

However, before investing, it is important to determine whether the ETF is spot or futures-based. Spot Bitcoin ETFs are directly linked to BTC prices, while future ETFs may have different prices from time to time. This distinction is critical in terms of the return and risk profile of the investment.

How Many Bitcoin ETFs Are There?

As of 2024, 11 different Spot Bitcoin ETFs have been approved in the United States. The most prominent among them include:

IBIT – BlackRock iShares Bitcoin Trust
FBTC – Fidelity Wise Origin Bitcoin Fund
ARKB – ARK 21Shares Bitcoin ETF
BITB – Bitwise Bitcoin ETF
BTCO – Invesco Galaxy Bitcoin ETF
EZBC – Franklin Bitcoin ETF

In addition to these, futures-based ETFs have also been trading since 2021. For instance, the ProShares Bitcoin Strategy ETF (BITO) stands out among futures products. Both spot and futures-based ETFs offer a variety of options to investors with more than 15 active products in total.

Outside the U.S., approved Bitcoin ETFs also exist in countries like Canada, Germany, Switzerland, and Brazil. However, the U.S. market remains the most important globally in terms of trading volume and institutional interest.

Conclusion

Bitcoin ETFs have played a major role in making cryptocurrencies more regulated, secure, and accessible in the financial world. Especially the approval of Spot Bitcoin ETFs has ushered in a new era for both individual and institutional investors. These products, which allow investment in Bitcoin without directly owning it, continue to strengthen the bridge between traditional finance and the digital asset world.

2025-08-01

What is a Cryptocurrency Exchange?What Is an NFT? Popular NFT Coins prevIcon

Recommended