Bitcoin exchange-traded funds (ETFs) are traditional financial tools—available on traditional markets—that give investors access to the cryptocurrency without having to deal directly with assets on the blockchain.
What is an exchange-traded fund (ETF)?
Before venturing into the world of cryptocurrency exchange-traded funds (ETFs), like those for Bitcoin, it is important to understand what ETFs are more generally. ETFs are financial products that trade on stock exchanges like the New York Stock Exchange (NYSE) or Nasdaq. They are issued and managed by financial companies like Blackrock, Vanguard, and Charles Schwab. These institutions typically charge shareholders a fee to compensate them for the costs of fund management.
ETFs can be bought and sold in these markets throughout the day, just like stocks. However, they share features with mutual funds, as well—mainly that, in addition to tracking specific assets like gold, they can also hold a basket of different stocks, bonds, commodities like oil, and derivatives like futures. The largest ETF measured by “assets under management” is the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index by holding the underlying stocks the index is comprised of.
Many people and institutions trade ETFs because these products allow for financial exposure they otherwise could not achieve. For instance, index ETFs permit trading of diversified baskets of assets, commodity ETFs enable trading of gold without individuals having to store gold bars, and leveraged ETFs can magnify profits (and losses) compared with trading individual stocks.
There are many kinds of ETFs, but in recent years a new type has captured the attention of market participants: cryptocurrency ETFs.
What is a Bitcoin ETF?
Background
Just as Bitcoin was the first cryptocurrency, it was also the first coin to gain traction as the subject of an ETF. In the early years of cryptocurrencies, those who wanted to trade and own crypto had to have a significant amount of technological knowledge. The only way to obtain, hold, and trade coins was by setting up a crypto wallet and using complex peer-to-peer protocols.
The rise of centralized exchanges like Bitstamp helped users gain exposure to cryptocurrencies. It significantly lowered the threshold for onboarding crypto users. However, while using these platforms is relatively easy, it still requires a separate onboarding process (e.g., signing up on a website, completing know-your-customer processes) for traders who already have existing brokerage accounts, including tax-advantaged retirement accounts.
This is the reason many are excited about Bitcoin—and other crypto—ETFs. These give traders exposure to the price of Bitcoin, allowing them to access the crypto market through traditional financial tools and accounts.
How Bitcoin ETFs work
There are two types of Bitcoin ETFs: spot and futures. Both give traders exposure to Bitcoin, but in different ways.
Spot vs. Futures Bitcoin ETFs
Spot Bitcoin ETFs are products that have direct exposure to the price of bitcoin. Issuers, such as Blackrock and Fidelity, buy and hold bitcoin and holders of the ETF have a claim on the fund’s bitcoin holdings. This design, along with the ability for traders to create and redeem shares of the ETF, ensures that the price movement of the ETF’s shares are well aligned with bitcoin.
Futures ETFs, on the other hand, do not follow the price of bitcoin as directly. Instead of holding bitcoin itself, companies who issue Bitcoin futures ETFs hold derivatives called futures contracts. These are financial tools that represent agreements between traders to trade assets at a certain price at a pre-defined date, and the fund rolls the futures contracts over as they expire. Though the price of Bitcoin affects the value of shares of these ETFs, it often does so more unpredictably, a concept known as “tracking error”.
Bitcoin ETFs vs buying bitcoin
While both Bitcoin ETFs and direct ownership of Bitcoin provide exposure to the cryptocurrency's price, they cater to different investor needs and preferences.
Bitcoin ETF, for example, allow for:
- Ease of access: Investors can buy and sell Bitcoin ETFs through their existing brokerage accounts.
- Regulation and security: The Bitcoin held by the ETF is typically stored in secure, institutional-grade custody solutions that are subject to regulatory oversight.
- Tax Efficiency: Depending on your jurisdiction, holding Bitcoin in an ETF might offer tax advantages compared to directly owning the asset.
Buying Bitcoin, on the other hand, can provide:
- Full control: Users hold their private keys and have the freedom to use their Bitcoin as they wish (e.g., for transactions, DeFi participation).
- Lower costs: Buying Bitcoin directly typically involves lower fees compared to investing in an ETF.
Implications for the Bitcoin market
Soon after the first Bitcoin futures ETF was approved, the price of Bitcoin peaked and began a precipitous decline. Many believe the anticipation of the event fueled a trading frenzy that drove the price to its peak.
The implications of a spot Bitcoin ETF are less clear. One prevailing theory is that spot ETFs have more direct effects on markets than futures ETFs. This could lead to several significant impacts:
- Increased liquidity: Spot Bitcoin ETFs could attract significant investment from institutions and retail investors alike, leading to increased liquidity for the asset.
- Regulatory considerations and future developments: While the US approval of spot Bitcoin ETFs is a major step, the regulatory landscape remains uncertain. Future regulations could impact custody requirements, taxation, and the inclusion of Bitcoin ETFs in retirement accounts, which could either accelerate or hinder their growth and adoption.
A timeline of Bitcoin ETFs in the United States
To bring a Bitcoin ETF to market in the United States, the U.S. Securities and Exchange Commission (SEC) evaluates how an issuer plans to hold coins (known as “custody”), the liquidity of the bitcoin market, how the price of ETF shares will follow that of bitcoin, and several other factors. When the SEC approves a Bitcoin ETF based on this process, the product can trade on exchanges.
The first US Bitcoin ETF was proposed by Cameron and Tyler Winklevoss in 2013. Their efforts were rejected—twice—by the SEC. Numerous others tried their hand at petitioning the SEC for their own Bitcoin-based funds in the ensuing years, all with the same result. However, in 2021 the SEC approved the first Bitcoin futures ETFs, setting the stage for other US futures-based crypto ETFs including leveraged products.
Consistent with its prior decisions, the SEC denied crypto asset manager Grayscale’s attempt to convert one of its products into a spot Bitcoin ETF in 2022. However, Grayscale sued the SEC on the grounds that its proposed spot ETF’s design was not significantly different than futures ETFs that were already approved by the SEC.
In August 2023, the U.S. District of Columbia Court of Appeals agreed that the SEC was “arbitrary” in its denial, and ultimately the SEC was ordered to re-review Grayscale’s application. This also prompted review of other similar applications, culminating in the SEC’s approval of eleven spot Bitcoin ETFs on January 10, 2024.
As of November 2024, US spot bitcoin ETFs surpass $100 billion in total net asset value, and the highest trading day (March 5, 2024) saw around $10 billion in trading volume.
Top 5 Most Traded Spot BTC ETFs in the US
Based on average daily volume (ADV), and as of November 2025, here are the top 5 most traded spot Bitcoin ETFs since their launch in the US:
- iShares Bitcoin Trust (IBIT): Managed by BlackRock, IBIT has consistently been the most traded spot Bitcoin ETF, with an ADV of 28.63 million shares.
- Grayscale Bitcoin Trust (GBTC): Previously a private trust, GBTC converted to an ETF and has maintained significant trading volume, with an ADV of 19.98 million shares.
- Fidelity Wise Origin Bitcoin Fund (FBTC): Fidelity's entry into the spot Bitcoin ETF market has also seen strong interest, with an ADV of 11.22 million shares.
- Bitwise Bitcoin ETF (BITB): BITB has captured a portion of the market with an ADV of 3.11 million shares.
- ARK 21Shares Bitcoin ETF (ARKB): ARK Invest's is also a popular ETF with an ADV of 2.94 million shares.
Non-US spot Bitcoin ETFs
Spot Bitcoin ETFs were embraced more quickly outside of the United States. In 2021, three Canadian Bitcoin ETFs began trading: Purpose Bitcoin ETF (BTCC), CI Galaxy Bitcoin ETF (BTCX), and Evolve Bitcoin ETF (EBIT). Canada continued to lead the world in the following two years, with six spot Bitcoin ETFs available for trading in total. Markets with similar products by November 2024—as attention on the SEC was beginning to mount in the US—included countries like Germany, Switzerland, Liechtenstein, Australia, and Brazil.
Bitcoin ETF essentials
- Exchange-traded funds are financial products that can be traded like shares of stocks on exchanges.
- Bitcoin futures ETFs began trading in the US in 2021, and spot Bitcoin ETFs (which attempt to track the price of Bitcoin more closely) have traded in other countries across the world since that time.
- Though the first spot Bitcoin ETF was proposed in 2013, US regulators rejected their applications until finally approving the first eleven spot Bitcoin ETFs in January 2024.