How to Invest in Cryptocurrency ETFs? A Complete Guide from Scratch

At the beginning of 2024, a major event occurred—the U.S. Securities and Exchange Commission finally approved the launch of a Bitcoin spot ETF. What does this mean? Simply put, ordinary investors can now invest in cryptocurrencies as easily as buying stocks. No need to research wallets or private keys, and no worries about scams—just participate in Bitcoin’s price movements directly through traditional brokerages. This marks a significant turning point for the entire investment world, as cryptocurrencies transition from niche assets to mainstream investment tools.

Finally Approved: How the SEC Changed Cryptocurrency Investment

Before the Bitcoin spot ETF was introduced, the SEC was quite cautious. The main reason? The spot market lacked regulation and was easily manipulated, making risks hard to control. However, with institutional investors introducing “surveillance sharing agreements” and collaborating with regulated custodians, these concerns gradually became manageable.

By early 2024, the SEC finally gave the green light. This isn’t just regulatory easing; it’s a signal that cryptocurrencies are now officially accepted by the traditional financial system. In other words, the approval of crypto ETFs transforms this once “unorthodox” asset into a legitimate investment vehicle.

For retail investors, the most immediate benefit is: investment becomes simpler and safer. Soon, buying Bitcoin ETFs may become as routine as purchasing stocks.

What Is a Cryptocurrency ETF? Simply Explained

At its core, an ETF is like a “fund manager” that holds your assets. Bitcoin ETFs work the same way—fund companies buy and store Bitcoin on your behalf; you just need to place an order and pay. No need to understand blockchain technology or digital wallets.

There are mainly two types of crypto ETFs on the market:

Spot ETF: The fund company directly purchases actual Bitcoin and stores it in a secure vault. When you buy one unit, you own one unit of real Bitcoin stored there. The price closely tracks the market in real-time. The downside? Holding costs are transparent, and price volatility is fully reflected.

Futures ETF: Instead of holding actual Bitcoin, it invests in Bitcoin futures contracts to track the price. This approach has become relatively mature (it appeared as early as 2021), and it avoids private key hacking risks. However, over the long term, each roll-over of futures contracts eats into profits, and management fees are usually higher.

Spot vs. Futures: Which Cryptocurrency ETF Is Right for You?

Planning for the long term? Spot ETFs are more suitable. They are low-maintenance, cost-effective, and track prices accurately—ideal for those seeking stable crypto exposure.

Trading short-term? Futures ETFs offer more flexibility. You can short or arbitrage, but remember—frequent roll-overs can eat into returns, and risks are higher.

Top 5 Benefits of Investing in Cryptocurrency ETFs

1. Lower Investment Barriers Instantly

Previously, investing in Bitcoin required understanding blockchain, setting up wallets, managing private keys. Now? Just open your brokerage app, search for IBIT or FBTC, place an order, and done. Like buying any other ETF—no brain required.

2. Significantly Improved Security

Regulated custodians, transparent oversight, strict audits—these ensure your investment is protected. Instead of directly owning Bitcoin, you’re investing in “insured Bitcoin proxy rights.” Risks like scams or exchange failures are effectively eliminated.

3. Easy Diversification of Assets

Bitcoin is volatile but has long-term potential. Including it in your portfolio can reduce over-reliance on stocks and bonds, spreading risk. Plus, all assets are viewable in one account, making rebalancing straightforward.

4. A Hedge Against Inflation

Bitcoin’s supply is limited, unlike fiat currencies that can be printed endlessly. During inflationary periods, it can serve as a store of value. As a “defensive asset” in your portfolio, it performs well.

5. Opportunities for Both Up and Down Markets

Bullish? Buy a long ETF. Bearish? Buy a inverse ETF or short. No matter how the market moves, you have options. This flexibility is hard to match with traditional investments.

Risks of Investing in Cryptocurrency ETFs

Don’t be fooled by convenience—risks still exist:

1. Price Volatility Remains Intense

Bitcoin’s nature is “sharp rises and falls,” with daily drops over 10% common. ETF investment doesn’t change this. If you’re sensitive to volatility or need the money soon, think carefully.

2. ETF Price May Deviate from Spot Price

Although designed to track Bitcoin, management fees, trading hours, or market premiums/discounts can cause ETF prices to diverge from the actual Bitcoin price. This gap is more noticeable when US markets are closed.

3. Regulatory Rules Are Still Evolving

The crypto market itself is still developing, with inconsistent regulations across countries. In extreme situations, market reactions can be chaotic, and investor protections may be limited.

Bottom line? Don’t think ETF is a “risk-free magic bullet.” It simply reduces some of the pain points of traditional Bitcoin investing; the inherent risks remain. Be prepared mentally before investing.

Cryptocurrency ETF vs. Direct Bitcoin Purchase: Which Path to Take?

Want simple investing? Choose ETFs—easy and hassle-free.

Want full control? Buy directly—more freedom but also more responsibility.

Popular Cryptocurrency ETF Products

How to Buy Cryptocurrency ETFs? Two Main Ways

Due to regulatory restrictions, most retail investors cannot directly purchase ETFs through crypto exchanges. However, there are two options:

Method 1: Overseas Brokerage (Fastest & Easiest)

Steps:

1. Choose an overseas broker offering Bitcoin ETFs
2. Open an international securities account online
3. Transfer funds
4. Search for ETF codes (e.g., IBIT, FBTC) and place orders

Note: Transfer fees may increase costs; avoid small remittances. Profits are considered “overseas income,” so tax reporting and exemption limits should be noted.

Method 2: Discretionary Account (For High Net Worth Individuals)

If you qualify as a “professional investor” (e.g., institutional investors or high-net-worth individuals with over NT$30 million in assets), you can invest in overseas ETFs via domestic broker discretionary accounts. Honestly, this route has high entry barriers and is mainly for wealthy, professional investors.

Quick FAQs

Q: Are cryptocurrency ETFs really safe?
A: Compared to directly buying Bitcoin, safety is improved. Professional custody + strict regulation greatly reduces risks. But “safe” doesn’t mean “risk-free”—price volatility still exists.

Q: Are there other crypto ETFs besides Bitcoin?
A: Yes. Ethereum spot ETFs are also available. Other coins are still under review; currently, Bitcoin and Ethereum dominate.

Q: Are crypto ETFs suitable for long-term or short-term?
A: Depends on the type. Spot ETFs are low-cost and suitable for long-term holding. Futures ETFs are more flexible but involve roll-over costs, better suited for short-term strategies or hedging.

Final reminder: Before investing in crypto ETFs, fully understand your risk tolerance. No matter how convenient, these tools cannot change Bitcoin’s inherent high volatility. Do your homework and invest within your means.