In this article, we'll cover the basics of how to invest in the iShares Bitcoin Trust ETF. You'll learn how this spot Bitcoin ETF works and explore the pros and cons of investing in the fund.
Exchange-Traded Fund (ETF)
What is the iShares Bitcoin Trust ETF?
The iShares Bitcoin ETF Trust is a spot Bitcoin ETF launched by BlackRock (BLK -0.83%) in January 2024. IBIT is the ticker symbol for the iShares Bitcoin ETF, which trades on the Nasdaq Stock Exchange.
A spot Bitcoin ETF owns Bitcoin and closely tracks its price. It's similar to spot ETFs that own precious metals, such as gold and silver, and track their price movements.
The SEC's January 2024 decision to greenlight spot Bitcoin ETFs was a landmark for investors seeking cryptocurrency exposure. Prior to the approval, ETFs weren't allowed to own cryptocurrency directly. The only Bitcoin ETFs that existed were those that held Bitcoin futures rather than the crypto itself.
The SEC's decision allows investors to gain direct crypto exposure through a brokerage account since the ETFs trade on stock exchanges. That, in turn, makes it easier to invest retirement funds in Bitcoin.
The iShares Bitcoin Trust ETF is the largest spot Bitcoin ETF, with more than $63 billion in assets under management. It's also highly liquid, with a 30-day average daily trading volume of about 44 million shares.
How to buy the iShares Bitcoin Trust ETF
The iShares Bitcoin Trust ETF trades on the Nasdaq. You can invest in ETFs like the iShares Bitcoin Trust ETF using the same steps you'd follow if you were trading individual stocks.
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Does the iShares Bitcoin Trust ETF pay a dividend?
The iShares Bitcoin Trust ETF doesn't pay dividends because Bitcoin doesn't produce dividends. Any profits you earn from investing in a spot Bitcoin ETF are due to increases in the price of Bitcoin. That's important to keep in mind because when you invest in a stock ETF, you'll typically earn dividends that get reinvested unless you opt to receive them in cash, which can, in turn, boost your returns.
Dividends can soften the impact of lousy stock market returns, but you won't get this cushion if you invest in the iShares Bitcoin Trust ETF. If dividends are important to your investment strategy, consider a top dividend ETF instead.
What is the iShares Bitcoin Trust ETF's expense ratio?
An ETF expense ratio is the percentage of an investment that is allocated to fees. The best ETFs to invest in typically have low expense ratios. After all, a higher fee means less of your money gets invested.
ETF Expense Ratio
The bottom line on the iShares Bitcoin Trust ETF
The iShares Bitcoin Trust ETF and other spot Bitcoin ETFs make it easier to get direct Bitcoin exposure through a brokerage account. However, like Bitcoin, the iShares Bitcoin Trust ETF isn't appropriate for everyone. Only invest if you're comfortable with dramatic price swings and you're willing to hold the fund for the long term. Limit your stake to a small percentage of your overall investments, ideally 5% or less.
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