Bitcoin's Lightning Moment: Spot ETFs Supercharge Digital Asset Investing

Bitcoin, the world’s most popular cryptocurrency, has been making headlines lately with its soaring price and growing adoption. But did you know that you can now invest in bitcoin through a new type of exchange-traded fund (ETF) that holds actual bitcoins instead of futures contracts? These are called spot bitcoin ETFs, and they offer several advantages over bitcoin futures ETFs, such as lower fees, better tracking, and more exposure to the underlying asset. In this article, I will explain what spot bitcoin ETFs are, how they work, and why they are a game-changer for crypto investors and African entrepreneurs.

Spot bitcoin ETFs have been a long-awaited innovation in the crypto space, as they allow investors to buy and sell shares of a fund that holds bitcoins in a regulated and transparent manner. Unlike bitcoin futures ETFs, which track the price of bitcoin futures contracts and incur additional costs and risks, spot bitcoin ETFs directly own bitcoins and reflect their spot price. Spot bitcoin ETFs also have lower fees than other crypto investment vehicles, such as trusts and funds, which charge up to 3% annually.

The SEC approved the first batch of spot bitcoin ETFs on January 10, 2024, after more than 10 years of applications and rejections. Among the 11 spot bitcoin ETFs that received the green light, the cheapest one is the Bitwise Bitcoin ETF (BITB), which charges 0.24% after the first six months of zero fees. The most expensive one is the Grayscale Bitcoin Trust (GBTC), which charges 1.5%. Other notable spot bitcoin ETFs include the ARK 21Shares Bitcoin ETF (ARKB), which is backed by the influential fund manager Cathie Wood, and the iShares Bitcoin Trust (IBIT), which is issued by the world’s largest asset manager BlackRock.

Spot bitcoin ETFs are a great option for anyone who wants to invest in bitcoin without having to deal with the technical and security challenges of buying and storing bitcoins themselves. They are also a convenient way to diversify your portfolio and hedge against inflation and currency devaluation, especially in countries with unstable economies and political situations.

It can also boost your crypto portfolio by giving you more exposure to the upside potential of bitcoin, as well as reducing the downside risk of volatility and manipulation. As Larry Fink, the CEO of BlackRock, said in a recent interview10: “I believe [bitcoin] goes up as the world is more frightened. If people have fearful geopolitical risks, they’re fearful of their own risk … And unlike gold, where we manufacture new gold, we’re almost at the ceiling of the most of the amount of bitcoin that could be created.” Spot bitcoin ETFs are not only beneficial for investors, but also for entrepreneurs, especially in Africa, where crypto adoption is growing rapidly.

Spot bitcoin ETFs can provide access to capital, liquidity, and innovation for African businesses that operate in the crypto space or use blockchain technology. They can also enable cross-border payments, remittances, and trade, as well as financial inclusion and empowerment for the unbanked and underbanked populations. As Fink also said in the same interview10: “If you’re in a country where you’re fearful of your future, fearful of your government, or you’re frightened that your government is devaluing its currency by too much deficits, you can say this is a great potential long-term store of value. Like I said, it’s like digital gold.”

Spot bitcoin ETFs are a revolutionary development in the crypto market, as they offer a simple, safe, and cost-effective way to invest in bitcoin. They also have many advantages over other crypto investment vehicles, such as lower fees, better tracking, and more exposure to the underlying asset. Spot bitcoin ETFs can enhance your crypto portfolio and hedge against uncertainty and instability, as well as create opportunities and value for African entrepreneurs and communities.

If you are interested in spot bitcoin ETFs, you can check out some of the options available in the market and choose the one that suits your needs and preferences. You can also learn more about bitcoin and blockchain technology by following the latest news and trends in the crypto space. I hope you enjoyed this article and found it informative and helpful. If you did, please share it with your friends and colleagues who might also be interested in spot bitcoin ETFs. And if you have any questions, comments, or feedback, please feel free to leave them below. I would love to hear from you and continue the conversation.