How to Buy Bitcoin BTC: Quick-Start Guide
Bitcoin ETPs offer the ease of stock trading, low costs, tax efficiency, and convenience. Also, in the wake of the SEC’s spot bitcoin ETF approval, applications for other spot crypto ETFs have been submitted to the Securities & Exchange Commission. The SEC is now considering approval for spot Ethereum ETFs, which would provide more investors access to Ethereum, the second-largest cryptocurrency by market capitalization. In January, the SEC formally approved exchange-traded funds linked directly to bitcoin. So-called “spot” bitcoin ETFs can hold the digital asset without equivocation or complications.
- Bitcoin is available at bitcoin ATMs or from payment services like PayPal and mainstream brokerage firms like Robinhood or Coinbase.
- NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances.
- All iShares ETFs and ETPs trade commission free online through Fidelity.
- With 100% of assets invested directly in bitcoin and a big iShares brand behind it, IBIT is a major player in the space.
- Others may be restricted to buying and selling securities in their traditional brokerage accounts for various reasons.
For most people, the best place to buy Bitcoin is on a crypto exchange. These are online platforms dedicated to facilitating trades in cryptocurrency, usually by offering trading pairs (e.g., USD to Bitcoin) and usually by matching buyers with sellers. IBIT enables investors to access bitcoin through the convenience of an exchange-traded product, helping remove the operational, tax, and custody complexities of holding bitcoin directly.
You can sell bitcoin at the same venues where you purchased the cryptocurrency, such as cryptocurrency exchanges and P2P platforms. Typically, the process of selling bitcoin on these platforms is similar to the process of buying it. Credit card processing can add extra charges to these transactions. In addition to paying blockchain transaction fees, the exchange may pass on processing fees to the buyer.
Cryptocurrency exchanges
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to generating a new ssh key and adding it to the ssh-agent take an action on their website. Regardless of the option you choose, you will have to verify your identity when first signing up for an account and registering a payment method. In the US, you’re usually required to submit a scan of a state-issued ID, such as a driver’s license or identification card. On an economic level, Bitcoin’s creator — the pseudonymous Satoshi Nakamoto — created it in 2008 as a form of “sound money,” akin to digital gold. This information must be preceded or accompanied by a current prospectus. Buying and selling shares of ETFs may result in brokerage commissions.
Some crypto apps, such as games, crypto wallets or other online services that use blockchain technology, allow users to buy and sell digital assets directly within their app. Like its stock-trading platform, Robinhood charges no fees for Bitcoin trades. Other online brokers that offer access to Bitcoin or other cryptocurrencies include Webull, TradeStation and Fidelity. Six of signup and earn $100 the most common ways to invest in Bitcoin include Bitcoin wallets and centralized cryptocurrency exchanges, certain traditional brokers, a few money transfer apps, Bitcoin ATMs and Bitcoin ETFs.
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If the SEC just recently gave approval to funds to operate as spot bitcoin ETFs, how is it that Grayscale Bitcoin Trust has been up and running since 2013? Thanks to the friction of levered funds—that is, the combined direct and indirect costs of trading them—you are unlikely to ever get a performance that is exactly twice bitcoin’s performance. But with a gain of about 51% since its June 2023 inception date, it’s hard to argue there isn’t a use for this admittedly aggressive bitcoin ETF. With 100% of assets invested directly in bitcoin and a big iShares brand behind it, IBIT is a major player in the space.
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Bitcoin can be traded as fractional shares, so your investment could be as low as, say, $25. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Make sure you have a well-diversified portfolio
Every investment comes with risks, and cryptocurrencies such as bitcoin have proven to be extremely volatile. It’s always a good idea to check with a financial advisor before making any investment decision. When choosing a bitcoin ETF, investors should take bitcoin price plunges into account their personal financial goals, investing timeline and risk profile. A “short” ETF is a risky long-term bet amid inflationary pressures that raise many assets’ prices.
Among various performance evaluation methods, the premium or discount of an ETF stands out for its nuanced insight. The IRS requires reporting of each bitcoin transaction, which is subject to capital gains tax.4 Investors should consult a tax or financial professional for more information on how they may be impacted by bitcoin tax laws. Some investors may feel safer getting exposure to bitcoin in their portfolios by purchasing a professionally managed ETF than they do owning actual BTC. But ETFs that invest indirectly in bitcoin—such as ETFs that hold bitcoin futures—are not inferior. They are simply alternative strategies, looking to gain exposure to bitcoin in a different way.
If a retirement investor would like to get a modest amount of exposure to bitcoin without opening an account at a crypto exchange or a bitcoin IRA, owning shares of a bitcoin ETF is a reasonable alternative. While almost anyone can open a Coinbase account, not everyone is comfortable doing so. Others may be restricted to buying and selling securities in their traditional brokerage accounts for various reasons. ProShares Bitcoin Strategy ETF was a first-mover in this space and continues to be the leader among bitcoin futures ETFs. Keep in mind, however, that BITO is an actively managed fund linked to bitcoin futures contracts.
