Bitcoin ETF: What It Is and How It Works

A Bitcoin ETF — is not the bitcoin itself, but a security that is traded on an exchange like a stock, with its value linked to the price of bitcoin.

How an ETF differs from direct bitcoin purchase

By buying bitcoin directly, you become the owner of the cryptocurrency itself — with a private key, a crypto wallet, and all the related storage particulars. By purchasing a share of a bitcoin ETF, you essentially buy a part of a fund that holds bitcoin on its balance sheet, and the share's price follows the asset's price. You do not own bitcoin directly and do not deal with crypto wallets — the transaction goes through a regular brokerage account, just like buying a stock.

An example of such an instrument in the catalog

In the 'Exchange Broker' catalog, in the 'Stocks' section, the iShares Bitcoin Trust (ticker IBIT) is available — one of the largest Bitcoin ETFs in the US market. The current share price should be checked directly in the catalog before the transaction — it constantly changes following the price of bitcoin.

What to understand before buying

The price of a bitcoin ETF share is as volatile as bitcoin itself — the fund does not eliminate price risk, it only changes the form of asset ownership. Additionally, the management company of the ETF charges its own management fee, separate from the broker's fee. Do not confuse a bitcoin ETF with buying the cryptocurrency itself — these are different types of instruments with different risks and costs.

This material is for informational purposes only and is not an individual investment recommendation. Mentioning a specific instrument does not imply a recommendation to purchase it. Past results do not guarantee future returns.