How to Buy Bitcoin ETFs in Australia
Investing in a Bitcoin ETF (exchange-traded fund) in Australia offers a convenient way to gain exposure to Bitcoin without the complexities of managing the cryptocurrency directly. Here are the key points to consider.
Contents
- What is a Bitcoin ETF?
- Who Can Buy Bitcoin ETFs in Australia? Can I Buy a Bitcoin ETF?
- Types of Bitcoin ETFs in Australia
- Benefits of Bitcoin ETFs
- Risks of Bitcoin ETFs
- How to Buy a Bitcoin ETF in Australia
- How to Cash Out of Bitcoin ETFs in Australia
What is a Bitcoin ETF?
A Bitcoin ETF (Exchange-Traded Fund) is an investment product that allows investors to gain exposure to Bitcoin without needing to directly purchase or manage the cryptocurrency. This fund trades on traditional stock exchanges, making it accessible through standard brokerage accounts, just like any other stock or ETF.
By investing in a Bitcoin ETF, investors can benefit from the price movements of Bitcoin while avoiding the complexities and security risks associated with owning Bitcoin directly, such as managing digital wallets and private keys. This investment vehicle is particularly appealing for those looking for a more regulated and convenient way to include Bitcoin in their investment portfolios.
Who Can Buy Bitcoin ETFs in Australia? Can I Buy a Bitcoin ETF?
In Australia, anyone who meets the basic requirements for investing in securities can buy Bitcoin ETFs. This includes individual retail investors, institutional investors, and legal entities such as trusts or pension funds. To invest in Bitcoin ETFs, you need to have a brokerage account with a provider that offers these ETFs, such as CMC Markets, CommSec, Pearler, Selfwealth, Stake, or Superhero.
Bitcoin ETFs are accessible through most Australian stock brokerage apps and platforms, making it easy for investors to purchase them just like any other stock or ETF. For instance, the Monochrome Bitcoin ETF (IBTC) and the Global X 21Shares Bitcoin ETF (EBTC) can be bought through various brokerage platforms.
Investors should be aware that Bitcoin ETFs are considered high-risk investments due to the volatility of the underlying asset, Bitcoin. It is essential to read the Product Disclosure Statement (PDS) and consider whether such an investment aligns with your financial situation and risk tolerance before proceeding.
Types of Bitcoin ETFs in Australia
There are different types of Bitcoin ETFs available to Australian investors. The Monochrome Bitcoin ETF (IBTC) launched in June 2024. It is Australia’s first ETF holding Bitcoin directly and is traded on Cboe Australia. Another BTC ETF available to Australians is Global X 21Shares Bitcoin ETF (EBTC). EBTC is another ETF that is physically backed by Bitcoin, with holdings stored in secure, offline cold storage.
In general, there are a variety of BTC ETF types worldwide.
Physically Backed ETFs
These ETFs hold actual Bitcoin. Examples include the Monochrome Bitcoin ETF (IBTC) and Global X 21Shares Bitcoin ETF (EBTC). These funds purchase and store Bitcoin on your behalf, typically in secure, offline wallets to protect against hacking.
Futures-based ETFs
These ETFs invest in Bitcoin futures contracts rather than the cryptocurrency itself. Examples include VanEck Bitcoin Strategy and ProShares Bitcoin Strategy ETF.
Crypto-related ETFs
These invest in companies involved in the cryptocurrency sector, such as mining firms and blockchain technology providers. An example is the Betashares Crypto Innovators ETF (CRYP).
Benefits of Bitcoin ETFs
Bitcoin ETFs are managed by professionals, eliminating the need to understand Bitcoin wallets or manage private keys. Including Bitcoin ETFs in your portfolio can provide diversification, especially since Bitcoin often performs differently from traditional asset classes.
ETFs like IBTC are also regulated under the Australian Financial Services Licensing regime, ensuring adherence to specific investor protection rules, and this is one of the major aspects of this investment class that appeals to those hesitant to invest in Bitcoin directly. Of course, that’s not to say that investing in BTC ETFs in Australia is without risks.
Risks of Bitcoin ETFs
The main risks of investing in BTC ETFs in Australia are volatility, tracking errors, and management fees.
- Volatility: Bitcoin is known for its significant price fluctuations, which can be mirrored in the ETF’s performance.
- Tracking Error: The ETF may not always perfectly track the price of Bitcoin, particularly with futures-based ETFs.
- Management Fees: ETFs come with management fees that can impact overall returns. It’s important to consider both the ETF’s expense ratio and any brokerage fees associated with buying and selling ETF shares.
Investors should be aware of the risks involved before investing in this volatile asset class, and can speak to a financial advisor if unsure of whether to proceed.
How to Buy a Bitcoin ETF in Australia
- Choose a Brokerage: You need an account with a brokerage that offers access to Australian ETFs. Popular platforms include CMC Markets, CommSec, Pearler, Selfwealth, Stake, and Superhero.
- Search for the ETF: Use the ticker symbol to find the ETF. For instance, IBTC for Monochrome Bitcoin ETF and EBTC for Global X 21Shares Bitcoin ETF.
- Place an Order: Decide on the number of shares you want to purchase and place your order through the brokerage platform.
Investing in Bitcoin ETFs can be a viable option for those looking to diversify their portfolio and gain exposure to Bitcoin without the complexities of direct cryptocurrency investment. However, it’s crucial to thoroughly research and consider the risks involved, especially given the volatility associated with cryptocurrencies.
How to Cash Out of Bitcoin ETFs in Australia
If you’re holding digital assets and looking for an easy, low-cost way to off-ramp into fiat currency, Grineo is an excellent choice. Users can exchange between BTC, ETH, USDT, and USDC directly in the app. You can convert BTC to stablecoins with ease. With the Grineo Card, you can spend or withdraw stablecoins like cash at any store, site, or ATM where Visa is accepted at just a 1% flat rate per card transaction.
Interested in instantly cashing out of stablecoins with the Grineo Card?
