The Boost: Bitcoin ETFs

This week, we cover the biggest news in investing – the approval of Bitcoin ETFs by the SEC. It’s estimated that 12% of the population owns crypto and we suspect the overall exposure to it may increase with this news.

The approval specifically covers exchange-traded funds that directly hold Bitcoin, also referred to as “spot” ETFs. These funds have already attracted billions in investment.

Please note: We know crypto is controversial. We don’t take a stance on whether you should own it, but we do believe investors have the right to choose.

🧠 What you need to know

Bitcoin ETFs make it a lot easier to gain exposure to bitcoin without the complexities of owning Bitcoin directly, such as opening a separate account from your current brokerage or safely storing your private key. They will also make it more affordable to tax-loss harvest your Bitcoin holdings. Platforms like Coinbase charge a fee for each transaction, while most online brokers no longer charge a trading commission for stocks and ETFs.  

It’s quite the endorsement for Bitcoin’s staying power as an asset, seeing such established investment firms have embraced it.

Please note: You won’t find these ETFs with all brokers. Robinhood, Schwab, Fidelity, E*Trade, Interactive Brokers, and many others will off them. Vanguard does not plan to, while Merrill Edge is still deciding. Financial advisors Merrill Lynch, Edward Jones, and Northwest Mutual also won’t be offering them to clients.

Your options:

Eleven spot Bitcoin ETFs were approved on Thursday. We’ve organized the table by sorting from the smallest to largest expense ratio. In one of our prior posts we shared how you can think about ETF fees. These are all considered passive ETFs, as they aim to track the price of bitcoin. The funds managing these ETFs will not use active management to try to beat the performance of Bitcoin or another benchmark.

Many of them are waiving their fees or offering discounts for the first several months to attract investors away from competitors. The only ones not offering a discount are EZBC, HODL, and GBTC. The exception is GBTC, which was previously operating as a trust and has over $28B in assets. It likely can maintain a high expense ratio due to an existing base of investors who may not want to sell their holdings and incur taxes.

Bitwise Bitcoin ETF (BITB) - 0.20%

ARK 21Shares Bitcoin ETF (ARKB) - 0.21%

BlackRock's iShares Bitcoin Trust (IBIT) - 0.25%

Fidelity Wise Origin Bitcoin Trust (FBTC) - 0.25%

Valkyrie Bitcoin and Ether Strategy ETF (BRRR) - 0.25%

VanEck Bitcoin Trust (HODL) - 0.25%

Franklin Bitcoin ETF (EZBC) - 0.29%

WisdomTree Bitcoin Fund (BTCW) - 0.30%

Invesco Galaxy Bitcoin ETF (BTCO) - 0.39%

Grayscale Bitcoin Trust (GBTC) - 1.50%

As you can see, one drawback of investing in Bitcoin through an ETF is the potential for higher long-term costs due to the expense ratio, as opposed to direct ownership.

🤝 How can Mezzi help?

Mezzi helps you manage and build your wealth, initially focusing on stocks. If you own or plan to own Bitcoin ETFs, whether in a single account or across multiple accounts, you can monitor your allocation in one place with Mezzi. Mezzi will also track your Bitcoin ETF fees and flag lower-cost alternatives if available. As the prices of these ETFs fluctuate, there will be opportunities for tax-loss harvesting. Mezzi identifies these opportunities and guides you through the process of saving on your taxes.

Beyond Bitcoin ETFs, Mezzi plans to expand into crypto this year.