What Is a Bitcoin ETF? How Spot Bitcoin ETFs Work and What They Cost

Updated October 22, 2026: fully revised, with the SEC approval of January 10, 2024, fund data and flows through October 2026 and a cost comparison. The first version from November 17, 2023 described the situation before approval. Corrected in this update are the agency's name (Securities and Exchange Commission), the ticker of BlackRock's fund (IBIT rather than the IBTC reported at the time) and the rise in the gold price from 2004 to 2011 (roughly fourfold, not sixfold).

A Bitcoin ETF is an exchange-traded fund that tracks the price of bitcoin. The spot Bitcoin ETFs that have traded in the US since January 11, 2024 buy actual bitcoin and keep it with a custodian. Investors buy fund shares through a brokerage account and never have to run a wallet themselves. The US Securities and Exchange Commission (SEC) approved eleven such funds on January 10, 2024. Since then, net inflows have reached $57.5 billion, according to daily data from Farside Investors (as of October 20, 2026).

Retail investors in Germany and the rest of the EU usually cannot buy the US funds, because they lack the required key information document. Which bitcoin products are available there instead is covered in our guide to crypto ETFs in Germany. This article explains the Bitcoin ETF itself: how it is built, how it was approved, the largest funds, their costs and the money that has flowed in since launch.

Bitcoin ETF: Key Points at a Glance

• The SEC approved eleven spot Bitcoin ETFs on January 10, 2024, and trading began on January 11, 2024.
• Since launch, the US funds have taken in a net $57.5 billion, $35.2 billion of it in 2024 (as of October 20, 2026).
• The largest fund, BlackRock's iShares Bitcoin Trust (IBIT), managed about $66.9 billion on October 20, 2026.
• Annual fees range from 0.14 percent (Morgan Stanley, MSBT) to 1.50 percent (Grayscale, GBTC).
• Grayscale's GBTC held 619,220 bitcoin when trading began; on October 21, 2026 it held 125,265, about 80 percent less.
• On a €10,000 investment, a fund charging 0.25 percent a year costs more than a direct purchase with 0.5 percent trading fees after about four years.

The Bitcoin ETF explained: a fund that holds real bitcoin

ETF stands for exchange-traded fund. A conventional ETF tracks an index such as the S&P 500 and can be bought and sold at any time while the exchange is open. A Bitcoin ETF tracks a single asset instead of a basket of shares: the price of bitcoin.

For investors it works like buying a stock: the shares sit in a brokerage account, their price follows bitcoin minus the fee, and no wallet is needed. What you own, however, is fund shares, not bitcoin. You cannot send them to your own address, and you can only trade them during exchange hours, while bitcoin itself trades around the clock.

Spot Bitcoin ETF or futures ETF: how they differ

A spot Bitcoin ETF buys bitcoin in the cash market at the current price and holds it. A futures ETF holds bitcoin futures contracts instead, mostly on the CME in Chicago. When a contract expires, the fund has to roll into the next one. If the later contract is priced higher, every roll costs money, and over time the fund falls behind the bitcoin price.

The first of these futures funds in the US was the ProShares Bitcoin Strategy ETF (BITO) in October 2021.

How a spot Bitcoin ETF works: custody of the coins

New fund shares are not created on the exchange but by the fund itself. Large trading firms known as authorized participants order blocks of shares from the fund; for BlackRock's IBIT, one such block comprises 40,000 shares, according to the prospectus. In return, the firm delivers bitcoin or dollars that the fund uses to buy bitcoin. Redemptions work the other way round. At first, blocks could only be exchanged for cash; since July 29, 2025, the SEC has also allowed them to be swapped directly for bitcoin.

This mechanism keeps the share price close to the value of the bitcoin held. If a share trades above its net asset value, it pays for the trading firms to create and sell new shares; if it trades below, they hand shares back to the fund. The bitcoin itself sits in segregated accounts with a custodian. BlackRock names Coinbase Custody as custodian in its prospectus and Anchorage Digital as an alternative, and Grayscale and Bitwise also name Coinbase Custody on their fund pages. The funds' cash is mostly held by the Bank of New York Mellon.

Physical here means that every share is backed by bitcoin. Products that only replicate the price through swap agreements with a bank carry the additional risk that this counterparty defaults.

Bitcoin ETF approval: ten years of rejections until January 2024

The first application came from Cameron and Tyler Winklevoss, who later founded the Gemini exchange, in July 2013 with the Winklevoss Bitcoin Trust. The SEC refused the listing on March 10, 2017, mainly citing the risk of market manipulation on unregulated trading venues. On August 22, 2018, it turned down nine more bitcoin funds from ProShares, Direxion and GraniteShares in a single day.

The turning point was a lawsuit. Grayscale wanted to convert its Bitcoin Trust into an ETF; the SEC said no in June 2022, Grayscale sued and won in August 2023 at the federal appeals court in Washington, which found that the agency had not explained why it allowed futures funds but not spot funds. In June 2023, BlackRock, the world's largest asset manager, had also filed its own application, followed by about a dozen other issuers.

On January 10, 2024, the SEC approved the listing of eleven spot funds with order 34-99306: from BlackRock, Fidelity, Grayscale, Bitwise, ARK and 21Shares, VanEck, Invesco and Galaxy, WisdomTree, Franklin Templeton, Valkyrie and Hashdex. Then SEC Chair Gary Gensler stressed in his statement on the decision that the agency was not approving or endorsing bitcoin. Trading began on January 11, 2024.

From Grayscale trust to Bitcoin ETF: why the premium disappeared

Before 2024, the Grayscale Bitcoin Trust (GBTC) was the best-known way to invest in bitcoin through a US security. It was a closed-end vehicle, though: Grayscale issued new shares only occasionally to large investors, and holders could not redeem their shares for the bitcoin behind them. That removed the mechanism that ties the price to net asset value. The trust also charged an annual fee of 2.0 percent.

The chart below shows the result for 2020 and 2021: GBTC in blue against the converted bitcoin price in orange, with the gap underneath. In early and late 2020, GBTC traded up to about 30 percent above the value of its bitcoin; from spring 2021 it traded below, ending 2021 at a discount of about 25 percent.

With the conversion into an ETF on January 11, 2024, Grayscale cut the fee to 1.5 percent, according to its quarterly report, and the discount vanished because redemptions became possible. Many investors used exactly that to exit: according to The Block, GBTC held 619,220 bitcoin when trading began; on October 21, 2026 it held 125,265 bitcoin, according to Grayscale, about 80 percent less.

The largest Bitcoin ETFs in the US: fees and assets

The six largest US spot Bitcoin ETFs manage a combined $104 billion or so, almost two thirds of it in BlackRock's IBIT. Assets are shown as of the date given for each fund.

Asset figures come from the fund pages of BlackRock, Fidelity, Grayscale (GBTC and BTC), Bitwise and ARK Invest; fees and flows come from the Farside Investors overview (as of October 20, 2026).

The cheapest fund is the Morgan Stanley Bitcoin Trust (MSBT), which launched in April 2026 with a 0.14 percent fee, according to The Block, and had gathered a net $800 million by October 20, 2026. GBTC sits at the other end: at 1.50 percent it costs six times as much as IBIT and has lost a net $28.0 billion since its conversion. For cost-conscious investors, Grayscale launched the Bitcoin Mini Trust (BTC) in July 2024 at 0.15 percent.

Bitcoin ETF inflows: $57.5 billion since January 2024

Of the $57.5 billion in net inflows through October 20, 2026, $35.2 billion came in 2024, $21.3 billion in 2025 and $0.9 billion so far this year, based on the daily figures from Farside Investors. The strongest day was November 7, 2024, with $1.37 billion, two days after the US presidential election. The weakest was February 25, 2025, with an outflow of $1.11 billion.

The distribution stands out. BlackRock's IBIT alone took in a net $66.3 billion, more than the market as a whole, because GBTC lost $28.0 billion over the same period. The total across all funds is therefore well below the inflows into the newer funds.

Our report on ETF inflows ahead of the Fed meeting shows the latest daily figures: on October 19, 2026, the funds took in a net $526.7 million. For the bitcoin price, flows are one demand signal among several; scenarios are covered in our Bitcoin price prediction. Bitcoin traded at about $84,760 on October 21, 2026, according to CoinGecko, roughly a third below its record high of $126,080 on October 6, 2025.

Bitcoin ETF costs in a worked example: €10,000 over five years

An ETF's annual fee looks small, but it is deducted from the fund's assets every year. A direct purchase on a crypto exchange costs money once when you buy and once when you sell. The table runs both routes for €10,000 over five years. Assumptions: the fee is deducted continuously and pro rata from assets, a direct purchase costs 0.5 percent in trading fees on both purchase and sale, and order fees and spreads when buying the fund as well as taxes are left out.

The calculation shows two thresholds. A fund charging 0.25 percent becomes more expensive than a direct purchase after about four years; a fund charging 1.50 percent after only eight months. Because the fee is a fixed share of assets, it grows with the price: after a 50 percent rise, the same fund also costs 50 percent more in euros. A direct purchase, on the other hand, comes with the cost of custody, such as buying a hardware wallet once.

Trading fees for direct purchases are compared in our crypto exchange comparison. Providers that offer bitcoin and securities under one roof are listed in our crypto broker comparison.

Bitcoin ETF and gold ETF: what the launch of GLD in 2004 shows

Bitcoin is often compared with gold, and the gold ETF is the obvious precedent. The SPDR Gold Trust (GLD) listed on the New York Stock Exchange on November 18, 2004, according to its sponsor the first gold ETF traded in the US and the first US-listed ETF backed by a physical asset.

The chart below shows the gold price in dollars per troy ounce from 1985 to early 2023. At the end of 2004 it stood at just over $400; in the summer of 2011 it was above $1,800, roughly four times as much. The chart does not show whether the ETF caused the rise: the same years brought the financial crisis from 2008 and sharply lower policy rates. It only shows that the ETF created a new, convenient way in, through which money could flow into the market.

After the Bitcoin ETF: ether and Solana ETFs follow

Other crypto assets followed the bitcoin funds. The SEC approved spot ether ETFs in May 2024, and they have traded since July 23, 2024. According to Farside Investors, they had gathered a net $12.8 billion by October 20, 2026. On September 17, 2025, the SEC adopted generic listing standards: since then, exchanges may list funds on further crypto assets that meet set criteria without seeking a separate approval for each fund.

Solana funds were among those that followed, the first with full Solana backing being the Bitwise Solana Staking ETF (BSOL) on October 28, 2025. US Solana ETFs have taken in a combined net $1.54 billion, according to Farside. How quickly the direction can turn was shown by the end of a 14-week inflow streak in early October 2026. Some of these funds pass staking rewards on to investors, which is technically not possible with bitcoin.

Bitcoin ETF in Germany and the EU: why brokers offer ETPs instead

The US funds are generally not available to retail investors in Germany. The PRIIPs Regulation (EU) No 1286/2014 requires a key information document for packaged investment products before they can be sold to retail investors in the European Economic Area. The US issuers do not produce one, so banks and brokers do not offer the funds to retail clients.

There is no European Bitcoin ETF either. Funds for retail investors in the EU are mostly UCITS funds under Directive 2009/65/EC, which requires diversification across several holdings; a fund holding a single asset does not qualify. German exchanges such as Xetra list bitcoin ETPs instead, mostly as ETNs, meaning debt securities of an issuer that are usually backed by bitcoin. Unlike with the assets of an ETF, you carry the risk that the issuer defaults. How to check that is covered in our article on issuer risk in crypto ETNs.

Tax treatment differs as well. In Germany, bitcoin held directly is tax-free after a holding period of more than one year under Section 23 of the Income Tax Act. A draft bill from the Federal Ministry of Finance would change that for purchases from 2027, but the cabinet had not adopted it by mid-October 2026; we track the status of the holding period reform. For an ETP, taxation depends on whether it grants a claim to delivery of the bitcoin. This paragraph is not tax advice.

Bitcoin ETF: after four years, the fee is what counts

A spot Bitcoin ETF makes bitcoin tradable through a brokerage account, with actual bitcoin held by a custodian and a mechanism that keeps the share price close to the value of that bitcoin. Since January 2024, the US funds have gathered a net $57.5 billion, most of it at BlackRock. The price of convenience is the annual fee: at 0.25 percent it exceeds the trading fees of a direct purchase after about four years, at 1.50 percent after only eight months.

In Germany, the exchange route leads to ETPs rather than ETFs, with their own issuer risk and their own tax rules; backing and delivery claims are set out in the key information document. Whichever route you take, bitcoin remains an asset with sharp price swings, and a total loss is possible.

(As of October 21, 2026. This article is not investment advice. Prices, fund data and fees change; check the terms with the provider before you buy.)