How to buy Valkyrie Bitcoin Strategy ETF (BTF) units
The second Bitcoin future ETF is set to go live on 22 October. Here's how to own Valkyrie Bitcoin Strategy ETF units in just a few minutes.
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The Valkyrie Bitcoin Strategy ETF, the second Bitcoin futures based fund approved for the US market, start trading Friday, Oct. 22, on the Nasdaq under the symbol BTF.
Shares closed the day at $24.30, down 4.7% from the start, on a day when Bitcoin prices dipped.
The Valkyrie Bitcoin Strategy ETF will own bitcoin futures contracts rather than the actual coin itself. This means it tries to track bitcoin price fluctuations rather than purchasing the actual asset.
Valkyrie Funds CEO Leah Wald told Bloomberg the regulation of futures in the U.S. might provide some greater sense of security to investors over buying the actual asset. The company has applied for approval of an ETF backed by Bitcoin itself, she said, but does not expect that until possibly next year.
How to invest in Valkyrie Bitcoin Strategy ETF
- Compare online brokers. To invest in exchange traded funds (ETFs) listed in the United States, you'll need to sign up to an ETF broker with access to US markets. Our table below can help you choose.
- Open and fund your brokerage account. Complete an application with your personal and financial details. Fund your account with a bank transfer, PayPal or debit card.
- Search for the Valkyrie Bitcoin Strategy ETF. Find the ETF by name or ticker symbol: BTF. Research its history to confirm it's a solid investment against your financial goals.
- Purchase now or later. Buy today with a market order or use a limit order to delay your purchase until the Valkyrie Bitcoin Strategy ETF reaches your desired price.
- Decide on how many to buy. Weigh your budget against a diversified portfolio that can minimise risk through the market's ups and downs.
- Check in on your investment. Congratulations, you've invested in the Valkyrie Bitcoin Strategy ETF.
Compare online ETF brokers
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
What we know about the Valkyrie Bitcoin Strategy ETF
Launched on Oct. 22, 2021 by alternative asset management firm Valkyrie and headed by Leah Wald, the Valkyrie Bitcoin Strategy ETF (BTF) seeks to provide investors with capital appreciation through exposure to Bitcoin futures.
The crypto-native fund manager is the third sponsor of a bitcoin futures exchange-traded fund in the United States to win approval, and it was the second ETF to launch.
The ETF, which originally filled in August, noted management fees for the fund will be 0.95%.
The use of futures means nvestors don’t actually own Bitcoin directly through the fund. Unlike traditional ETFs that buy and sell underlying assets such as stocks or gold, Valkyrie uses futures contracts to profit from Bitcoin price fluctuations.
In other words, it uses contracts that speculate on the future price of Bitcoin to try to match Bitcoin's ups and down. In reality, depending on how volatile the market is and other factors, these prices could differ significantly, a somewhat unique risk.
Thus far, the Bitcoin ETFs on the US market rely on futures. ETFs that actually own Bitcoin are in the works and Valkyrie has applied to open one, but it's unclear when or if the SEC will approve any of those.
To check out other Bitcoin-related ETFs, check out our bitcoin ETF guide.Here's a look at how the two Bitcoin ETFs and Bitcoin itself have traded since the ETFs launched.
The risks of the Valkyrie Bitcoin Strategy ETF (BTF)
The Valkyrie Bitcoin ETF and other futures-based ETFs like it come with a unique set of risks that may affect the performance of your investment. While they are groundbreaking in terms of earning approval from the SEC, you may want to look at other ways of investing in Bitcoin.
- Accessibility. BTF is listed on NASDAQ which makes it easily accessible to anyone with a share trading account that already has access to NASDAQ.
- Liquidity. NASDAQ is one the largest stock exchanges in the world, with enormous amounts of liquidity which could flow into BTF.
- Custody. By purchasing an ETF, there is no requirement to own actual Bitcoin, which can be an unwelcome learning curve for some.
- Contango. Futures-based ETFs are exposed to a unique phenomenon known as contango. It occurs when a fund – based on futures contracts – underperforms compared to the underlying asset. That is, investors would be better off purchasing actual BTC rather than futures contracts via an ETF. It occurs due to the maintenance cost of holding futures contracts, which need to be "rolled over" each month, incurring a fee.
- Fees. Fees for BTF are twofold – there's a 0.95% management fee included with the cost of the ETF, while the futures contracts themselves attract additional fees. These include maintenance fees for keeping a leveraged position open and rollover fees to purchase new contracts each month.
- Volatility. Bitcoin is a famously volatile asset, which is further agitated by futures contracts. This is because futures contracts involve a degree of leverage, which means that relatively small movements in the price of Bitcoin can have an oversized impact on the potential profit or loss of a contract.
- Custody. By choosing not to purchase actual Bitcoin, you are missing out on potential benefits, such as earning interest.
Are cryptocurrency ETFs a good investment?
- Allows investors to gain exposure to Bitcoin without the need for owning the underlying security
- Avoids the hassle of setting up a Bitcoin wallet
- Stepping stone for retail investors
- Lower fees and more liquid than traditional crypto markets
Not so great for
- Investors do not own Bitcoin itself
- Being a futures contract it does not directly track the underlying asset. Instead investors trade on contracts at a predetermined price and date.
Who is the Valkyrie Bitcoin Strategy ETF suited for?
The Valkyrie ETF is not as simple as investing in Bitcoin via an ETF. It tracks Bitcoin futures contracts, which makes it a bit more complex than an ETF that just tracks the price of Bitcoin. As Valkyrie itself says on the product page "investors seeking direct exposure to the price of Bitcoin should consider another investment" (such as a cryptocurrency exchange or broker).
Bitcoin futures contracts are derivatives, which allow buyers and sellers to speculate on what the price of Bitcoin will be by a given date. In the case of BTF, it tracks BTC futures traded on the Chicago Mercantile Exchange (CME).
With that in mind, according to the prospectus, this is how the Valkyrie ETF works:
- Purchasing shares in the ETF gets you a share of the fund.
- The fund is made up of a mixture of assets. These include CME Bitcoin futures contracts, cash and cash-like equivalents. Cash is necessary to pay for contracts, fees and other costs.
- The fund is actively managed, which means futures contracts are regularly bought and sold in order to generate a profit, in line with the fund's investment objectives.
- The objective of the fund is to maintain exposure to Bitcoin "as close to" 100% of the time, allowing for temporary cash positions while contracts are bought and sold.
This means BTF may be suited to you if you are satisfied with exposure to the volatility of Bitcoin markets via futures, without wanting to actually trade futures or own bitcoin directly.
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