Spot ETF

A spot ETF buys and holds the underlying asset itself. A spot Bitcoin ETF holds bitcoin with a regulated custodian, and each share represents a slice of that bitcoin. This differs from a futures ETF, which holds contracts that bet on the future price and must be rolled over regularly, creating tracking differences.

The US Securities and Exchange Commission approved the first spot Bitcoin ETFs on January 10, 2024, and they began trading the next day. Issuers included BlackRock, Fidelity, Grayscale, and several others. Spot Ethereum ETFs followed in July 2024. The Bitcoin products became among the fastest-growing ETFs in history, gathering tens of billions of dollars within their first year.

Spot ETFs have become a major source of demand and a daily data point for the market, since issuers report their holdings and net flows. Investors should still check the expense ratio, the custodian, and whether the fund allows in-kind redemption, which affects how closely it tracks the spot price.