The final quarter of 2024 has been quite eventful in the crypto market. As Bitcoin’s price surges to new heights following the US election results, it has reignited investors’ interest, and fund influx into the market has increased substantially. Now, as Bitcoin nears $100k, there are several ways to buy Bitcoin online for those looking to join the rally.
This article will delve into the different methods of buying Bitcoins online, including Bitcoin ETFs, crypto exchanges, Bitcoin CFDs, etc.
Bitcoin ETFs
Bitcoin ETFs have emerged as the best way to buy Bitcoin online. Since the launch of BTC ETFs in January, the combined Bitcoin holdings of popular US BTC ETFs now exceed 1 million Bitcoins, valued at over $96 billion as of the time of writing. Investors prefer the Bitcoin ETFs primarily because they prevent the expense to the underlying assets; hence reducing the risk of volatility.
How to Buy Bitcoins Through ETFs
Buying Bitcoin through Exchange-traded Funds (ETF) is quite easy. You can do so through a trusted broker, specifically one offering ETF trading. Investors are expected to set up and fund their accounts. Afterward, they may proceed to purchase their preferred Bitcoin ETF. Usually, they’re denoted by their symbols. The ETF tracks the price changes in the underlying assets. In this case, it’ll be bitcoin. ETF holders benefit from the changes in the asset price.
Popular Bitcoin ETFs
Here are the most popular Bitcoin ETFs:
iShares Bitcoin Trust (IBIT): This Bitcoin ETF is owned by the investment giant BlackRock. It currently boasts over $18 billion in BTC value.
Grayscale Bitcoin Trust ETF (GBTC): It’s recognized as the largest Bitcoin fund, with over $21 billion in assets, offering investors direct exposure to Bitcoin.
Fidelity Wise Origin Bitcoin Fund (FBTC): The Bitcoin ETF from the reputable financial service firm Fidelity, with a low expense ratio of 0.25%.
ARK 21Shares Bitcoin ETF (ARKB): A Bitcoin ETF from Ark Invest
Buy Bitcoin on Crypto Exchanges
Crypto exchange platforms have been instrumental in the success of the crypto market. They provide the much-needed liquidity for investors to buy and sell their crypto assets.
Investors looking to buy Bitcoins can leverage the crypto exchange platforms. However, unlike Bitcoin ETFs, traders seeking to purchase Bitcoins through crypto exchanges must own a digital or hardware wallet. A crypto wallet is a secured digital storage system, which can be hardware, often called a cold wallet, or platform-based, also known as a hot wallet. It allows users to store, manage, and transfer their crypto assets.
In that sense, while buying on exchanges might be the most conventional method to purchase Bitcoins, there are still several risks with buying BTC via this method. Essentially, when buying Bitcoin via crypto exchanges, you are exposed to hacking or the loss of funds if the exchange is facing financial issues.
How to Buy Bitcoins Through Exchanges
There are two types of crypto exchange platforms: Centralized exchanges and Decentralized exchanges. We’ll highlight their differences below.
For the best experience, you should decide on the preferred exchange before setting up an account. Some exchanges, especially centralized exchanges, often require more detailed information about users and may request additional verification documents. Once the account is up, users may fund their accounts with fiat or stablecoins. With their fiat or stable coin in their account, you can then purchase Bitcoin.
Note that the exchange platform usually allows users to withdraw the purchased bitcoin into their wallet address, either cold or hardware wallet. However, it might be tricky to withdraw funds into your credit card or bank account. This normally depends on the country or region in which you are located.
Centralized Exchange VS Decentralised Exchange
Below is a quick overview of each type of crypto exchange platform and how they compare to each other.
Centralized Exchanges (CEXs)
Centralized exchange platforms that are owned and controlled by a single entity. It facilitates the purchase, storage, and transfer of crypto assets, including Bitcoins.
Popular CEXs include:
- Coinbase
- Binance
- Kraken
Decentralized Exchanges (DEXs)
Unlike centralized exchanges, Decentralized crypto exchange platforms harness the power of blockchain technology to provide democratized exchange services to users without the influence of a central entity. While centralized exchange moderates the crypto transactions through the operating company or individuals, decentralized exchange operates through DAOs.
Notable DEXs include:
- Uniswap
- SushiSwap
- Curve
Buy This Bitcoin-Related Stock
Bitcoin-related stocks are gradually growing in popularity. They allow investors to gain exposure to the crypto market without holding Bitcoins. These classes of stocks became even more popular after tech giants like Tesla and MicroStrategy (MSTR) began investing in bitcoins aggressively.
For instance, MicroStrategy recently purchased a BTC worth over $2B, with a total BTC valuation of $25B. These stocks are publicly traded, and investors tend to prefer them because of their connection to the Bitcoin market. Although TSLA and MSTR invest directly in Bitcoins, companies like Riot Blockchain (RIOT) are also involved in Bitcoin mining. Regardless, their stocks are still Bitcoin-related stocks because they’re publicly traded companies.
How to Buy a Bitcoin-Related Stock
Purchasing a Bitcoin-related stock is similar to a traditional stock-buying process. Firstly, you should create an account with a reputable online broker that offers direct access to stock exchanges.
Popularly known examples include Fidelity, Schwab, Interactive Brokers, and Robinhood. Next, fund your account with your preferred fiat currency. Finally, purchase the Bitcoin-related stock you wish to hold and decide if you’re entering a limit buy or market order. These features would be provided by the trading platform you choose. Once you purchase a Bitcoin-related stock, you’ll find the stock in your portfolio.
Bitcoin CFDs
Bitcoin Contract For Difference (CFDs) allows investors to speculate on the price of Bitcoins without actually holding BTC. Brokers offering the services facilitate Bitcoin speculation without necessarily exposing investors to the underlying asset. In a way, trading CFDs is quite similar to trading futures contracts; however, unlike futures, with CFDs, you are not purchasing the physical asset. Instead, you only speculate on the price of the asset.
The upside is that you can trade Bitcoin on leverage through contracts, even when you don’t physically hold Bitcoins.
How to Buy Bitcoins through CFDs
The first step is to choose a preferred Broker. Set up an account with the broker and fund the account. Each broker provides specific CFDs, though, nowadays, the vast majority of brokerage firms provide Bitcoin. Select your preferred offer and choose the leverage and margin requirements. Finally, set the amount you wish to invest and enter your position.
Popular Bitcoin CFD Brokers:
- AvaTrade
- Plus500
- FPMarkets
- Pepperstone
- IG
Conclusion
In sum, each method highlighted above offers unique benefits and risks. While investors may purchase Bitcoins using each method, it’s best to analyze one’s risk appetite before settling for a preferred method: Bitcoin ETFs, crypto exchanges, bitcoin-related stocks, or Bitcoin CFDs.
Additionally, before making any purchase, we suggest reading our Bitcoin price prediction for 2024 using Monte Carlo simulation and learning how to use Bitcoin liquidation data.
