Buying Bitcoin on Interactive Brokers

Big listed companies like MicroStrategy, Twitter,  and Tesla openly buy Bitcoin, which has an estimated market cap of 1.09 trillion based on Hyperchart and its current price of $58,279.

Personally, I used Gemini and Coinbase for my crypto purchase and was wondering if my favorite stockbroker, Interactive Brokers, offers bitcoin buying which it does in some cases which I will share.

Can I buy Bitcoin on Interactive Brokers?

How do I buy Bitcoin on Interactive Brokers? You cannot buy Bitcoin on Interactive Brokers currently but a spokesperson said to Forbes that there are plans to offer Bitcoin in IBKR by summer 2021. In the meantime, you can buy Bitcoin indirectly via the various stocks / ETF that intend to track Bitcoin but these will charge you a premium price and also annual fees and require special permissions.

Bitcoin Futures began trading on the CME using the underlying symbol BRR on December 18, 2017. The following are the Bitcoin-related stocks/ETFs if you really wish to gain BTC exposure before IBKR allow Bitcoin purchases:-

  1. GBTC (PINK)- Grayscale Bitcoin Investment Trust (only Over The Counter so not really available)
  2. BITCOINXB (SFB)- Bitcoin Tracker One (this one is meant for Europeans)
  3. NYXBT (NYSE)- NYSE Bitcoin Index (price index following Coinbase)
  4. GXBT (Cboe)- The Gemini Bitcoin Trace Price Index (No new contracts offered for trading as of June 2019)
  5. BRR (CME)- CME Bitcoin Reference Rate Index ($15.01 per contract)
  6. BRTI (CME)- CME Bitcoin Real Time Index
  7. GXBT (Cboe/CFE)- The Gemini Bitcoin Trace Price Futures (No new contracts offered for trading as of June 2019)
  8. BRR (CMECrypto)- CME Bitcoin Reference Rate Futures
  9. BAKKT (ICECRYPTO)- Bakkt Bitcoin Futures

Is it smart to buy Bitcoin in IBKR

Disclaimer: Buying Bitcoin is very risky and is only for clients with a high-risk tolerance and financial ability to sustain losses.

The problem with cryptocurrency ETF funds is that they often trade at a significant premium compared to the underlying Bitcoin price in addition to charging you an annual fee.

Based on IBKR, 62% of the retail investors, accounts lose money when trading CFDs. (https://kb.clientam.com/fr/node/1912)

What is the cheapest way to buy Bitcoin? To buy $100 worth of crypto on Coinbase today, it costs $2.99, or 2.9%. To buy $1,000, you’ll pay $14.68, or 1.5%. Therefore, even if you managed to buy Bitcoin directly in IBKR, there is definitely a high fee based on Coinbase which already allows buying Bitcoin via cash. Nearly everyone thinks crypto trading fees will fall, but that will take time as newer competition will depress the trading fees.

“It took two decades for those fees to compress to zero,” says Rich Repetto, a managing director at investment bank Piper Sandler, who has been studying online brokerages since 1999. 

What is the minimum amount to invest in Bitcoin?

The minimum amount to invest is just the trading fees to get a few cents in Bitcoin via crypto exchanges.

Unlike physical money, Bitcoin can be split into a Satoshi, whereby 100,000,000 Satoshi makes up 1 Bitcoin. The reason no one buys a Satoshi is because of the minimum fees in the exchanges.

With a minimum cost of $2.99, it will not be logical to pay $2.99 and get only $10 of Bitcoin. Therefore, usually, people will buy at least $100.

To get a cheaper fee but at a higher minimum investment amount, people trades using other means such as:-

  • CME Bitcoin BRR that contains 5 Bitcoins per contract, the commission fee is USD 15.01. While the fees are reasonable, i will costs over $250,000 minimally at the current BTC prices above $50k. 
  • The Grayscale Bitcoin Investment Trust requires a minimum investment of $50,000 and charges an annual fee of 2.0 percent, whereas you can buy 1 stock of it via IBKR. 
Author
Sky Hoon. Read Full Bio
Website Owner, Twitter-er
He has been trading since 2008. He started this blog to share the journey about option trading. He dabbled in stocks, bitcoin, ethereum (in Celsius Network), ETF (lazy Dollar Cost Averaging) and also built websites for fun. He used this as a platform to share my experiences and mistakes in trading, especially options which I just picked up.

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