The Top 7 Crypto ETFs to Invest in

It is presently possible for cryptocurrency ETFs to own spot Bitcoin, Ethereum futures, or even shares in cryptocurrency exchanges and blockchain enterprises.

Within the cryptocurrency world, there is a well-known saying that has been clearly emphasized by the high-profile failures of FTX, Celsius, and Voyager: "not your keys, not your coins."

This expression emphasizes the dangers of not having complete control over your cryptocurrency holdings and, therefore, not possessing your own private keys. This worry highlights the significance of self-custody and harks back to Bitcoin's libertarian and decentralized beginnings.

However, with the introduction of new spot Bitcoin exchange-traded funds, or ETFs, on January 10, opinions on self-custody started to drastically alter.

In 2016, there was only one way to directly own Bitcoin in a retirement plan," explains Bitcoin IRA co-founder and chief operating officer Chris Kline. "Almost every kind of bank account may now hold cryptocurrency assets, and the market is better off as a result. It implies that newly unexplored funds may now get Bitcoin."

There is a lot of investor interest in these ETFs. This pattern suggests that investors are becoming more at ease with using exchange-traded funds (ETFs) to purchase cryptocurrency exposure, therefore bridging the divide between traditional investing vehicles and the digital asset market.

The spot Bitcoin ETFs are a nice addition to the market, and more alternatives are excellent for investors," Kline adds. "The massive inflow numbers these investments have shown this year confirm that their convenience contributes to encouraging wide-scale adoption."

Furthermore, attention in the cryptocurrency ETF market is quickly moving beyond Bitcoin. The industry's focus is now shifting toward the highly anticipated spot Ethereum ETFs, after the introduction and success of Bitcoin ETFs. It is anticipated that the Securities and Exchange Commission (SEC) will make a decision about these ETFs in May, while there is a chance that it could be delayed or denied.

Even yet, directly holding Bitcoin is still preferable to the new spot Bitcoin ETFs. "ETFs have limitations to traditional trading hours, while direct access platforms allow unconstrained trading," explains Kline. "Additionally, when it becomes time to take these assets out for your golden years, ETFs must be sold to dollars and distributed, while a direct access platform allows for more flexibility as well as the ability to distribute those possessions from an IRA account to a personal wallet."

The top seven cryptocurrency ETFs available for purchase right now are as follows:

ETF

The iShares Bitcoin Trust, symbol IBIT,

Bitwise ETF for Bitcoin (BITB)

Bitcoin Trust ETF (GBTC) in grayscale

Ethereum Strategy ETF (EFUT) VanEck

Blockchain ETF for Global X (BKCH)

Boost the BLOK ETF for Transformational Data Sharing.

BitU, the ProShares Ultra Bitcoin ETF

IBIT, or the iShares Bitcoin Trust

According to BlockHash CEO Brandon Zemp, "Crypto ETFs are basically funds that track the price of a select individual cryptocurrency or even a group of cryptocurrencies." "These companies are generally low-cost, more diversified as well as require no real need to understand how crypto self-custody works, which makes them a simpler way of gaining exposure to the crypto market."

IBIT, the spot Bitcoin ETF, is a prime example. Since its launch, IBIT's assets under management, or AUM, have increased to nearly $17.2 billion, mostly due to BlackRock's renown and economies of scale. Currently, it provides exposure to the spot price of Bitcoin during market hours for 0.25% expense ratio; however, for the first $5 billion of AUM, this is waived to 0.12% for a full year.

Bitwise ETF for Bitcoin (BITB)

One example of a conventional "big box" asset manager joining the cryptocurrency space is BlackRock. In the quest for the best Bitcoin ETF, committed digital asset managers have also made significant progress. Bitwise, which runs BITB, is a prime example. This ETF created history in January by becoming the first to reveal its public wallet address as a Bitcoin ETF.

More openness is made possible by enabling potential investors to confirm BITB's reserves and transactions in this way. With somewhat more than $2.1 billion in assets under management (AUM) representing 33,997 Bitcoins in trust, this ETF has had some success thus far. It has also been very liquid to trade, with a 30-day median bid-ask spread of 0.05%. A 0.2% expense ratio is charged by BITB; the first $1 billion in AUM is exempt from this cost.

Investors in Bitcoin ETFs should credit Grayscale for enabling these products via the Grayscale Bitcoin Trust ETF (GBTC). Grayscale defeated the SEC in a historic court battle back in August, which opened the door for the 11 Bitcoin ETFs that are available for purchase right now. As a consequence, its venerable fund, GBTC, was changed from a closed-end trust to an open-ended exchange-traded fund.

Following its debut, however, GBTC saw consistent cash outflows as investors sold it to fund acquisitions of rivals that were aggressively waiving their high 1.5% cost ratio. Its current AUM is close to $19 billion. In retaliation, Grayscale intends to introduce the Grayscale Bitcoin Mini Trust (BTC), a spin-off of GBTC with identical spot exposure to Bitcoin and cheaper costs.

Ethereum Strategy ETF (EFUT) VanEck

Although there are no spot Ethereum ETFs available, investors may still follow the second-largest cryptocurrency by market capitalization using a few special ETFs. An Ethereum "strategy" ETF that makes use of Ether futures is the current workaround. Although they provide a synthetic exposure to the price of ether, these derivatives are not the same as spot ether.

VanEck's EFUT is one of the noteworthy ETFs that was introduced in this market. At the moment, risk-free Treasury notes that are utilized as security for CME Ether futures contracts make up the majority of this ETF's assets. Although this ETF's price will not precisely mirror the actual price of ether, its correlation is strong enough to make it a useful stand-in. EFUT has an approximate AUM of $29 million and has an expense ratio of 0.66%.

Blockchain ETF for Global X (BKCH)

According to Ido Caspi, research analyst at Global X ETFs, "as observed in 2023, blockchain as well as crypto-related stocks, such as miners as well as crypto exchanges, typically offer higher beta trades in anticipation of major events." Similar to how investors might target gold miners and gold streaming firms instead of real bullion, these companies provide an alternate means of investing in cryptocurrency.

Global X ETFs offer BKCH at a 0.5% expense ratio for exposure to cryptocurrency exchanges, miners, and asset managers including Coinbase Global Inc. (COIN), Riot Platforms Inc. (RIOT), and Galaxy Digital Holdings Ltd. (GLXY.TO). "The influx of institutional capital into Bitcoin is demanded to significantly increase Bitcoin activity and, consequently, transaction fees," argues Caspi.

Amplify Transformational Data Sharing ETF (BLOK) BLOK was established in January 2018 and provides access to enterprises inside the bitcoin ecosystem. 52 equities that have been carefully chosen for their engagement in blockchain technology are now held by this ETF. Galaxy and Coinbase are only a few of the assets it has in common with BKCH; however, it is not constrained by a benchmark index like the latter is.

Other significant holdings in BLOK include MicroStrategy Inc. (MSTR), which has been progressively amassing Bitcoin under the guidance of its executive chairman and president, Michael Saylor. Included are even established brokers and payment processors that are branching out to provide cryptocurrency services, such as PayPal Holdings Inc. (PYPL) and Robinhood Markets Inc. (HOOD). BLOK levies an expenditure ratio of 0.76%.

BitU, the ProShares Ultra Bitcoin ETF

Already notorious for its extreme volatility, Bitcoin often experiences intraday increases or decreases of 5% or more. However, there's now an ETF alternative to leverage or futures for traders looking for even more amplified exposure. Introducing BITU, a leveraged Bitcoin ETF with a 0.95% cost ratio that aims to achieve a daily return twice that of the Bloomberg Bitcoin Index.

BITU employs a unique kind of derivative known as a swap, which is effectively a financial contract with a counter-party, in this instance, Goldman Sachs Group Inc. (GS) and Nomura Holdings Inc. (NMR), to accomplish this leveraged exposure. IBIT, another ETF, serves as the swap's underlying asset. Prospective investors should be aware that this ETF is very hazardous and should not be purchased and held for an extended period of time.