Keep fees in mind when choosing one of these crypto ETFs.
Exchange-traded funds are some of the easiest ways for investors to gain diversified exposure to a particular theme or asset class. One of the challenges of investing in Bitcoin (BTC) and other cryptocurrencies in the early years of crypto was figuring out exactly how and where to buy them. Cryptocurrency ETFs make it just as easy to invest in Bitcoin as it is to buy popular stocks. There are now several cryptocurrency-themed ETFs out there, and that number continues to grow. Keep in mind, however, that these ETFs can also charge high management fees. Here are eight of the best cryptocurrency ETFs that have exposure to cryptocurrency or crypto futures contracts.
ProShares Bitcoin Strategy ETF (ticker: BITO)
The ProShares Bitcoin Strategy ETF was a game changer for cryptocurrency investors. The BITO ETF made history in October 2021 when it became the first cryptocurrency ETF that the Securities and Exchange Commission allowed to trade on a major U.S. exchange. Cautious Bitcoin investors who were waiting for the green light from U.S. regulators finally got their wish with the BITO fund. Instead of buying Bitcoin itself, the BITO fund holds different Bitcoin futures contracts. The BITO ETF has about $1 billion in assets under management and a 0.95% annual expense ratio, or $95 for every $10,000 invested.
Grayscale Bitcoin Trust (GBTC)
Prior to the launch of the BITO ETF, the Grayscale Bitcoin Trust was the best Bitcoin fund option for most investors. The GBTC fund launched way back in 2013 and is a trust rather than an ETF. Grayscale plans to convert the GBTC trust to an ETF as soon as the SEC allows cryptocurrency spot ETFs that track Bitcoin prices directly. Unlike other Bitcoin ETFs, GBTC holds actual cryptocurrency, and each share represents about 0.0009 Bitcoin. The GBTC trust has $24.2 billion in assets, a 2% expense ratio and is one of the largest, most liquid crypto funds.
Grayscale Ethereum Trust (ETHE)
Bitcoin and Ethereum are by far the two largest and most popular cryptocurrencies, so investors looking to focus specifically on those two cryptos can get their Ethereum fix from the Grayscale Ethereum Trust. If the conversion of GBTC to an ETF goes smoothly, Grayscale will likely transition the ETHE trust to an ETF in the near future and potentially list on a major exchange. The ETHE trust has $8.5 billion in assets and a 2.5% expense ratio. Each ETHE share represents about 0.01 Ether (ETH), the native token on the Ethereum platform.
Bitwise 10 Crypto Index Fund (BITW)
Most of the biggest crypto funds are focused on Bitcoin, but the Bitwise 10 Crypto Index Fund provides investors with exposure to the 10 most valuable cryptocurrencies by market capitalization. Bitwise says it screens the fund’s holdings for certain risks, weights it by market cap and rebalances it monthly. In addition to Bitcoin and Ethereum, holdings include altcoins such as Algorand (ALGO) and Bitcoin Cash (BCH). The BITW fund is closed ended and trades over the counter in the U.S. It has $762 million in assets and a 2.5% expense ratio.
Valkyrie Bitcoin Strategy ETF (BTF)
Just days after the BITO fund began trading on the New York Stock Exchange, the Valkyrie Bitcoin Strategy ETF launched on the Nasdaq. Like the BITO fund, BTF does not invest in Bitcoin directly. Instead, it holds front-month Chicago Mercantile Exchange Bitcoin futures. Valkyrie already offers trusts for other popular cryptocurrencies on international markets, and it hopes to roll out additional U.S.-listed crypto ETFs in the future. The BTF ETF is smaller and less liquid than BITO. It holds $36.5 million in assets and has a 0.95% expense ratio.
VanEck Bitcoin Strategy ETF (XBTF)
The VanEck Bitcoin Strategy ETF launched on Nov. 15, 2021, and is ETF leader VanEck’s version of a Bitcoin fund. The XBTF fund invests in Bitcoin futures listed on the CME, and its major selling point is its 0.65% expense ratio, the lowest among the current class of Bitcoin futures funds. VanEck’s ultimate goal is a Bitcoin spot ETF, but the SEC rejected its spot ETF proposal just days after the XBTF fund launched. The SEC has repeatedly cited potential for fraud and market manipulation in its spot fund rejections. The XBTF fund has $22.1 million in assets under management.
Global X Blockchain & Bitcoin Strategy ETF (BITS)
Like many of the other crypto ETFs, the Global X Blockchain & Bitcoin Strategy ETF invests in Bitcoin futures contracts. However, nearly half (47.7%) of the fund’s holdings is devoted to the Global X Blockchain ETF (BKCH), which holds a collection of 26 stocks of companies that benefit from the adoption of blockchain technology, including Coinbase Global Inc. (COIN), Riot Blockchain Inc. (RIOT) and Marathon Digital Holdings Inc. (MARA). The BITS fund’s structure provides investors with a more diversified way to invest in Bitcoin than the pure-play Bitcoin futures funds. The BITS fund launched on Nov. 16, 2021, and has $6.2 million in assets.
Valkyrie Balance Sheet Opportunities ETF (VBB)
The Valkyrie Balance Sheet Opportunities ETF doesn’t invest in Bitcoin or Bitcoin futures. Instead, it invests in 20 different public companies that hold Bitcoin on their own balance sheets, providing investors with a diversified basket of Bitcoin and blockchain-related tech stocks that are highly correlated to crypto prices. The VBB fund’s top holdings include stocks such as Microstrategy Inc. (ticker: MSTR), Tesla Inc. (TSLA) and Block Inc. (SQ). Together, those three stocks make up more than 30% of the VBB fund’s total weight. The VBB fund launched on Dec. 14, 2021. It has an expense ratio of 0.75% and less than $1 million in assets.
8 best cryptocurrency ETFs to buy:
— ProShares Bitcoin Strategy ETF (BITO)
— Grayscale Bitcoin Trust (GBTC)
— Grayscale Ethereum Trust (ETHE)
— Bitwise 10 Crypto Index Fund (BITW)
— Valkyrie Bitcoin Strategy ETF (BTF)
— VanEck Bitcoin Strategy ETF (XBTF)
— Global X Blockchain & Bitcoin Strategy ETF (BITS)
— Valkyrie Balance Sheet Opportunities ETF (VBB)
More from U.S. News
8 Best Cryptocurrency ETFs to Buy originally appeared on usnews.com
Update 02/03/22: This story was published at an earlier date and has been updated with new information.
