Crypto ETFs allow investors to own many kinds of digital assets.
Cryptocurrency ETFs put a traditional spin on investing in crypto. The number of cryptocurrencies and crypto-related investments on the market is growing every day. Instead of taking concentrated risk by going “all in” with one individual crypto investment, investing in a cryptocurrency exchange-traded fund allows investors to easily access crypto assets while managing risk through the ETF’s diversified properties. Each fund’s investments are linked to digital assets or blockchain technology to varying degrees, but crypto ETFs’ fortunes are pegged to the performance of major cryptocurrencies like Bitcoin (BTC) and Ether (ETH). There are several cryptocurrency-themed ETFs out there, but keep in mind that they tend to charge high management fees. Here are seven of the best cryptocurrency ETFs that have exposure to cryptocurrency or crypto futures contracts.
ProShares Bitcoin Strategy ETF (ticker: BITO)
ProShares Bitcoin Strategy ETF is the first Bitcoin-linked ETF in the U.S., having started trading in October 2021. This ETF provides investors with the opportunity to add exposure to Bitcoin without directly owning the cryptocurrency. BITO does not directly invest in Bitcoin. Rather, the fund aims to provide returns through exposure to Bitcoin futures contracts. Investors may look into BITO as a replacement for real assets like gold and other commodities, an alternative to traditional currency investments, or as a hedge against inflation. BITO holds net assets worth roughly $1 billion and carries an expense ratio of 0.95%, a cost of $95 annually for every $10,000 invested.
Grayscale Bitcoin Trust (GBTC)
The Grayscale Bitcoin Trust is one of the first investment vehicles to derive value solely from the price of Bitcoin. Since the fund launched in 2013, it has returned more than 28,000% to investors. GBTC has $28 billion in assets under management, making it one of the largest crypto funds on the market, and uses the CoinDesk Bitcoin Price Index (XBX) as its benchmark. The trust is open to direct investments by accredited investors putting up a minimum investment of $50,000, but anyone can access shares of GBTC on the secondary market through various online brokers. The fund also may be subject to miscellaneous expenses outside of its annual expense ratio of 2%.
Grayscale Ethereum Trust (ETHE)
Similar to the Grayscale Bitcoin Trust, Grayscale offers another fund focused on the second-largest cryptocurrency on the market, called the Grayscale Ethereum Trust. ETHE derives its value from the price of Ethereum’s token, Ether, and follows the CoinDesk Ether Price Index (ETX) as its benchmark. Grayscale passively invests in Ether, allowing investors to gain exposure to the popular cryptocurrency without worrying about buying it directly, storing it or safeguarding it. ETHE has $10 billion of assets under management and an expense ratio of 2.5%.
Bitwise 10 Crypto Index Fund(BITW)
Bitwise 10 Crypto Index Fund is an ETF that offers diversified exposure to the 10 most highly valued cryptocurrencies weighted by market capitalization. The fund is weighted toward the largest cryptocurrencies, with a 62% allocation toward Bitcoin and 26.7% for Ethereum as of March. But there are other popular altcoins in the mix of holdings, including Solana (SOL), Cardano (ADA), Avalanche (AVAX), Polkadot (DOT) and Polygon (MATIC). BITW has $877 million in assets under management and an expense ratio of 2.5%.
Valkyrie Bitcoin Strategy ETF(BTF)
This Nasdaq-listed ETF is actively managed and primarily invests in Bitcoin futures contracts. Part of the fund holds cash, U.S. Treasurys or corporate bonds for liquidity purposes. BTF’s portfolio allocation is 73.8% in Bitcoin futures and 26.2% in Treasury bills. BTF holds net assets of about $45.8 million and carries a total expense ratio of 0.95%. This makes BTF smaller and less liquid than BITO, which holds $1 billion in assets. What sets BTF apart is the asset management firm that manages it. Valkyrie specializes in managing digital assets and is committed to expanding access to investing in emerging asset classes.
Global X Blockchain & Bitcoin Strategy ETF (BITS)
Global X Blockchain & Bitcoin Strategy ETF is another fund that allows investors to gain access to Bitcoin through a regulated futures market. A much smaller Bitcoin fund, BITS holds assets valued at just $7.5 million. BITS does not directly invest in Bitcoin or blockchain companies. Rather, the fund invests in U.S.-listed Bitcoin futures contracts and gets exposure to companies through other ETFs like the Global X Blockchain ETF. This strategy offers investors exposure to disruptive companies that work with blockchain technology and digital assets. BITS has a competitive expense ratio of 0.65%.
Valkyrie Balance Sheet Opportunities ETF (VBB)
This Valkyrie fund does not directly invest in Bitcoin but in publicly traded companies that hold Bitcoin on their balance sheet or indirectly invest or transact in Bitcoin, like Bitcoin trading platforms, Bitcoin miners and any company that provides services for the Bitcoin ecosystem. Some of the fund’s top holdings are MicroStrategy Inc. (MSTR), Tesla Inc. (TSLA), Block Inc. (SQ) and Coinbase Global Inc. (COIN). VBB started trading in December 2021. Its expense ratio is 0.75%, and total assets under management are just under $1 million, so traders should beware possible liquidity issues.
7 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)
— Global X Blockchain & Bitcoin Strategy ETF (BITS)
— Valkyrie Balance Sheet Opportunities ETF (VBB)
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7 Best Cryptocurrency ETFs to Buy originally appeared on usnews.com
Update 04/08/22: This story was published at an earlier date and has been updated with new information.
