Best Crypto ETF: A Closer Look at the Top Options

Wondering which best crypto ETFs (exchange-traded funds) are worth considering? Well, you have come to the right place.

Navigating the complex world of cryptocurrencies can be overwhelming. While platforms like Binance, Bybit, and Kraken have made it easier to trade cryptocurrencies, the potential for high volatility and market fluctuations remains a concern.

This is where crypto ETFs emerge as a powerful solution. By offering diversified exposure to a basket of cryptocurrencies, ETFs can help mitigate risk and provide a smoother investing experience. So, stick with me as we dive into the best crypto ETF list and see how they can fit into your portfolio.

Just note that I'm not here to give you a financial advice. Before making any important investment decisions, it would be best to consult with a financial advisor.

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Top Crypto ETF List

Choosing the right crypto ETF can feel like finding a needle in a haystack, but don't worry; I've got you covered. Let's break down some of the best crypto ETFs out there, getting the lowdown on what they offer and what to look out for.

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iShares Bitcoin Trust (IBIT)

Issuer: BlackRock, Inc.

Category: Spot ETF

Expense Ratio: 0.12% (as of writing)

The iShares Bitcoin Trust (IBIT) is a pretty big deal in the crypto ETF landscape. Backed by the investment giant, this BlackRock crypto ETF has quickly increased in popularity.

One of the biggest things going for IBIT is its low expense ratio. As of writing, it's one of the most affordable ways to invest in Bitcoin through an ETF at just 0.12%. BlackRock has also committed to maintaining this low fee for the first $5 billion assets until January 2025.

If the fund surpasses $5 billion before then, the fee on assets above that amount will increase to 0.25%. After the 12-month waiver period ends, the overall expense ratio will adjust to 0.25%.

This BlackRock crypto ETF has been a huge hit, attracting a ton of investor money. It's actually overtaken the Grayscale Bitcoin Trust in terms of the amount of Bitcoin it holds. So, if you're looking for a simple and cost-effective way to invest in Bitcoin, IBIT is definitely worth considering.

Bitwise 10 Crypto Index Fund (BITW)

Issuer: Bitwise Investments

Category: Futures ETF

Expense Ratio: 0.25% (as of writing)

Alright, let's talk about the Bitwise 10 Crypto Index Fund. It's one of the best crypto ETFs like a basket of the top 10 cryptocurrencies. It's got Bitcoin, Ethereum, and other popular coins like Cardano, Polygon, and Solana.

But here's the thing: it's actively managed, which means a team of people is deciding what to buy and sell. That's why it comes with a pretty hefty price tag; you're paying for that extra management. Also, because you can't buy it on a regular stock exchange, the price can jump around a bit more than you might like.

However, there's an interesting change on the horizon. This futures-based ETF is set to convert to a spot ETF on around December 3, 2024. The conversion is tied to Bitwise’s proprietary 'Trendwise' rotation strategy, designed to reduce downside volatility by moving into Treasuries when the crypto markets pull back.

WisdomTree Managed Futures Strategy Fund (WTMF)

Issuer: WisdomTree

Category: Futures ETF

Expense Ratio: 0.65% (as of writing)

One of the most intriguing ETFs on the market, the WisdomTree Managed Futures Strategy Fund (WTMF), doesn't invest directly in Bitcoin, but it’s still one of the best crypto ETFs for those looking to gain exposure to Bitcoin futures.

WTMF offers an appealing option for anyone looking to dip their toes into the crypto world without fully committing to individual crypto assets. It’s actively managed and aims to capture trends in commodities, currencies, as well as equity markets through long and short positions in futures contracts. This approach helps WisdomTree navigate both rising and falling markets.

At the core of WTMF's strategy is its quantitative, rules-based approach. Each month, it rebalances based on momentum signals from 24 different futures contracts. The goal is to capture price trends, whether those trends are moving up or down.

To manage risk, this ETF screens out the four most volatile contracts and assigns equal weight to the rest. This level of flexibility is key, especially for a market as unpredictable as crypto. Even though it’s not directly tied to a specific index, the ETF aims to provide the returns of a benchmark index developed by WisdomTree, making it a solid option for those who appreciate structure in their investments.

For example, if there’s a disagreement in momentum signals (say, one signal shows an upward trend while another shows a downward trend), the ETF doesn’t react hastily. Instead, it takes a middle-ground approach by reducing its position and replacing part of it with short-term Treasurys. 

This thoughtful, measured strategy is exactly what makes WTMF one of the best crypto ETFs for investors who want some exposure to the crypto market while benefiting from the safety net of a diversified futures strategy.

Invesco Galaxy Bitcoin ETF (BTCO)

Issuer: Invesco

Category: Spot ETF

Expense Ratio: 0.39% (as of writing)

Although relatively new (launching in January 2024), the Invesco Galaxy Bitcoin ETF (BTCO) has already showcased that it is one of the best crypto ETFs in the market. Here’s what makes BTCO stand out: it invests directly in physical Bitcoin. So, rather than relying on futures or other indirect stuff, you're basically riding the actual ups and downs of Bitcoin’s market price.

BTCO isn’t flying solo, though, as Invesco has teamed up with Galaxy Asset Management. These guys know their way around digital assets, and they’re the ones managing all the buying and selling of Bitcoin for this ETF.

Furthermore, to determine the fair market value of the Bitcoin it holds, BTCO uses the Lukka Prime Bitcoin Reference Rate. Lukka, an independent third-party data company, ensures the pricing is as accurate as possible by considering factors like trading volume and market oversight across Bitcoin exchanges.

If you're looking for a more secure, managed way to gain exposure to Bitcoin, BTCO offers a strong option backed by expertise, reliable infrastructure, and a focus on delivering accurate pricing.

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VanEck Bitcoin ETF (HODL)

Issuer: VanEck

Category: Spot ETF

Expense Ratio: 0.25% (as of writing)

When it comes to the best crypto ETFs, VanEck Bitcoin ETF (HODL) is definitely worth talking about. HODL is a passive investment vehicle designed to track the price of Bitcoin. In other words, investors can gain exposure to Bitcoin without having to worry about the complexities of managing crypto themselves.

What makes HODL stand out is VanEck’s strong commitment to this space. As the first established ETF issuer to file for futures-based Bitcoin ETF in 2017, VanEck has now fully shifted its focus to spot Bitcoin ETFs, following approval from the US SEC (Securities and Exchange Commission) in January 2024.

The firm also seeded the ETF with $72.5 million, giving it the largest seed capital of any spot bitcoin ETF out there. This level of support highlights VanEck’s confidence in the product and its importance in the crypto industry.

On top of that, VanEck’s commitment goes beyond just financial returns. The company has pledged to donate 5% of its profits from HODL to Brink, a non-profit organization dedicated to funding developers who maintain Bitcoin’s core protocol.

This pledge will continue for at least 10 years, which is a nice bonus for those who want to support Bitcoin’s development while investing. With HODL, you're getting a well-backed, well-intentioned ETF that simplifies bitcoin exposure for everyday investors.

Hashdex Nasdaq Bitcoin ETF

Issuer: Tidal Investments LLC

Category: Futures ETF

Expense Ratio: 0.94% (as of writing)

The Hashdex Nasdaq Bitcoin ETF is an exciting option for those looking to explore the best crypto ETFs available today. This ETF is fully physically backed, meaning it’s directly supported by actual Bitcoin assets and futures contracts held within the Nasdaq Bitcoin Reference Price Index (NQBTC) basket.

The primary objective of the Hashdex Nasdaq Bitcoin ETF is to track the investment results of the NQBTC before taxes and expenses. It’s also important to note that this ETF is listed on the Bermuda Stock Exchange and is currently available only to institutional clients. This exclusivity might limit access for some individual investors, but it highlights Hashdex’s focus on serving the needs of larger entities looking to tap into the crypto landscape.

Founded in 2018, Hashdex has emerged as a global pioneer in crypto asset management, currently managing over $847 million in client assets as of August 27, 2024. Their mission is to open the crypto ecosystem to the world, making it easier for innovative investors to engage with this dynamic asset class.

In 2021, Hashdex made waves by introducing the world’s first crypto index ETF, allowing many investors to venture into the crypto market for the first time. With its innovative approach and strong backing, the DEFI is a compelling choice for those interested in diversifying their portfolios with cryptocurrency exposure.

Grayscale Bitcoin Trust (GBTC)

Issuer: Digital Currency Group, Inc.

Category: Spot ETF

Expense Ratio: 1.5% (as of writing)

Grayscale Bitcoin Trust (GBTC) is one of the OG's in the crypto investment world. It has been around since 2013, giving it a pretty long track record.

Originally, GBTC was only for big-time investors, but it opened up to everyone in 2020. And guess what? In January 2024, it received a green light from the SEC to become a spot Bitcoin ETF, which is a big deal.

However, there's a catch. GBTC comes with a pretty hefty fee of 1.5%. That's much more than some other crypto ETFs out there.

While it's a popular choice, the Grayscale Bitcoin Trust might not be the best crypto ETF for everyone. If cost is a primary concern when selecting a crypto ETF, you might want to explore other options.

Franklin Bitcoin ETF (EZBC)

Issuer: Franklin Templeton

Category: Spot ETF

Expense Ratio: 0.19% (as of writing)

The Franklin Bitcoin ETF (EZBC) is a noteworthy addition to the best crypto ETFs available on the market today. Launched in 2024, this passively managed ETF aims to mirror the performance of Bitcoin prices minus the fund's expenses. 

Essentially, it provides a convenient way for investors to gain exposure to Bitcoin without the hassles of acquiring and managing the digital asset directly. By eliminating many complexities and operational challenges associated with buying, holding, and trading crypto, the ETF simplifies the investment process.

A standout feature of the Franklin Bitcoin ETF is its focus on providing an investment value that directly corresponds to the Bitcoin owned by the fund. As the price of Bitcoin fluctuates, the value of the ETF shares moves accordingly, offering a straightforward way to participate in the Bitcoin market.

Performance-wise, the EZBC has shown promising results. In September 2024, it delivered a return of 7.6%, earning it a grade of B within the Digital Assets category, with an average return of 5.6%. 

The grading system ranks ETFs relative to others in the same category. An A indicates returns in the highest 20%. This performance suggests that the Franklin Bitcoin ETF is not only a viable option for gaining Bitcoin exposure but also demonstrates a competitive edge in the rapidly evolving digital asset landscape.

ProShares Bitcoin Strategy ETF (BITO)

Issuer: ProShares Advisors LLC

Category: Futures ETFs

Expense Ratio: 0.95% (as of writing)

ProShares Bitcoin Strategy ETF, or BITO for short, was the first to hit the market and is still going strong. BITO tracks the price of Bitcoin futures contracts and gives you exposure to Bitcoin's performance without actually owning the crypto itself.

While BITO isn't directly invested in Bitcoin, it's still a popular choice for those wanting to add a touch of crypto to their portfolio – which is why it's included in many best crypto ETF lists. Moreover, it's traded on the New York Stock Exchange, making it accessible to many investors.

Keep in mind, though, that there's a slight difference between the price of BITO and the actual price of Bitcoin due to how it's structured.

Fidelity Advantage Bitcoin ETF (FBTC)

Issuer: Fidelity

Category: Spot ETF

Expense Ratio: 0.95%  (as of writing)

FBTC has been around for a while, joining the party not long after the first Bitcoin ETF hit the scene. This Fidelity crypto ETF is all about Bitcoin, plain and simple. No fancy stuff, no other cryptocurrencies, just pure Bitcoin exposure.

By being backed by actual Bitcoin, Fidelity not only lets you speculate on its market price but also own a piece of the cryptocurrency.

On top of that, Fidelity is a big name in the financial world, so you know your Bitcoin is being stored in a pretty secure place.

However, remember that Fidelity crypto ETF is traded in Canadian dollars, so there's a bit of currency exchange to consider. But if you're comfortable with that and looking for a full Bitcoin play, this ETF is worth checking out.

What Are Crypto ETFs?

We've covered the top asset picks, from BlackRock crypto ETF to other noteworthy options, and seen what sets them apart. So, let's get back a little to know what crypto ETFs really are. It might sound a bit complex, but I promise to keep it simple.

Imagine a basket of goodies; that's kind of what an ETF is. Instead of candies and chips, it's filled with investments like stocks, bonds, or, in this case, cryptocurrencies. The cool thing about ETFs is that you can buy or sell the whole basket simultaneously instead of purchasing each item.

Just like a regular ETF that holds stocks or bonds, a crypto ETF aims to track the overall performance of the crypto market. They do this by holding the actual cryptocurrencies or using financial contracts that bet on the crypto's price going up or down.

Another thing to know is tokenization. It's the process of converting assets, like Bitcoin or real-world property, into digital pieces called tokens.

These tokens live on a special kind of digital ledger called a blockchain. Some crypto ETFs invest in these tokens to gain exposure to the underlying blockchain technology or the projects they represent rather than holding the actual cryptocurrency itself.

So, you've got a basic idea of a crypto ETF, but how does it stack up against the classic ETF? Well, they're cousins, not twins. Traditional ETFs are well-established investment vehicles that follow familiar rules. They invest in various assets like stocks, bonds, or commodities. They are also typically traded on major stock exchanges, making them highly liquid.

On the other hand, crypto ETFs are still relatively new and operate in a less regulated environment. They focus on cryptocurrencies, a much more volatile and unregulated asset class.

Meaning, there's more risk involved, and the regulatory landscape is constantly changing. Additionally, crypto ETFs are often traded on different platforms and might have different fee structures than traditional ETFs.

Aside from what I've mentioned, here are other pros and cons of crypto ETFs:

Pros

• Offer diversification across multiple cryptocurrencies;
• Potentially lower investment compared to buying individual coins;
• It may be easier to trade than individual cryptocurrencies;
• Some provide exposure to regulated markets.

Cons

• Limited selection of cryptocurrencies compared to the entire market;
• Fees associated with buying and managing the ETF;
• The regulatory landscape for crypto is still evolving.

Okay, so we've covered what crypto ETFs are. Now, let's break down the different types available.

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Types of Crypto ETFs

An article about the best crypto ETF wouldn't be full-fledged without discussing the different types of it. Understanding the different flavors of crypto ETFs is crucial in making informed investment decisions.

Let's explore which one might be right for you.

Spot ETFs

Want to own some Bitcoin or Ethereum without the hassle of dealing with crypto exchanges and wallets? A spot crypto ETF might be your jam.

These funds are like regular ETFs, but they hold actual cryptocurrencies instead of stocks and bonds. It's a direct way to invest in the crypto market.

After years of waiting, the big breakthrough came in early 2024 when the SEC finally gave the green light to the first spot Bitcoin ETFs^[1]. It was a game-changer!

A few months later, they also opened the door for spotting Ethereum ETFs. This means more options for investors looking to get into the crypto action.

The approval of spot Bitcoin ETFs sparked a wave of excitement in the industry, with numerous providers rushing to launch their own versions. The surge of interest has attracted even some of the biggest names in traditional finance. For example, BlackRock, a leading investment management firm, quickly filed for its own spot Bitcoin ETF.

Interestingly, not all industry giants have embraced crypto. Vanguard, a well-known investment management company, has notably held back from entering the crypto space. Despite the growing interest in cryptocurrencies, Vanguard has maintained its stance against offering crypto-related products, including its own spin on crypto ETF.

Futures-Based ETFs

If you're more into gambling on crypto prices without actually owning the coins, futures-based ETFs could be your thing. These funds don't hold the crypto themselves; instead, they use something called futures contracts. Basically, they're betting on the future price of the crypto.

To keep up with such contracts, futures-based ETFs have to constantly roll over their bets. This is called the rollover risk, impacting how well the ETF performs. 

Furthermore, many futures-based ETFs are structured as limited partnerships. That is to say, the tax implications can be more complex compared to traditional ETFs.

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Main Features

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Pros

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Leveraged ETFs

Leveraged ETFs borrow money to invest more than your initial stake. In other words, you might double or even triple the profit if the market goes up.

Sounds awesome, right? Well, there's a catch: they're focused on daily returns, making them not so suitable for long-term investments. For instance, if the market goes up 2% one day, a 2x leveraged ETF might aim for a 4% gain. However, if the market drops 2%, you could lose 4%.

These ETFs are definitely not for the faint of heart. They're designed for short-term traders who are okay with taking big risks for the chance of big rewards.

Benefits of Crypto ETFs

Having a grasp on the various types of crypto ETFs is essential, but understanding the benefits of the best crypto ETFs is equally important.

Let's look at some of the key benefits you can enjoy.

• Diversification. Instead of putting all your eggs in one basket by investing in a single cryptocurrency, you're balancing your risk across a variety of digital assets. This helps to smooth out the volatility often associated with the crypto market.
• Simplified Access to the Crypto Market. Crypto ETFs provide a simplified entry point by offering a familiar investment vehicle, similar to traditional ETFs. Investors can access the cryptocurrency market through their existing brokerage accounts, so you don't need to establish accounts on multiple cryptocurrency exchanges.
• Enhanced Security and Risk Management. Crypto exchanges have been targets for cyberattacks. By pooling funds and investing in a diversified portfolio of cryptocurrencies, ETFs can mitigate the risks associated with individual cryptocurrency holdings.
• Cost Efficiency. Directly investing in cryptocurrencies often involves various fees, including custody charges and additional expenses for physical ownership^[2]. Crypto ETFs can provide a more cost-effective solution by aggregating investor funds and benefiting from economies of scale.
• Regulatory Framework. ETFs operate within a regulated environment. It provides investors with a level of protection compared to directly investing in cryptocurrencies. This regulatory oversight can help mitigate risks associated with market manipulation and fraud.

From diversification and simplified access to enhanced security, crypto ETFs offer a comprehensive solution for seasoned investors and those new to cryptocurrency.

Factors to Consider When Choosing the Best Crypto ETF

We've looked into the benefits of crypto ETFs, but how do you choose the best one for your investment goals? Well, selecting the best crypto ETF involves carefully considering several key factors.

Let's break down what you should look for.

Know Your Investment Goals

Before diving into crypto ETFs, defining your investment objectives is essential.

Are you looking for short-term gains, long-term growth, or a way to diversify your portfolio? Understanding your objectives will help narrow down your options and select an ETF that aligns with your financial aspirations.

For instance, a leveraged ETF might be tempting if you're seeking quick returns, but it's important to understand the associated risks.

Underlying Holdings

Investing in crypto ETFs isn't just about owning a piece of the crypto market; it's about choosing the right piece.

Every ETF is like a carefully curated basket of cryptocurrencies. Some focus on the big, established coins like Bitcoin and Ethereum, while others include a mix of these heavyweights and promising up-and-comers.

Think about how much risk you're comfortable with. If you're okay with a bit more risk, you might prefer an ETF with a broader range of cryptocurrencies, including some with higher volatility.

However, if you're looking for a more stable investment, an ETF focused on established coins might be a better fit.

Fees and Expenses

When you're investing, fees can really add up and eat into your profits. That's why it's important to keep an eye on the costs associated with your crypto ETF.

The main fee you'll see is called the expense ratio. This is like a yearly membership fee for the ETF. It covers things like management costs and other expenses. Lower is generally better when it comes to expense ratios.

That's not all, though. You might also have to pay brokerage fees when you buy or sell shares of the ETF. These fees can vary depending on your brokerage account.

In summary, when comparing different crypto ETFs, consider the expense ratio and any potential brokerage fees. Conducting extra research can save you money in the long run.

Liquidity

Liquidity is a big deal when it comes to investing. You want to be able to jump in and out of your investments without causing a big stir in the market. This is especially important for crypto, which can be pretty volatile.

A high trading volume is your friend here. It means lots of people are buying and selling the ETF, so you can easily get in or out without affecting the price too much. Imagine trying to sell a house in a quiet neighborhood versus a bustling city – that's kind of the difference.

So, when picking the best crypto ETF, look for one with plenty of buyers and sellers. This will give you more flexibility when making your moves. However, it's important to be aware that high trading volume doesn't guarantee profits. Therefore, always consider your risk tolerance before making any investment decisions.

Regulatory Landscape

The crypto industry is still a relatively new frontier, and regulations are constantly evolving. This dynamic environment can significantly impact crypto ETFs. Different countries have varying rules, and even within a single country, regulations can change over time.

Keep an eye on regulatory developments, as they can impact the performance and availability of crypto ETFs. For instance, the SEC's approval of spot Bitcoin ETFs was a significant milestone, but it's just the beginning.

The potential for future regulatory changes, including the potential for a Vanguard crypto ETF or other similar products, could further shape the industry.

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Conclusion

Crypto ETFs have made it a lot easier to jump on the crypto bandwagon without all the hassle. Investing in the best crypto ETF can provide exposure to a diversified range of cryptocurrencies, potentially reducing risk compared to holding individual digital assets.

But remember, crypto is still a wild ride. While platforms like Binance, Bybit, and Kraken have made trading cryptocurrencies more accessible, the potential for significant price fluctuations remains a concern. So, it's essential to do your research and not put all your eggs in one basket. With a bit of research and planning, you can find the best crypto ETF that helps you reach your financial goals.

However, it's also worth noting that the crypto ETF landscape is still developing. While some industry giants like BlackRock have joined the lineup with their own crypto ETFs, others, such as Vanguard, have chosen a more cautious approach. The absence of a Vanguard crypto ETF highlights the differing perspectives on the role of crypto in traditional finance.

The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.

Scientific References

1. V. Babalos, E. Gouri, and R. Gupta: ‘Does the introduction of US spot Bitcoin ETFs affect spot returns and volatility of major cryptocurrencies?’;

2. P. Signh: ‘Is the Financial Market ready for Cryptocurrency ETFs? - A critical evaluation’.