ETFs are a good way to invest in crypto without holding crypto assets directly in a cold storage. This can be useful in a retirement plan or if you use a stock broker where they are available. If you want to understand better how crypto ETFs work, I highly recommend the investopedia explanation that sheds some light on what’s under the hood. In this article, I will share what I think are the best crypto ETFs.
1. ProShares Bitcoin Strategy ETF (BITO)
ProShares Bitcoin Strategy ETF is an actively-managed exchange-traded fund that seeks capital appreciation by investing in bitcoin futures contracts. It is one of the best crypto ETFs tracking Bitcoin. BITO is the first futures-based cryptocurrency ETF on the market and is also the largest, as measured by assets under management.
The fund is not entirely made up of bitcoin futures contracts. It can also use money market instruments such as U.S. Treasury bills and repurchase agreements to minimize risk and raise capital to buy more futures contracts. Bitcoin has been relatively volatile in price. However, as financial institutions and investors keep looking for ways to gain exposure to cryptocurrency, it has become increasingly more popular and valuable.
2. Valkyrie Bitcoin Strategy ETF (BTF)
Valkyrie Bitcoin Strategy ETF is an actively managed ETF available through Nasdaq that invests primarily in bitcoin futures contracts. Although BTF does not have the lowest expense ratio among bitcoin cryptocurrency ETFs on the market, its active management strategy was able to outperform its category peers.
Under normal circumstances, it will seek to purchase a number of bitcoin futures contracts so that the total notional value (i.e., the total value of the bitcoin underlying the futures contracts) of the bitcoin underlying the futures contracts held by the fund is as close to 100% of the net assets of the fund as possible.
3. Bitwise 10 Crypto Index (BITW)
Bitwise 10 Crypto Index offers exposure to 10 leading cryptocurrencies, including bitcoin. More specifically, BITW seeks to track the performance of an index the 10 most highly valued cryptocurrencies, which are then screened and monitored for certain risks, weighted by market capitalization, and rebalanced monthly.
BITW is an alternative crypto ETF, in that it does not purchase Bitcoin futures contracts. Investors should also note that BITW is structured as a partnership, which means that investors are issued a K-1 at the end of the tax year. Investors should be sure to understand the tax implications of an investment in the fund. Additionally, expenses of 2.50% are high for an ETF.
4. VanEck Bitcoin Strategy ETF (XBTF)
The VanEck Bitcoin Strategy ETF seeks capital appreciation by investing in bitcoin futures contracts. The Fund offers exposure to bitcoin-linked investments through an accessible exchange traded vehicle. The fund does not invest in bitcoin or other digital assets directly. The fund seeks to invest in Bitcoin Futures so that the total value of the bitcoin to which the fund has economic exposure is approximately 100% of the total assets of the fund (the “Target Exposure”).
5. Global X Blockchain and Bitcoin Strategy ETF (BITS)
The Global X Blockchain & Bitcoin Strategy ETF is an actively-managed fund that seeks to capture the long-term growth potential of the blockchain and digital assets theme. The Fund takes long positions in U.S. listed bitcoin futures contracts and invests, directly and/or indirectly, in companies positioned to benefit from the increased adoption of blockchain technology. BITS will not invest directly in bitcoin, and it currently delivers exposure to blockchain companies through other ETFs, including the affiliated Global X Blockchain ETF.
Thanks for reading.
n.b: this is not financial advice