5 Best Bitcoin ETFs for September 2024 The Motley Fool

It’s what investing experts call the “greater fool theory of investing,” since traders make money only by selling to someone else who is more optimistic about the cryptocurrency’s price potential. Jeff Reeves writes about investments, the stock market, exchange-traded funds what is an etf crypto and retirement topics. A veteran journalist with extensive capital markets experience, Jeff has covered Wall Street and investing since 2008.

Bitcoin ETFs and Their Fees, Promotions and Holdings

To adopt a diversified investment strategy, you should consider the assets included in the ETFs, their management fees, past performance, and the sectors they focus on. You can create a strong portfolio by choosing different ETFs that span different cryptocurrencies. Additionally, the unpredictable cryptocurrency prices make strategic planning challenging for investors. Unlike traditional assets, where price movements can be more https://www.xcritical.com/ predictable, factors like market sentiment and trends influence cryptocurrencies. Therefore, you must remain vigilant and adaptable in your investment strategies.

What is a Bitcoin strategy ETF?

As always, keep in mind that past performance is no guarantee of future results. When the SEC first approved spot bitcoin ETFs, it gave hope to backers of other cryptocurrencies for the same. Regulators soon began reviewing proposals from fund managers like VanEck, Greyscale, and Fidelity for spot ether ETFs, the digital currency native to the Ethereum platform. Those hopes were born out when spot ETH ETFs were effectively approved five months later.

Volt Crypto Industry Revolution and Tech ETF (BTCR)

This phrase highlights the fundamental differences in ownership and control between holding actual bitcoin and investing in a bitcoin ETF. Furthermore, BITO’s management by ProShares adds a layer of trust and expertise. ProShares is well known for its proficiency in handling exotic ETFs that utilize leverage and derivatives. This experience is invaluable in managing a futures-based bitcoin ETF, where understanding the nuances of derivatives is crucial.

Amplify Transformational Data Sharing ETF

In 2022, the fund lost about 85% of its net asset value (NAV), making it one of the worst-performing ETFs of the year. It does this by tracking the performance of multiple equities in addition to a 10% exposure to Bitcoin through the Grayscale Bitcoin Trust (GBTC). The latter can be rebalanced to a maximum of 15% or a low of 0% and 100% to equities. Bitwise Asset Management, the fund’s sponsor and advisor, explained how BITW works relative to an open-ended mutual fund or ETF.

ProShares Bitcoin Strategy ETF (BITO)

A futures contract is a standardized contract where two parties agree to exchange a specific quantity of a standardized asset on a specific day for a particular price. Bitcoin futures contracts are traded on the Chicago Mercantile Exchange. So, a Bitcoin futures ETF is an exchange-traded fund that holds Bitcoin futures contracts and sells shares of the fund to investors.

Are Crypto ETFs Safer than Other Crypto Assets?

Actively managed by ProShares, the fund was the first to launch in the United States following a green light from the Securities and Exchange Commission (SEC). In this guide, we are looking at eight of the best cryptocurrency-related exchange-traded funds (ETFs). In addition, we will explain why you may want to consider investing in a crypto ETF as opposed to buying Bitcoin (BTC) or other cryptocurrencies directly. However, Bitwise’s website states it “includes the management fee, custody charges for holding the fund’s assets charged by the custodian, and customary fees and expenses of the fund administrator and auditor.”

The selection process for the index starts with a global universe of equities in both developed and emerging markets. It eliminates stocks with market caps of less than $250 million and three-month average daily trading of less than $1 million. It should go without saying that Bitcoin and other digital assets remain highly speculative and should be approached with extreme caution. The SEC had previously rejected approving a spot bitcoin ETF, citing risks such as market manipulation and fraud.

Buying bitcoin vs. buying bitcoin ETFs

BLKC began trading on the Chicago Board Options Exchange in October 2021. Given their portfolios, these ETFs have share prices that mimic changes in the price of derivatives instead of the cryptocurrencies themselves. Therefore, the price of shares in a given cryptocurrency ETF rises and falls in line with crypto futures contract prices. Like other derivatives, synthetic cryptocurrency ETFs have an additional risk because of the lack of oversight and valuation concerns in the crypto exchanges from where the funds would be pulling crypto.

• Researching a crypto ETF’s past performance is key to estimating future returns and assessing risk.
• Moreover, the narrative around crypto ETFs is gaining momentum, with industry titans like BlackRock potentially entering the fray.
• Actively managed ETFs employ dedicated analysts to opportunistically trade fund assets on shareholders’ behalf and often charge considerably higher management fees than passive index funds.
• Similar to the BITO fund, BLOK is also listed on the NYSE Arca exchange and currently has over $358M AUM.
• Before 2024, the Grayscale Bitcoin Trust wasn’t an ETF but an investment trust with units trading over the counter (traded via broker-dealer networks instead of a centralized exchange).
• For example, investing in a spot bitcoin ETF, as opposed to owning cryptocurrency outright, may seem more secure or approachable to investors.

Rebalancing is based on an arbitrary methodology developed by the fund manager attracting an annual expense ratio of 0.73%. BLCN was launched on January 17th, 2018, as a joint collaboration between Siren and Nasdaq and so far manages funds of about $84M. Its annual fund management cost is 0.68% making it among the cheapest on this list. Over the last three years, the fund has returned ~5%, but this is mainly due to the underperformance of the cryptocurrency industry in 2022, a year in which the fund shed about 17% of its value. The top three countries by weight are the U.S. (82%), Canada (8%) and Japan (6%). The ETF’s top 10 holdings, which include Coinbase Global, payments processor PayPal Holdings (PYPL) and CleanSpark, account for roughly 60% of STCE.

However, until these new entrants establish a solid track record and the competitive dynamics settle down, investors have reliable options in the existing futures-based ETFs. We like the ProShares Short Bitcoin Strategy ETF for the same reasons we like the ProShares Bitcoin Strategy ETF. It’s the only ETF on the U.S. market that offers short exposure to the S&P CME Bitcoin Futures Index. However, investors should note that this fund has a hefty fee of over 1%.

Spot Bitcoin ETFs track the price of the crypto on effectively the same percentage basis, even if they trade at different prices. So you see that the funds have all risen approximately the same amount, with minor differences. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional. The flood of SEC filings — which continued until hours before the SEC’s approval announcement, and may continue still — reflected an ongoing price war between issuers. Many Bitcoin ETFs — both spot Bitcoin ETFs and Bitcoin strategy ETFs — are slashing their fees and offering limited-time promotional fee waivers.

In layman’s terms, a cryptocurrency exchange is a place where you meet and exchange cryptocurrencies with another person. The exchange platform (i.e. Binance) acts as a middleman – it connects you (your offer or request) with that other person (the seller or the buyer). With a brokerage, however, there is no “other person” – you come and exchange your crypto coins or fiat money with the platform in question, without the interference of any third party. When considering cryptocurrency exchange rankings, though, both of these types of businesses (exchanges and brokerages) are usually just thrown under the umbrella term – exchange. Due to the volatility of the crypto market, predicting the best times to buy or sell is highly challenging and risky. So, what is a strategy that might help you mitigate the impact of this volatility?

This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Note that the SEC’s approval of a rule change for spot ether ETFs does not mean that these ETFs can start trading. Applications from the investment managers need to be reviewed and further approvals need to be given.

With the space constantly evolving, the list could change going forward. While the fund is structured in an easy-to-comprehend way, the expense ratio of 1.24% is on the pricey side. Among the largest companies tracked through the Siren NASDAQ Blockchain Economy Index include PayPal, Alibaba (BABA), Coinbase, Baidu, Tencent, Overstock, Visa, Microsoft, Nvidia, and Robinhood Markets. ProShares Short Bitcoin Strategy ETF is a unique fund created by ProShares that tracks the daily price of the S&P CME Bitcoin Futures Index. However, a rise in the price of the index causes a fall in the stock price of BITI and vice versa.