Featured Partner Offers
1
Coinbase
0.4% Maker Fee / 0.6% Taker Fee
200+
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Fact Checked
Fact Checked
Updated: Apr 16, 2024, 3:40pm
Bitcoin is a relative newcomer to the world of exchange-traded funds. Bitcoin ETFs tied to futures on the cryptocurrency launched in 2021, but it wasn’t until January 2024 that U.S. regulators allowed exchange-traded products tied directly to the day-to-day movement of bitcoin prices—known as the asset’s spot prices.
To help you understand this new corner of the ETF universe, Forbes Advisor has reviewed the pure-play bitcoin ETFs currently available for trading in the United States. Some are ETFs tied to the spot bitcoin market. Others offer indirect exposure to this popular digital asset through bitcoin futures.
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Featured Partner Offers
1
Coinbase
0.4% Maker Fee / 0.6% Taker Fee
200+
Assets under management
$25.7 billion
Expense ratio
1.50%
Investing strategy
Spot bitcoin
$25.7 billion
1.50%
Spot bitcoin
As the largest fund that invests 100% of its assets directly in bitcoin digital currency, Grayscale Bitcoin Trust remains among the leading options for investors who don’t want to manage a crypto wallet–a device used to store your cryptocurrency keys and access your crypto coins–themselves.
After years of anticipation, the Securities and Exchange Commission finally opened the door to 11 spot bitcoin ETFs in 2024. So far, the other 10 are dwarfed by Grayscale Bitcoin Trust. That fund, GBTC, debuted in 2013 as a trust, and is now an ETF. It remains well over 10 times bigger than the largest of the newcomer spot bitcoin ETFs.
GBTC built its infrastructure well in advance of the recent SEC ruling as it bet big in anticipation of getting over this final regulatory hurdle. Although large and liquid, however, the elevated fee structure for this bitcoin ETF at present may give some investors cause to shop around.
Assets under management
$8.9 billion
Expense ratio
0.12%
Investing strategy
Spot bitcoin
$8.9 billion
0.12%
Spot bitcoin
The iShares Bitcoin Trust ETF is one of the emerging leaders after January’s regulatory moves, thanks to a surge of shareholder money inflow. That is in part because sponsor BlackRock waived a portion of fees until total assets reached $5 billion to attract new investors.
With 100% of assets invested directly in bitcoin and a big iShares brand behind it, IBIT is a major player in the space. It is also likely to survive any consolidation that strikes the crowded field of digital asset ETFs in the months and years ahead.
Assets under managemen
$367 million
Expense ratio
0.00%
Investing strategy
Spot bitcoin
$367 million
0.00%
Spot bitcoin
Invesco Galaxy Bitcoin ETF, another spot bitcoin fund, is on our list because of its generous approach to winning new business. BTCO is waiving its official 0.25% fee to zero for the first six months on the first $5 billion in assets. After July 11, the waiver expires unless renewed.
The 0.25% fee will be a bit higher than some of its competitors’, but the discount is hard to pass up for many short-term swing traders who don’t think about their bitcoin positions in a long-term way.
With a few hundred million in assets, BTCO is gathering support that could cement it as one of the few 100% bitcoin funds that might have staying power. That presumes that investors who recently piled in because of the fee waiver don’t bolt if the waiver expires this summer.
Assets under management
$1.4 billion
Expense ratio
0.00%
Investing strategy
Spot bitcoin
$1.4 billion
0.00%
Spot bitcoin
Bitwise is one of the lesser-known sponsors on this list, but its Bitwise Bitcoin ETF has some features that make it noteworthy. For starters, it’s listed on the New York Stock Exchange’s NYSE Arca platform, which means it is trading on a premier platform for exchange-traded funds.
BITB also boasts a hefty level of assets under management thanks to a short-term fee waiver that made it free to trade until the fund hit $1 billion in AUM. However, even the baseline, post-waiver fee of 0.20% is attractive, so many investors may leave cash in BITB.
Bitwise is not quite as well-known as other sponsors on this list. BITB is a relative newcomer as it launched in January 2024.
Assets under management
$2.5 billion
Expense ratio
0.95%
Investing Strategy
Bitcoin futures
$2.5 billion
0.95%
Bitcoin futures
ProShares Bitcoin Strategy ETF was a first-mover in this space and continues to be the leader among bitcoin futures ETFs. Keep in mind, however, that BITO is an actively managed fund linked to bitcoin futures contracts. Those financial products derive their value from the potential future prices of an asset—not the current or “spot” price.
First-movers are often more successful at attracting shareholders and their money in the long run. ProShares Bitcoin Strategy ETF launched in 2021 as the first bitcoin futures ETF, and it is still the leader in that category. It attracted around $1 billion in assets within a few days after its launch.
Assets under management
$472 million
Expense ratio
1.85%
Investing strategy
Leveraged bitcoin futures
$472 million
1.85%
Leveraged bitcoin futures
One factor that makes futures markets popular with some investors is the potential for “leverage”—in other words, the ability to trade with borrowed cash to supercharge your bets. This obviously comes with elevated risks, but the rewards can be significant. Volatility Shares 2x Bitcoin ETF, which seeks to use futures to provide two times the daily price movement of bitcoin, has notched a total return of about 66% in the past six months versus about 6% for the broad stock market in the form of the S&P 500 Index.
The expense ratio for this complex fund is pretty steep. Thanks to the friction of levered funds—that is, the combined direct and indirect costs of trading them—you are unlikely to ever get a performance that is exactly twice bitcoin’s performance. But with a gain of about 51% since its June 2023 inception date, it’s hard to argue there isn’t a use for this admittedly aggressive bitcoin ETF.
Assets under management
$80 million
Expense ratio
1.33%
Investing Strategy
Decline in bitcoin futures
$80 million
1.33%
Decline in bitcoin futures
The ProShares Short Bitcoin ETF has been around since June 2022. BITI aims to return the inverse of the S&P CME Bitcoin Futures Index for a single day at a time. If and when bitcoin stumbles, this unique ETF may be of interest to investors.
A “short” ETF is a risky long-term bet amid inflationary pressures that raise many assets’ prices. In the case of an asset like bitcoin, which has been on a tear, ETFs that are set up to profit from the digital currency’s decline have been painfully punished.
That explains why the total net assets are tiny for ProShares Short Bitcoin ETF and why its performance has been abysmal. However, BITI has been around since June 2022. It may persist despite recent troubles since ProShares regularly supports hypertactical funds like this that are completely ignored when they’re not working but have the potential to attract immediate interest when market conditions change.
*All data is sourced from ETF providers and StockRover, current as of April 2, 2024.
The author(s) held no positions in the securities discussed in the post at the original time of publication.
Company | Company - Logo | Assets Under Management | Expense Ratio | Investing Strategy | Learn More CTA text | Learn more CTA below text | LEARN MORE |
---|---|---|---|---|---|---|---|
Grayscale Bitcoin Trust (GBTC) | $25.7 billion | 1.50% | Spot bitcoin | View More | |||
iShares Bitcoin Trust ETF (IBIT) | $8.9 billion | 0.12% | Spot bitcoin | View More | |||
Invesco Galaxy Bitcoin ETF (BTCO) | $367 million | 0.00% | Spot bitcoin | View More | |||
Bitwise Bitcoin ETF (BITB) | $1.4 billion | 0.00% | Spot bitcoin | View More | |||
ProShares Bitcoin Strategy ETF (BITO) | $2.5 billion | 0.95% | Bitcoin futures | View More | |||
Volatility Shares 2x Bitcoin ETF (BITX) | $472 million | 1.85% | Leveraged bitcoin futures | View More | |||
ProShares Short Bitcoin ETF (BITI) | $80 million | 1.33% | Decline in bitcoin futures | View More |
With the recent SEC approval of 11 spot bitcoin ETFs, the bitcoin ETF marketplace has become more crowded. However, history shows that many ETFs ultimately change to a different strategy or de-list altogether.
All of the funds included in this list are pure-play bitcoin portfolios, offering direct exposure to bitcoin through either spot prices or bitcoin futures. None of the funds included offer indirect exposure to bitcoin by owning stocks of other blockchain-related companies, such as crypto exchanges, bitcoin mining companies and banks that provide solutions for crypto companies.
As such, for our spot bitcoin ETFs we have demanded that:
Beyond the four spot bitcoin funds that our strategy yielded us, we also reviewed alternative bitcoin funds. For these funds to be included, we have demanded that:
The only exception we made to these criteria was with the “short” bitcoin fund. It has struggled to hold shareholders’ interest amid the current bull market, but it is positioned to return to favor if bitcoin enters a bear market in the future.
To learn more about our rating and review methodology and editorial process, check out our guide on how Forbes Advisor rates investing products.
A bitcoin ETF is an exchange-traded fund that invests primarily in assets related to the original cryptocurrency, bitcoin. ETFs sell shares to investors on the open market and use the proceeds to build a portfolio of assets.
ETFs are similar to mutual funds. But unlike mutual funds, ETFs are traded directly on a stock exchange like stock in a publicly traded company.
Until January 11, due to SEC regulations, bitcoin ETFs could not trade bitcoin at its current, or spot price. Rather, fund managers had to own companies and other ETFs that were related to bitcoin or cryptocurrency in general or they owned bitcoin futures contracts. Futures are complex derivatives instruments that should only be traded by experienced investors.
Even though spot bitcoin ETFs now provide more direct exposure to bitcoin, different investors are interested in different strategies. Those may involve futures or other ways to gain exposure to bitcoin markets. You must do research before buying a bitcoin ETF, so you fully understand how it is structured.
In January, the SEC formally approved exchange-traded funds linked directly to bitcoin. So-called “spot” bitcoin ETFs can hold the digital asset without equivocation or complications.
While there have been some funds that have provided indirect exposure over the last few years, the new funds give investors a way to tie their money very closely to the day-to-day movement of bitcoin prices on “spot” markets.
But not all of the new funds will draw in enough shareholder money. That can be fatal for a fund. After all, a fund that charges 0.30% in annual expenses and has only $50 million in total assets would only generate $150,000 a year in management fees. That’s not a lot for a marketing budget, regulatory compliance work or other necessary expenses.
If the SEC just recently gave approval to funds to operate as spot bitcoin ETFs, how is it that Grayscale Bitcoin Trust has been up and running since 2013? In its early days, GBTC was not an ETF.
As a trust, GBTC traded something like a closed-end fund. That meant it lacked the highly liquid, smooth redemption mechanism that ETFs enjoy. And as a result, shares often traded at a big premium or discount to the actual value of the underlying bitcoin. Investors are understandably reluctant to pay, say, $1 for 90 cents worth of assets. With SEC approval of its conversion to an ETF, GBTC got a level playing field with the other 10 ETFs that won the SEC’s okay to operate.
Spot bitcoin ETFs have been making headlines lately. But ETFs that invest indirectly in bitcoin—such as ETFs that hold bitcoin futures—are not inferior. They are simply alternative strategies, looking to gain exposure to bitcoin in a different way.
One trend to watch for is that the new spot offerings have caused many shareholders to move some assets out of the older funds, into their newer cousins. Funds that fail to maintain a sufficient amount of assets under management will find it hard to stay in business.
Owning a bitcoin ETF may, in some cases, be more expensive than simply purchasing bitcoin on a crypto exchange. Here’s why: Cryptocurrency exchanges typically charge one-time fees to buy and sell bitcoin, while owning a bitcoin ETF incurs an annual expense ratio fee. But several ETFs have temporarily waived those fees.
You should also consider if you’ll ever transfer any bitcoin from your exchange to a separate hot or cold crypto wallet. If so, you’ll likely be hit with small withdrawal fees.
And consider your exit strategy. That means paying a trading fee when you sell.
Some investors may feel safer getting exposure to bitcoin in their portfolios by purchasing a professionally managed ETF than they do owning actual BTC.
Widespread adoption of bitcoin as an investment is relatively recent, and some people may be concerned about hacking or losing passwords or private keys needed to access their investment when it’s stored in a secure bitcoin wallet.
While almost anyone can open a Coinbase account, not everyone is comfortable doing so. Others may be restricted to buying and selling securities in their traditional brokerage accounts for various reasons.
Many people choose to invest for retirement in an individual retirement account, otherwise known as an IRA, or in a 401(k) plan. If a retirement investor would like to get a modest amount of exposure to bitcoin without opening an account at a crypto exchange or a bitcoin IRA, owning shares of a bitcoin ETF is a reasonable alternative.
– Stephen Kates, CFP, principal financial analyst for Annuity.org and a former wealth management advisor
When choosing a bitcoin ETF, investors should take into account their personal financial goals, investing timeline and risk profile.
In addition, the following factors are important to consider when evaluating any bitcoin ETF:
As opposed to buying cryptocurrency outright, opening a bitcoin ETF is a relatively easy process:
Nobody knows what the future of bitcoin ETFs, which are volatile securities, will be. Since inception, bitcoin prices have soared to more than $60,000 per coin. After that, they’ve dropped below $19,000.
Whether cryptocurrencies, and bitcoin in particular, will make good long-term investments, each individual investor can only decide for themselves. You should consider consulting a financial advisor before making investment decisions.
The approval of bitcoin ETFs has opened up the world of cryptocurrency investing to many investors who otherwise may not have had an appetite for it. For example, investing in a spot bitcoin ETF, as opposed to owning cryptocurrency outright, may seem more secure or approachable to investors.
As more and more money flows into spot bitcoin ETFs, these ETFs have been able to purchase more bitcoin, thus decreasing bitcoin’s supply while increasing its demand. This has led to a significant price increase in bitcoin since the approval of spot bitcoin ETFs.
— Jack Callahan, U.S. head of wealth and trading at global fintech firm Revolut
As has often been the case throughout cryptocurrency’s short history, many other cryptocurrencies—often called altcoins, due to them being alternative coins to bitcoin—have risen in value in lockstep with bitcoin’s bull run.
Also, in the wake of the SEC’s spot bitcoin ETF approval, applications for other spot crypto ETFs have been submitted to the Securities & Exchange Commission. The SEC is now considering approval for spot Ethereum ETFs, which would provide more investors access to Ethereum, the second-largest cryptocurrency by market capitalization.
However, the approval of spot Ethereum ETFs still appears far off at this point.
Get Forbes Advisor’s expert insights on investing in a variety of financial instruments, from stocks and bonds to cryptocurrencies and more.
Every investment comes with its own risks. However, cryptocurrencies such as bitcoin are a very volatile investment class. No investor should ever risk more than they can afford to lose.
We’ve included a list of spot bitcoin and bitcoin futures ETFs. Every investor is in a unique position with their own unique investment goals and needs. The best bitcoin ETF for each investor can only be determined through research geared to your unique needs and circumstances.
As with any ETF, investors may want to look at individual investment strategies and holdings as well as metrics such as expense ratio, total assets under management and past performance to determine any ETFs they choose to invest in. As always, keep in mind that past performance is no guarantee of future results.
Every investment comes with risks, and cryptocurrencies such as bitcoin have proven to be extremely volatile. No investor should risk more than they can afford to lose. It’s always a good idea to check with a financial advisor before making any investment decision.
The author(s) held no positions in the securities discussed in the post at the original time of publication.
Jeff Reeves writes about investments, the stock market, exchange-traded funds and retirement topics. A veteran journalist with extensive capital markets experience, Jeff has covered Wall Street and investing since 2008. Beyond Forbes Advisor, his work has appeared in numerous respected finance outlets including CNBC, Fox Business, The Wall Street Journal digital network, Kiplinger, USA Today and CNN Money.