Bitcoin ETFs provide an easy way to gain exposure to Bitcoin’s market movements without the complexity of owning cryptocurrency directly. In this guide, you’ll discover the best Bitcoin ETFs to buy, the factors to consider when choosing one, and how to effectively invest through a brokerage platform.
What Is a Spot Bitcoin ETF?
A Bitcoin Exchange-Traded Fund (ETF) allows you to invest in Bitcoin without directly owning the cryptocurrency. So, instead of buying Bitcoin yourself, you purchase shares in a fund that holds the actual Bitcoin. If you want to buy BTC, check out our list of top Bitcoin exchanges.
A Spot Bitcoin ETF, in particular, is an investment fund that holds actual Bitcoin rather than Bitcoin futures or other derivatives. This means the price of a Spot Bitcoin ETF closely tracks Bitcoin’s market value. Also, one of the main advantages of these ETFs is their ease of access. You can buy shares through a regular brokerage account, without the need to set up complex cryptocurrency wallets or private keys.
Top Spot Bitcoin ETFs
This table provides a snapshot of some of the top Spot Bitcoin ETFs available in the market. The listed ETFs are actively managed with a range of assets under management and varying expense ratios (Data Source: Coinglass).
| Rank | ETF Ticker | ETF Name | Yield (%) | Assets Under Management (AUM) | Expense Ratio (Fees) |
| 1 | IBIT | iShares Bitcoin Trust ETF | 5.26% | $57.69B | 0.25% |
| 2 | FBTC | Fidelity Wise Origin Bitcoin Fund | 2.07% | $21.99B | 0.25% |
| 3 | GBTC | Grayscale Bitcoin Trust ETF | 1.70% | $22.44B | 1.50% |
| 4 | ARKB | ARK 21Shares Bitcoin ETF | 3.32% | $5.25B | 0.21% |
| 5 | BITB | Bitwise Bitcoin ETF | 2.64% | $4.45B | 0.20% |
| 6 | BTC | Grayscale Bitcoin Mini Trust ETF | 3.25% | $4.29B | 0.15% |
| 8 | HODL | VanEck Bitcoin ETF | 1.83% | $1.47B | 0.25% |
How to Choose the Best Spot Bitcoin ETF
When choosing the best Spot Bitcoin ETF, there are a few key criteria to keep in mind. Here’s a breakdown of what you should look at:
- Expense Ratio: A lower expense ratio means you’re paying less in Bitcoin ETF fees, which leaves more of your money working for you. Over time, small differences in fees can really add up, so it’s worth considering when selecting an ETF.
- Assets Under Management (AUM): A higher AUM usually means the ETF is well-established and popular among investors. It also makes the ETF more liquid, meaning it’s easier to buy and sell shares without affecting the price. Moreover, a larger AUM suggests the fund has the backing and confidence of many investors, which can give you peace of mind.
- Tracking Error: Tracking error measures how closely the ETF’s performance matches Bitcoin’s actual price movements. The smaller the tracking error, the better, because you want your investment to reflect Bitcoin’s true market value. A significant tracking error could mean you’re not getting the full benefit of Bitcoin’s price swings.
- Liquidity: Liquidity is all about how easily you can buy or sell shares of the Bitcoin ETF stock without affecting its price too much. The more liquid an ETF is, the less likely you’ll face delays or price slippage when entering or exiting your position.
- Reputation and Trustworthiness of the Fund Manager: The reputation of the fund manager is crucial because you want to know your investment is in good hands. Well-known and trustworthy fund managers follow strict regulatory guidelines and have a track record of handling funds responsibly.
- Dividend Yield: While Bitcoin itself doesn’t generate dividends, some ETFs might earn income by lending or staking Bitcoin. If an ETF offers a yield, it can be a nice added benefit. Just be sure to check if the dividend yield is sustainable and aligns with your investment goals, as it’s not always guaranteed.
How to Buy Spot Bitcoin ETFs?
Step 1. Choose a Reliable Brokerage Platform
To invest in a Spot Bitcoin ETF, you’ll need access to a brokerage account that supports ETFs. Established platforms like Fidelity, Schwab, or other major brokers often list ETFs, including Spot Bitcoin ETFs, once they become available in your region.
Step 2. Open and Fund Your Brokerage Account
If you don’t already have a brokerage account, create one by completing the necessary registration steps. This involves providing personal information, verifying your identity, and linking your bank account. Deposit funds into your account to have the capital ready for your investment.
Step 3. Research Available Spot Bitcoin ETFs
Spot Bitcoin ETFs may vary by provider, fees, and market performance. Therefore, review the ETF’s prospectus to understand its structure, underlying Bitcoin holdings, and associated costs. Leading providers often offer transparent insights into their operations and custody solutions.
Step 4. Place Your Order
Once you’ve decided on an ETF, search for its ticker symbol in your brokerage platform. Enter the number of shares you want to buy and review the order details, such as price and fees. Confirm your purchase to complete the transaction.
Step 5. Monitor Your Investment
After purchasing, track your ETF’s performance through your brokerage platform. Understand market trends and the price of Bitcoin, as it directly impacts the ETF’s value. Also, adjust your investment strategy as needed.
What are Bitcoin Strategy ETFs?
A Bitcoin Strategy ETF is a type of fund designed to offer exposure to Bitcoin without directly holding the cryptocurrency. These ETFs aim to mirror Bitcoin’s price movement indirectly and have been available even before spot Bitcoin ETFs were approved.
Most Bitcoin Strategy ETFs focus on investing in Bitcoin futures contracts, while some allocate assets to stocks of companies involved in Bitcoin mining. However, because these investments don’t involve holding actual Bitcoin, the performance of these funds can often differ significantly from Bitcoin’s market returns.
Top Bitcoin Strategy ETFs by Fee
| BTC Strategy ETF and Ticker | Fee | Investment Methodology |
| Global X Blockchain & Bitcoin Strategy ETF (BITS) | 0.65% | Primarily holds Bitcoin futures and includes exposure to blockchain through the Global X Blockchain ETF (BKCH) |
| Valkyrie Bitcoin Miners ETF (WGMI) | 0.75% | Stocks of companies involved in Bitcoin mining |
| Bitwise Bitcoin Strategy Optimum Roll ETF (BITC) | 0.92% | Bitcoin futures |
| ProShares Bitcoin Strategy ETF (BITO) | 0.95% | Bitcoin futures |
| Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP) | 0.95% | Bitcoin futures |
| Valkyrie Bitcoin and Ether Strategy ETF (BTF) | 1.24% | Bitcoin and Ether futures. |
Is Bitcoin ETF Worth Investing?
Yes, Bitcoin ETF is worth investing in, but it depends on your goals. If you’re curious about Bitcoin but don’t want the hassle of managing wallets or securing crypto, ETFs make it easier. They let you invest through traditional brokerage accounts and are regulated, offering some peace of mind.
However, keep in mind that Bitcoin ETFs often invest in futures or related assets, so their performance may not exactly match Bitcoin’s price. If you believe in Bitcoin’s long-term potential and prefer simplicity over direct ownership, a Bitcoin Spot ETF can be a convenient option to explore.
Conclusion
In conclusion, the best Bitcoin ETF for your portfolio depends on factors like fees, liquidity, and AUM. iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC) are strong contenders, but it’s essential to evaluate your investment goals before making a decision.
The best BTC ETF can simplify your exposure to Bitcoin without dealing with direct ownership and security risks. Therefore, consider your priorities carefully and select the one that aligns with your strategy for long-term success.
FAQs
Are Spot Bitcoin ETFs better than futures Bitcoin ETFs?
Spot Bitcoin ETFs hold actual Bitcoin, so they track its price more accurately, which is great if you’re investing for the long haul. On the other hand, futures Bitcoin ETFs use contracts tied to Bitcoin’s price, which can lead to mismatches, especially over time. They’re better suited for active traders or short-term strategies.
Spot ETFs also avoid the extra costs of “rolling” futures contracts, which can eat into profits. So, if you want simplicity and price accuracy, spot ETFs are the way to go. For quick trades? Futures ETFs might work better.
What is the best ETF to buy for Bitcoin?
The best ETFs for Bitcoin investment are:
- IBIT – iShares Bitcoin Trust: With an impressive 5.26% market share, assets totaling $57.69 billion, and a low fee of 0.25%.
- FBTC – Fidelity Wise Origin Bitcoin Fund: Managing 2.07% of the market, $21.99 billion in assets, and the same affordable 0.25% fee.
Which Bitcoin ETF has the lowest fees?
Grayscale Bitcoin Mini Trust ETF stands out with its incredibly low fee of just 0.15%, making it one of the most cost-effective options for Bitcoin exposure.
Do spot Bitcoin ETFs have custodianship risk?
Yes, they have custodianship risk. Spot Bitcoin ETFs store real Bitcoin, which means they rely on custodians to keep it safe. If the custodian isn’t secure, there’s a risk of hacking, theft, or even operational mistakes.
However, most ETFs work with reputable custodians who use advanced security measures like cold storage and insurance. It’s worth checking who the custodian is when picking an ETF. Today most digital currency ETFs are approved by the Securities and Exchange Commission. While no system is perfect, regulatory oversight and top-tier security practices help reduce the risks.
