In 2024, the Securities and Exchange Commission (SEC) approved the launch of spot Bitcoin ETFs, giving traders a new and easier way to buy and sell Bitcoin. These funds allow investors to access Bitcoin without having to take custody of the cryptocurrency themselves or trade with an exchange that may be fraudulent.
What are Spot Bitcoin ETFs?
Spot Bitcoin ETFs track the price of Bitcoin on a percentage basis, meaning if Bitcoin rises 1%, the fund will also rise 1%. This makes them a convenient option for traders who want to gain exposure to Bitcoin without having to navigate the complexities of cryptocurrency exchanges.
Top Bitcoin ETFs
Here are some of the top-performing Bitcoin ETFs, including their total assets, 3-month performance, and expense ratios:
1. iShares Bitcoin Trust (IBIT)
- Total assets: $52.1 billion
- 3-month performance: 57.61%
- Expense ratio: 0.12%
Grayscale Bitcoin Trust (GBTC) has been a popular choice for investors looking to gain exposure to Bitcoin, but its high expense ratio of 1.50% may not be the most attractive option.
2. Fidelity Wise Origin Bitcoin Fund (FBTC)
- Total assets: $19 billion
- 3-month performance: 57.61%
- Expense ratio: 0%
ARK 21Shares Bitcoin ETF (ARKB) has a lower expense ratio of 0.21% and has been performing well in the market.
3. Bitwise Bitcoin ETF Trust (BITB)
- Total assets: $3.8 billion
- 3-month performance: 57.55%
- Expense ratio: 0.20%
Grayscale Bitcoin Mini Trust (BTC) has a lower expense ratio of 0.15% and is another popular option for investors.
4. ProShares Bitcoin ETF (BITO)
- Total assets: $2.4 billion
- 3-month performance: 54.63%
- Expense ratio: 0.95%
When choosing a Bitcoin ETF, the defining feature is the expense ratio, which is the percentage of your investment that they charge as a fee.
Which Fund Should You Choose?
If you were looking at two McDonald’s on the same block and they both offered Big Macs, it would make sense to go with the cheaper one. So it is with spot Bitcoin ETFs. Since these funds give you exposure to Bitcoin in the same way, their defining feature is the expense ratio.
Should You Invest in Bitcoin ETFs?
Of course, the existence of a cheaper and easier way to trade Bitcoin doesn’t make the digital coin a buy, only cheaper and easier to do so. So crypto ETFs are a good way for traders to play Bitcoin or Ethereum if that’s already their intent.
The Risks of Investing in Bitcoin
Bitcoin has been notoriously volatile, rocketing and plunging precipitously. That volatility has been great for adept traders since they make money on the volatility, and it hasn’t been too bad either for traders who have the stomach to hold on through the highs and lows.
The Greater Fool Theory of Investing
Finally, it’s vital to know that Bitcoin is not backed by anything except the sentiment of traders. Unlike a stock, which is backed by the assets and cash flow of an underlying business, Bitcoin and most other cryptocurrencies rely solely on traders’ expectations to prop up their prices.
Where Can You Buy the Best Bitcoin ETFs?
Bitcoin ETFs are generally available at any broker that allows customers to purchase stocks on a major U.S. exchange.
The Bottom Line
The emergence of spot Bitcoin ETFs makes it easier and cheaper for traders to take a stake in the digital currency using just their traditional broker. These funds may well open up Bitcoin to wider acceptance as a store of value and push up the price of the cryptocurrency even more.
Disclaimer
All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
