An ETF is a type of investment vehicle that tracks the performance of an index or group of securities. Cryptocurrency ETF funds do not directly hold cryptocurrencies. Instead, they are usually backed by physical assets, or they may hold derivatives such as futures contracts, enabling them to gain exposure to crypto markets without actually owning the digital currencies.
On October 19, 2020, the first crypto ETF, Proshares Bitcoin Strategy ETF (BITS), became available to investors. Before that milestone, there were thirteen applications pending SEC approval for new cryptocurrency exchange-traded funds. As of December 2021, the US Securities and Exchange Commission (SEC) has only approved ETFs that invest in Bitcoin cryptocurrency futures, as the US still waits on the sidelines until a physically-backed cryptocurrency ETF is approved.
Some ETFs hold equity positions in companies that may benefit from blockchain technology in some fashion. These funds are generally called “blockchain ETFs.”
Here are the Top Five Crypto ETFs to Watch
There are numerous ETFs that track the performance of cryptocurrencies. When considering a blockchain ETF investment, it’s important to remember not all digital assets are equal. We’re featuring the strongest performing options on our crypto ETF list.
1. ProShares Bitcoin Strategy ETF (BITO)
This is the first US-based cryptocurrency-focused exchange-traded fund (ETF) approved by the SEC. The ProShares Bitcoin Strategy ETF tracks the performance of Bitcoin futures contracts. The fund has more than $1.5 billion in assets under management and has been approved by the US Securities and Exchange Commission (SEC) just a few months after its launch. The BITO ETF charges 0.95% annually or $95 per $10,000 invested, which is lower than most ETFs. Therefore, making it one of today’s best Bitcoin futures ETFs for investors. As Bitcoin’s adoption increases, BITO’s value would increase as institutional investors seek to gain access to BTC.
2. Valkyrie Bitcoin Strategy ETF (BTF)
The BTF Bitcoin Strategy ETF (BTSE) is also a Bitcoin Futures ETF that was launched a couple of days after BITO was cleared by the SEC. BTG trades on the NASDAQ exchange and, similarly to BITO, doesn’t invest directly in Bitcoin. Instead of CME bitcoin futures, BTF holds Bitcoin futures contracts for the first month of trading. BTF has nearly 60 million dollars in assets under management with an expense ratio of 0.95%. This fund is set to become even bigger among investors as Valkyrie plans to release more crypto-focused funds in the coming months and years, too.
3. VanEck Bitcoin Strategy ETF (XBTF)
The VanEck bitcoin strategy ETF gained the SEC’s approval in October but was officially launched on the CBOE Exchange today. It is the third bitcoin futures ETF available in the U.S. and is expected to gain popularity due to VanEck’s reputation as one of the top investment firms in the country XBTF debuted on the NASDAQ today and is trading at around the $60 per share mark. It could rise further over the next few weeks and months as the need for them grows.
4. Purpose Bitcoin ETF (BTCC)
While the US is yet to approve a single spot Bitcoin ETF, its North American neighbor Canada has already approved a few. The Purpose Bitcoin ETF (BTCC) is one of the largest spot Bitcoin ETFs in the world, with more than $1 billion in assets under management. BTCC’s price could rally higher over the coming years as more investors seek ETFs that have direct exposure to Bitcoin, especially as the United States continues to reject the launch of similar funds.
5. Amplify Transformational Data Sharing ETF (BLOK)
BLOK is a fund that invests approximately 80% of its total funds in stocks engaged in the development of blockchain technologies. BLOK doesn’t track an index but instead focuses on various value and Growth Stocks within the cryptocurrency space. BLOK has some of its top holdings in MicroStrategy, PayPal, and Coinbase. With a 0.71% annual fee, this fund has a one-year return rate of 195%. It currently has more than $100 million in assets under management. BLOK’S value could increase from its current $59 per share as cryptocurrencies continue to grow in popularity over the next few months and years.
Crypto assets are an excellent option for long-term investors to diversify portfolios. It’s important to remember that a blockchain exchange-traded fund includes many ETFs. Digital asset management isn’t for everyone. Learn how EndoTech Algo’s supports novice investors’ goals as well as asset managers.