Top 5 Cryptocurrency ETFs – Securities.io

Bitcoin and the broader digital asset market have never been more popular. As a result, there is a growing collection of exchange-traded funds (ETFs) structured to track the market for investors interested in gaining exposure to it. The following is a short list highlighting some of the most popular options, with each offering a unique approach/appeal.

Cryptocurrency ETFs

1. iShares Bitcoin Trust

The iShares Bitcoin Trust (IBIT) is an exchange-traded fund (ETF) that provides investors with exposure to Bitcoin without having to directly hold the cryptocurrency. It operates by holding Bitcoin as the underlying asset and aims to mirror the market price performance of Bitcoin.

It is operated by BlackRock, the world’s largest asset manager, with over $9 trillion in assets under management as of Q1 2023. BlackRock is renowned for its broad range of investment products and services.

What distinguishes it from direct competitors?

1. Management and reputation: Managed by BlackRock, IBIT benefits from the firm’s significant experience and reputation in the financial sector.
2. Commissions: IBIT has a competitive fee structure. It starts with a standard fee of 0.25%, which is reduced to 0.12% for the first $5 billion of assets or 12 months, whichever comes first.
3. Keepers: The ETF uses Coinbase as its crypto custodian and spot market data provider, with BNY Mellon acting as its money custodian. This combination ensures high standards of security and reliability.
4. Authorized Participants: The fund benefits from a strong network of authorised participants, including JP Morgan Securities, Jane Street Capital, Macquarie Capital and Virtu Americas.

Since its launch in January 2024, IBIT has quickly gained popularity among investors due to its association with BlackRock and its effective fee-reduction strategy. The ETF has set several records for its pace of capital accumulation and boasts over $18 billion in AUM at the time of writing.

2. ProShares Bitcoin Strategic ETF

The ProShares Bitcoin Strategy ETF (BITO) is an exchange-traded fund that provides investors with exposure to Bitcoin through futures contracts rather than direct ownership of the cryptocurrency. It seeks to provide investment results that generally correspond to the performance of Bitcoin as measured by the price of Bitcoin futures.

BITO is operated by ProShares, a leading provider of specialized ETFs known for its innovative and diverse range of investment products. ProShares is widely regarded for launching the first US-based Bitcoin ETF.

What distinguishes it from direct competitors?

1. Futures-based approach: Unlike spot Bitcoin ETFs, BITO invests in Bitcoin futures contracts, providing indirect exposure to Bitcoin. This structure may appeal to investors who prefer not to deal with the complexities and risks associated with directly holding cryptocurrencies.
2. Regulatory Approval: BITO was the first US-based Bitcoin ETF to be approved by the SEC, marking a significant milestone and establishing itself as a pioneer in the market.
3. Accessibility: It allows traditional investors to gain exposure to Bitcoin through a familiar investment vehicle traded on traditional exchanges.
4. Management skills: ProShares’ expertise in managing futures-based products and its solid infrastructure ensure a high level of trust and reliability.

Since its launch in October 2021, BITO has attracted significant interest from investors. Initially, the ETF saw a strong influx of investments, reflecting the high demand for exposure to Bitcoin via a regulated ETF. However, its performance has been closely tied to the volatile nature of Bitcoin futures, resulting in periods of both gains and losses.

3. ProShares Bitcoin Short Strategy ETF

The ProShares Short Bitcoin Strategy ETF (BITI) is an inverse exchange-traded fund designed to provide investors with the opportunity to profit from declines in the price of Bitcoin. Unlike traditional Bitcoin ETFs, BITI seeks to achieve its investment objective by taking short positions in Bitcoin futures contracts, meaning it gains value when Bitcoin prices decline.

BITI is operated by ProShares, a leader in the ETF industry known for offering a wide range of innovative investment products. ProShares has been at the forefront of bringing cryptocurrency-related ETFs to market, including the first U.S.-based Bitcoin futures ETF.

What distinguishes it from direct competitors?

1. Reverse exposure: BITI is unique in that it allows investors to take advantage of falling Bitcoin prices. This is especially useful for those looking to protect their portfolios from potential declines in the cryptocurrency market.
2. Futures based strategy: Like other ProShares Bitcoin ETFs, BITI uses Bitcoin futures contracts to achieve its investment objectives. This approach provides regulated exposure without the need to directly hold Bitcoin.
3. Accessibility and Liquidity: BITI offers traditional investors an accessible way to short Bitcoin using a familiar ETF structure, traded on traditional exchanges.

BITI was launched in June 2022 and has since provided investors with a way to profit during periods of Bitcoin price declines. Like its sister ETF from Pro-Shares, BITI, its performance is closely tied to Bitcoin market volatility, with periods of both gains and losses.

4. ETF Siren Nasdaq NexGen Economy

The Siren Nasdaq NexGen Economy ETF (BLCN) is an exchange-traded fund that seeks to track the performance of the NASDAQ Blockchain Economy Index. The fund invests in companies actively involved in the development, research, and use of blockchain technologies. As such, it offers investors exposure to the broader blockchain ecosystem that goes beyond just cryptocurrencies.

BLCN is managed by Siren ETF Trust in partnership with Nasdaq. Siren is known for creating ETFs that target emerging and transformative sectors and the partnership with Nasdaq adds credibility and a solid framework for the fund.

At the time of writing, the five largest investments in this ETF are as follows.

• MicroStrategy Inc
• NU Holdings Ltd/Cayman Islands
• CleanPark Inc.
• Marathon Digital Holdings Inc
• Robinhood Markets Inc

Overall, they represent approximately 18% of the fund’s market value.

What distinguishes it from direct competitors?

1. Diversified exposure to blockchain: BLCN focuses on a broad range of companies involved in blockchain technology, including those engaged in digital asset mining, blockchain applications, blockchain transactions, blockchain hardware, and blockchain integration.
2. Index-based approach: The ETF tracks the NASDAQ Blockchain Economy Index, which offers a structured and systematic way to gain exposure to the blockchain sector.
3. Companies established: The fund includes holdings in large and well-known companies such as PayPal, Alibaba, Coinbase, Baidu, Tencent, Overstock, Visa, Microsoft, Nvidia and Robinhood Markets. This diversified approach mitigates risk compared to investing in individual businesses or companies.

Launched in January 2018, BLCN has experienced volatility, mirroring the broader blockchain and cryptocurrency markets. Despite significant declines during bear markets, the ETF has shown resilience due to its diversified holdings. Performance data should be reviewed for the most up-to-date information, but historically it has seen periods of both substantial gains and losses.

5. Amplify Transformative Data Sharing ETF

The Amplify Transformational Data Sharing ETF (BLOK) is an actively managed exchange-traded fund that invests in companies involved in the development and use of blockchain technologies. It offers investors diversified exposure to the blockchain ecosystem, including both direct developers of blockchain technologies and companies benefiting from blockchain adoption.

BLOK is managed by Amplify Investments, a firm known for creating innovative ETFs that target emerging and transformative sectors. The active management approach allows the fund to dynamically adjust its holdings based on market conditions and the evolving blockchain landscape.

At the time of writing, the five largest investments in this ETF are as follows.

• Scientific Nucleus Inc
• Galaxy Digital Holdings Ltd Limited Company
• Coinbase Global Inc
• MicroStrategy Inc
• Block Inc.

Overall, they represent approximately 21% of the fund’s market value.

What distinguishes it from direct competitors?

1. Active management: Unlike many blockchain ETFs that passively track an index, BLOK is actively managed. This allows fund managers to make tactical changes to the portfolio to capitalize on emerging opportunities and manage risks.
2. Wide exposure: BLOK invests in a wide range of companies, including those directly involved in blockchain technology, such as miners and software developers, as well as companies that benefit indirectly from it, such as financial services firms.
3. Global Reach: The fund includes holdings from companies around the world, providing global exposure to the blockchain sector.
4. Various participations: Major holdings include major technology and blockchain companies such as MicroStrategy, Square, NVIDIA, and PayPal, among others, providing broad exposure to potential growth areas in the sector.

Launched in January 2018, BLOK has shown periods of strong performance during blockchain bull markets and downturns during bear markets. At the time of writing, BLOK had approximately $700 million in AUM.

6. Honorable Mention

No active ETFs track the performance of Ethereum (ETH) in the United States. However, that will soon change, as more than one has already been approved for launch. When that happens, investors would be wise to consider them as part of their portfolios.

Final thoughts

Gaining exposure to the digital asset space has never been easier for the modern investor. Whether you are a Bitcoin maximalist, short the market, or just interested in mining, there is something for everyone.

To this end, visit our list of best stock brokers in usaor your respective region.

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