A Comprehensive Guide to the Top 11 Bitcoin ETFs

Bitcoin ETFs (Exchange-Traded Funds) have become increasingly popular as investors seek exposure to Bitcoin without directly purchasing the cryptocurrency. This guide explores the top 11 Bitcoin ETFs available in the market today, examining their features, performance, and unique aspects. With the growing interest in Bitcoin as both an investment and a store of value, understanding these ETFs can provide investors with valuable insights into their options.

1. ProShares Bitcoin Strategy ETF (BITO)

Overview: The ProShares Bitcoin Strategy ETF was the first Bitcoin ETF approved by the SEC and launched in October 2021. It aims to provide investment results that correspond to the performance of Bitcoin futures contracts.

Features:

• Type: Futures-based ETF
• Inception Date: October 2021
• Expense Ratio: 0.95%
• Focus: Bitcoin futures contracts

Performance: The ETF tracks Bitcoin futures rather than the spot price of Bitcoin, which can lead to discrepancies between the ETF's performance and the actual price of Bitcoin.

Pros: Provides indirect exposure to Bitcoin through futures contracts, making it accessible to traditional investors.

Cons: Futures-based ETFs can suffer from "contango" or "backwardation," which can affect performance.

2. Valkyrie Bitcoin Strategy ETF (BTF)

Overview: The Valkyrie Bitcoin Strategy ETF, launched in November 2021, is another futures-based ETF that seeks to mirror the performance of Bitcoin futures contracts.

Features:

• Type: Futures-based ETF
• Inception Date: November 2021
• Expense Ratio: 0.95%
• Focus: Bitcoin futures contracts

Performance: Like BITO, BTF tracks Bitcoin futures and may experience performance variations from the underlying Bitcoin price.

Pros: Provides exposure to Bitcoin via futures, offering an entry point for institutional and retail investors.

Cons: Subject to the same challenges as other futures-based ETFs, such as potential performance discrepancies.

3. VanEck Bitcoin Strategy ETF (XBTF)

Overview: The VanEck Bitcoin Strategy ETF, launched in November 2021, focuses on Bitcoin futures and aims to provide investment returns similar to the performance of Bitcoin futures.

Features:

• Type: Futures-based ETF
• Inception Date: November 2021
• Expense Ratio: 0.65%
• Focus: Bitcoin futures contracts

Performance: XBTF’s performance can differ from the spot price of Bitcoin due to the nature of futures contracts.

Pros: Lower expense ratio compared to some competitors, potentially offering cost-effective exposure to Bitcoin futures.

Cons: Futures contracts may lead to performance discrepancies compared to the actual Bitcoin price.

4. Global X Bitcoin Trust ETF (BITT)

Overview: The Global X Bitcoin Trust ETF is a newer entrant in the Bitcoin ETF market, launched in December 2021. It aims to offer exposure to Bitcoin via a trust structure.

Features:

• Type: Trust-based ETF
• Inception Date: December 2021
• Expense Ratio: 0.90%
• Focus: Bitcoin

Performance: BITT’s performance is closely tied to the spot price of Bitcoin, providing a more direct correlation to Bitcoin's market value.

Pros: Direct exposure to Bitcoin, potentially reducing discrepancies seen in futures-based ETFs.

Cons: Higher expense ratio compared to some futures-based ETFs.

5. Purpose Bitcoin ETF (BTCC)

Overview: The Purpose Bitcoin ETF is the first Bitcoin ETF approved in Canada and was launched in February 2021. It is designed to provide investors with exposure to Bitcoin by holding the cryptocurrency directly.

Features:

• Type: Spot Bitcoin ETF
• Inception Date: February 2021
• Expense Ratio: 1.00%
• Focus: Bitcoin

Performance: As a spot Bitcoin ETF, BTCC aims to closely track the price of Bitcoin, minimizing performance discrepancies.

Pros: Direct exposure to Bitcoin, with a more accurate reflection of Bitcoin's market price.

Cons: Higher expense ratio compared to some futures-based ETFs.

6. Evolve Bitcoin ETF (EBIT)

Overview: The Evolve Bitcoin ETF is another Canadian-based Bitcoin ETF launched in February 2021. It aims to provide investors with direct exposure to Bitcoin.

Features:

• Type: Spot Bitcoin ETF
• Inception Date: February 2021
• Expense Ratio: 1.00%
• Focus: Bitcoin

Performance: EBIT provides direct exposure to Bitcoin, closely tracking the cryptocurrency's market value.

Pros: Direct correlation with Bitcoin's spot price, offering accurate exposure.

Cons: Similar to other spot Bitcoin ETFs, it has a higher expense ratio.

7. BTCetc Bitcoin Exchange Traded Crypto (BTCE)

Overview: The BTCetc Bitcoin Exchange Traded Crypto is a European-based Bitcoin ETF that provides exposure to Bitcoin by holding the cryptocurrency directly. It was launched in June 2020.

Features:

• Type: Spot Bitcoin ETF
• Inception Date: June 2020
• Expense Ratio: 2.00%
• Focus: Bitcoin

Performance: BTCE aims to closely track the price of Bitcoin, offering a direct investment in the cryptocurrency.

Pros: Direct exposure to Bitcoin, closely tracking its market value.

Cons: Higher expense ratio compared to North American counterparts.

8. Grayscale Bitcoin Trust (GBTC)

Overview: The Grayscale Bitcoin Trust is one of the oldest Bitcoin investment vehicles, launched in 2013. It provides exposure to Bitcoin by holding the cryptocurrency in a trust.

Features:

• Type: Trust-based investment vehicle
• Inception Date: 2013
• Expense Ratio: 2.00%
• Focus: Bitcoin

Performance: GBTC’s price can trade at a premium or discount to the net asset value of Bitcoin held in the trust.

Pros: Established track record, providing a familiar structure for investors.

Cons: High expense ratio and potential for price discrepancies compared to Bitcoin’s market value.

9. Bitwise 10 Crypto Index Fund (BITW)

Overview: The Bitwise 10 Crypto Index Fund offers exposure to a diversified portfolio of cryptocurrencies, including Bitcoin. It aims to track the performance of the Bitwise 10 Large Cap Crypto Index.

Features:

• Type: Crypto index fund
• Inception Date: December 2020
• Expense Ratio: 2.50%
• Focus: Diverse cryptocurrency portfolio including Bitcoin

Performance: BITW provides exposure to a broad range of cryptocurrencies, with Bitcoin being a significant component.

Pros: Diversification across multiple cryptocurrencies, including Bitcoin.

Cons: High expense ratio and potential complexity compared to single-asset Bitcoin ETFs.

10. First Trust Indxx Innovative Transaction & Process ETF (LEGR)

Overview: The First Trust Indxx Innovative Transaction & Process ETF provides indirect exposure to Bitcoin by investing in companies involved in the blockchain and cryptocurrency industries.

Features:

• Type: Blockchain-focused ETF
• Inception Date: October 2018
• Expense Ratio: 0.65%
• Focus: Blockchain and cryptocurrency companies

Performance: LEGR’s performance is influenced by the broader blockchain and cryptocurrency sectors rather than Bitcoin directly.

Pros: Provides exposure to companies involved in Bitcoin and blockchain technologies.

Cons: Not a direct Bitcoin ETF, so performance is tied to a broader sector.

11. Amplify Transformational Data Sharing ETF (BLOK)

Overview: The Amplify Transformational Data Sharing ETF focuses on companies involved in blockchain technology, including those with exposure to Bitcoin.

Features:

• Type: Blockchain-focused ETF
• Inception Date: January 2018
• Expense Ratio: 0.71%
• Focus: Blockchain and cryptocurrency companies

Performance: BLOK tracks companies engaged in blockchain and cryptocurrency technologies, including Bitcoin.

Pros: Offers exposure to blockchain technology and Bitcoin indirectly.

Cons: Performance is linked to a broader range of companies and technologies, not just Bitcoin.

Summary and Considerations

Investing in Bitcoin ETFs can offer varying levels of exposure to Bitcoin, ranging from direct investment to indirect exposure through futures contracts or blockchain-related companies. When choosing a Bitcoin ETF, investors should consider factors such as expense ratios, the type of exposure offered (spot vs. futures), and the ETF's performance relative to Bitcoin’s market price.

Futures-based ETFs (e.g., BITO, BTF, XBTF) can provide access to Bitcoin, but their performance might differ from the spot price of Bitcoin due to factors like contango and backwardation. On the other hand, spot Bitcoin ETFs (e.g., BTCC, EBIT) offer more direct exposure, closely mirroring Bitcoin’s market value but often come with higher expense ratios.

Trust-based vehicles like GBTC provide another way to invest in Bitcoin, though they come with their own set of considerations, such as trading at a premium or discount to Bitcoin’s net asset value.

For those interested in a broader exposure to the cryptocurrency and blockchain sectors, index funds and blockchain-focused ETFs (e.g., BITW, LEGR, BLOK) can offer diversified investment options, though they do not provide direct Bitcoin exposure.

When evaluating Bitcoin ETFs, it’s crucial to assess your investment goals, risk tolerance, and the specific characteristics of each ETF to make an informed decision.