Best Bitcoin ETFs of May 2024

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An ETF, or exchange-traded fund, is a collection of similar investments that people can buy. ETFs create a diversified portfolio without the investor having to choose from a multitude of stocks. Similarly, bitcoin ETFs are collections of bitcoin-related investments. While the Securities and Exchange Commission recently approved 11 spot bitcoin ETFs that actually hold bitcoin itself, not all bitcoin ETFs invest directly in bitcoin. Some only invest in bitcoin futures contracts or stocks of companies related to bitcoin and other crypto.

If you would like to get into crypto investing but feel investing in bitcoin carries too much risk — or you don’t want to worry about finding the best places to store your crypto — investing in a bitcoin ETF could be for you.

Best Bitcoin ETFs To Invest In

With SEC spot bitcoin ETF approval in the rearview mirror, there’s been quite a shakeup in the top bitcoin ETFs. Here are the best bitcoin ETFs as of May 2024.

ProShares Bitcoin Strategy ETF (BITO)

ProShares was the first bitcoin ETF to hit the market, back in October 2021. It garnered $1 billion in growth in its first few days. The ETF fell hard in 2022 during crypto winter, but has since regained some of its value now that bitcoin recently surpassed its all-time high value.

In addition to bitcoin futures, the ProShares BITO ETF holds Treasury securities and cash, according to the fund’s fact sheet, which provides some diversity and a hedge against the crypto winter.

ProShares Short Bitcoin Strategy ETF (BITI)

If you are bearish about bitcoin and believe there will be a crypto winter, you might consider ProShares Short Bitcoin Strategy ETF. Unlike the other ETFs on this list, the ProShares Short Bitcoin ETF is speculating on a decrease in the price of bitcoin.

However, it doesn’t track trends — it aims for a return that is -1x the return of the underlying benchmark for just one day. That makes the fund as volatile as bitcoin futures on a day to day basis and has resulted in an almost 60% decline in value since its June 2022 inception date.

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Grayscale Bitcoin Trust ETF (GBTC)

Grayscale Bitcoin Trust was one of the largest bitcoin ETFs before spot bitcoin ETFs were approved. It has recently upscaled to become a spot bitcoin ETF. It still holds the largest market share of bitcoin ETF investments with over $18 billion in assets but it charges much higher fees than comparable spot bitcoin ETFs from competitors.

Grayscale used to charge 2.00% annually for the privilege of gaining some exposure to bitcoin through an ETF. But with other competitors offering introductory fee waivers and low expense ratios, Grayscale is starting to lose steam and recently lowered its expense ratio to 1.50%.

iShares Bitcoin Trust (IBIT)

iShares is a popular ETF issuer that’s owned by Blackrock. It has received approval from the SEC to launch a spot bitcoin ETF. The iShares Bitcoin Trust has since become the most popular spot bitcoin ETF besides Grayscale and may soon overtake them as the largest spot bitcoin ETF on the market. 

To attract investors, iShares discounted the ETF expense ratio all the way down to only 0.12%. That is 10x lower than Grayscale’s 1.50% expense ratio and can save long-term investors a bundle in fees. The expense ratio has recently increased to 0.25% due to crossing the $5 billion in assets mark but it’s still far less than its top competitor.

Wise Origin Bitcoin Trust by Fidelity (FBTC)

Fidelity is one of the largest and most popular brokers in the world and it jumped head-first into the world of crypto with its Wise Origin Bitcoin Trust spot ETF. It has since accumulated over $9 billion in assets under management, making it the third-largest bitcoin ETF on the market.

Part of the fast growth is due to Fidelity waiving the expense ratio of the ETF until Aug. 1, 2024. This saves investors a few bucks (or more) and when the expense ratio kicks back in it’s a paltry 0.25%. Combined with Fidelity’s trusted name, this bitcoin ETF is one of the better ways to invest in crypto within a traditional investment account.

Ark 21Shares Bitcoin ETF (ARKB)

Ark Invest is a popular investment company — mostly due to their dynamic CIO Cathie Wood — and it recently was approved for a spot bitcoin ETF. It’s a standard spot bitcoin ETF with a slightly lower expense ratio than competitors at 0.21% annually.

This bitcoin ETF has now surpassed $3 billion in assets under management, making it one of the larger offerings on the market. And its lower expense ratio will become more attractive as many competitor introductory expense ratios expire and become more expensive.

Bitwise Bitcoin ETF (BITB)

Bitwise is a crypto index fund manager that services financial advisers, asset managers and institutional investors. It launched a bitcoin ETF to give investors more access to bitcoin in crafting portfolios and it has grown to over $2 billion in assets under management. This ETF sports a cool 0.20% expense ratio, which is the lowest on the list — after intro rates expire.

One of the unique things about Bitwise is their commitment to furthering the development of bitcoin. Bitwise has committed to donate 10% of BITB profits toward bitcoin open-source development for the next 10 years. This helps fund the underlying technology that created the entire cryptocurrency asset class in the first place. Pretty cool, huh?

What Are Bitcoin Spot ETFs?

Bitcoin spot ETFs are a type of exchange-traded fund that tracks the spot price of bitcoin as opposed to using futures contracts and other financial instruments. These spot ETFs are highly regulated and require holding actual bitcoin with a trusted custodian to reflect the market capitalization of the ETF. 

The share price is controlled by authorized participants, large financial institutions that create or redeem shares of the ETF to align the share price with the current spot price of bitcoin. This can be tricky since bitcoin prices change by the second. This means that the spot ETF trades at a premium or a discount to the spot price of bitcoin at times and authorized participants are in charge of stabilizing the price of the ETF in real-time.

What Are Bitcoin Futures?

Futures represent a legal agreement to purchase or sell a specific commodity at a predetermined price at a specific time. When you purchase bitcoin futures, you are agreeing to purchase bitcoin. Keep in mind, that when you trade in futures, you sell the commodity before it ever reaches your hands. You don’t have to worry about selecting a crypto exchange or purchasing a cold wallet for secure storage. You won’t actually hold bitcoin.

The SEC recently approved ETFs to hold bitcoin, giving investors direct exposure to the spot price of bitcoin. Bitcoin futures ETFs, on the other hand, hold bitcoin futures contracts and other assets and may not match the price of bitcoin as closely. Many advanced investors are familiar and comfortable with futures, so these ETFs are growing rapidly as an alternative to direct bitcoin trading.

Pros and Cons of Bitcoin ETFs

Bitcoin ETFs make it easier to invest in bitcoin but it’s not quite the same as owning it yourself. Here are a few pros and cons of bitcoin ETFs to consider:

Pros

• Direct exposure to the spot price of bitcoin
• Can invest in bitcoin within retirement accounts and regular brokerage accounts
• Don’t have to hassle with self-custody of your bitcoin
• An easy way to add alternative assets to your portfolio

Cons

• You don’t get direct custody of bitcoin with a spot ETF
• Very volatile investment with huge swings in price
• No dividends paid

Risks and Benefits of Bitcoin ETFs

Bitcoin ETFs have given everyday investors a simple way to invest in bitcoin as an asset without the need to purchase from a crypto exchange or take custody of the asset themselves. Since many investors simply want exposure to alternative assets without the hassle of self-custody, spot bitcoin ETFs fill this need. And while bitcoin has a history of price volatility, it has been one of the fastest-growing assets over the last 15 years, giving long-term investors the ability to own an asset that has its own market dynamics outside of traditional markets.

But, in a way, spot bitcoin ETFs undermine the mission of bitcoin in the first place. Bitcoin was created in response to the Great Financial Crisis and to give owners access to a trustless monetary system that doesn’t rely on the government or a third party to facilitate transactions. Bitcoin is designed to be self-custodial and used independently of traditional financial markets. Spot bitcoin ETFs are simply wrapping self-sovereign assets into the very same market it was designed to avoid.

Whatever your take on bitcoin spot ETFs, it is clear that they are still a volatile investment. With uncertain global regulatory standards and the penchant to drop over 50% in price on a regular basis, investors need to treat these spot bitcoin ETFs like any other speculative investment. If you choose to invest in bitcoin spot ETFs you need to accept the very real risk of loss.

Final Take

Bitcoin ETFs allow you to take advantage of a high-risk — and potentially high reward — asset without actively managing your portfolio. A bitcoin ETF could be the right choice if you don’t want to mess with the technology behind trading bitcoin and prefer a regulated investment.

You should speak to a financial advisor who can offer the guidance you need and help you add bitcoin ETFs to your portfolio or begin an investment account.

Daria Uhlig and Dawn Allcot contributed to the reporting for this article.

Information is accurate as of May 14, 2024.

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