6 best bitcoin ETFs of 2024 | finder.com (2024)

With 11 spot bitcoin exchange-traded funds (ETFs) having recently come to market plus more than a handful of other bitcoin ETFs already trading, it can be challenging to know which bitcoin ETF to buy.

To help you make the best decision, we analyzed a cross section of bitcoin ETFs that hold either spot (actual) bitcoin, bitcoin futures contracts, put or call options on bitcoin futures contracts or stocks of publicly-traded bitcoin mining companies and came up with a list of the best bitcoin ETFs.

Please keep in mind that bitcoin is a notoriously volatile asset, as are the financial products associated with it, so consider how bitcoin ETFs fit into your overall risk strategy.

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6 best bitcoin ETFs of 2024

*All data was sourced from ETF Database and is relevant as of January 18, 2024.

What is a bitcoin ETF?

A bitcoin ETF is a type of ETF that holds bitcoin, bitcoin futures contracts, put or call options on bitcoin futures contracts or stocks of publicly traded bitcoin miners.

In the US, no bitcoin ETF is currently permitted to hold bitcoin itself, but almost a dozen financial institutions have submitted applications to bring this type of ETF — better known as a spot ETF — to market.

How to invest in a bitcoin ETF

Buy and sell ETF units like any stock on the stock market through an online broker.

1. Choose a stock trading platform. Choose from our Top Picks, use our comparison table or jump straight to our best stock and ETF trading apps of 2024.
2. Open an account. Provide your personal information and sign up.
3. Fund your account. Deposit funds into your account by linking your banking information or transfer funds from another trading account.
4. Search for the ETF name. Search for the ETF by name or ticker symbol.
5. Buy the ETF. Place your order. It’s that simple.

How to pick the best ETFs for you

There are thousands of ETFs to choose from, so you’ll need to consider a wide range of factors when deciding where to invest your money. These include:

• Your investment time frame. How long are you planning to invest your money? Some ETFs adopt a high-risk strategy to target high short-term growth, while others are designed for long-term growth to suit investors who plan to buy and hold for a long time.
• Your investment strategy. What do you want to achieve by investing in an ETF? Will you take a conservative approach in the hope of earning steady long-term gains, or will you adopt a high-risk/high-reward strategy to target quick gains? If you prefer lower risk, you could also consider index funds. Given that bitcoin is a volatile asset, almost any bitcoin ETFs would be considered high risk.
• How the fund works. Make sure you understand the nature of the product and the risks involved before you invest in an ETF. Download the fund’s prospectus and read through the details. Is it a passive ETF or is it actively managed? Which index, sector or industry is its core theme?
• Check the returns. Look at the returns the ETF has provided, after fees, over different periods of time. How has it performed over a one-year period? How has it performed over several years? How does this performance compare to the competition?
• Fees. Fees strongly influence your return on investment. Read the fine print to find out the management fee that applies to the ETF, and remember that you’ll also need to factor brokerage fees into your calculations when buying and selling ETFs.
• Talk to a financial adviser. If you’re unclear about an investment, how it works or its returns, contact a licensed professional to help you learn more.

ETF fees to consider

High fees can make a big dent in your overall investment returns. There are two main costs involved when investing in listed funds: brokerage and management fees.

• Management fee. This is often displayed as the management expense ratio (MER), which is the percentage of your return charged as fees by the ETF’s fund manager. Normally, the more work a fund manager has to do to keep the ETF profitable, the higher the fee — though this won’t always be the case. This is why many active ETFs charge higher fees than index ETFs, which passively track an index. As a general guide, ETF management fees range from about 0.05% to 2.5%.
• Brokerage fees. Like with stocks, your broker may charge a transaction fee every time you invest money into an ETF. This fee comes down to which trading platform or brokerage you use, and it could be a flat fee or calculated based on your trade value. As a general guide, expect brokerage fees to range from around $0 to $5 per transaction. However, most brokers no longer charge fees to trade stocks or ETFs.

To find the trading platform that offers the lowest fees, you’ll first need to decide how much you want to invest and how many lump sums you’ll be investing over a year. If it’s just a single lump sum, finding a platform that doesn’t charge an inactivity fee will be key. If you plan on frequently buying small amounts, the brokerage fee itself will be more important.

Where can I view ETF fund facts?

Basic details about a fund can be found in its prospectus, which (in most cases) must be filed with the US Securities and Exchange Commission (SEC) before an ETF can be publicly traded. The prospectus breaks down key information about a fund including:

• Fees and costs
• Investment objectives
• Risk level
• Performance

View all public filings related to ETFs and other regulated US securities directly with the SEC. You can also access an ETF’s prospectus by visiting the issuing company’s website.

Why invest in a bitcoin ETF?

Investing in a bitcoin ETF lets you get exposure to the price of bitcoin without going through the process of buying bitcoin directly through a crypto exchange. And it can give you exposure to bitcoin’s price in your 401(k), IRA or in a taxable account through a traditional brokerage. It also takes away the need to manage the private keys for your bitcoin in a non-custodial wallet.

When you invest in bitcoin ETFs, you don’t have to deal with the hassle of storing the private keys to your bitcoin in a crypto wallet. As there have been many instances of people losing their private keys — and therefore their bitcoin — many investors feel safer getting exposure to bitcoin via a professionally managed bitcoin ETF.

Risk of bitcoin ETFs

Before deciding whether ETFs are the best investment solution for you, make sure you’re fully aware of how they work and have an in-depth understanding of all the risks involved. These include:

• You could lose money. The value of ETFs and other types of listed funds rise and fall like any listed stock, which means there are similar risks involved.
• Single-asset ETFs. Some ETFs bundle together a diverse range of securities that protect the investor from market falls; others focus on one asset class. For example, a commodity ETF that invests in a particular metal will do well when that metal’s price goes up, but it will also fall quickly if prices don’t have the protection of other asset classes. All of the spot bitcoin ETFs are single-asset ETFs.
• Tracking errors. Fees, taxes and other factors can sometimes mean that an ETF doesn’t accurately track the performance of an index.
• Leveraged and inverse ETFs. Designed to provide higher short-term returns than traditional ETFs, leveraged ETFs are a high-risk option with higher fees. An example of this type of ETF is the 2x Bitcoin Strategy ETF (BITX). Meanwhile, inverse ETFs allow you to hedge against falling markets, but they can be confusing for novice investors and come with their own unique risks. An example of this ETF is the Proshares Short Bitcoin Strategy ETF (BITI).
• Currency risks and international taxes. If you invest in a global ETF, changes in the value of the US dollar will have a direct impact on the value of your investment. You may also need to pay foreign taxes, so make sure you’re aware of all tax implications of an ETF before you commit any funds.
• Synthetic ETFs. These have all the same risks as physical ETFs, but they also expose you to other potential risks such as counterparty risks. There’s also the possibility that the price of futures will differ from the price of an underlying asset.

What is a short bitcoin ETF?

Because bitcoin’s price is volatile, it can be helpful to have a financial instrument that lets you bet on when you think bitcoin’s price will go down.

The Proshares Short Bitcoin ETF (BITI) does exactly that, but without some of the difficulties and risks associated with shorting a bitcoin directly.

The professionals who manage BITI buy and sell the put and call options on bitcoin futures contracts for you, so you can get exposure to bitcoin’s downward price action without having to purchase and manage these options yourself.⁽²⁾

So, if you’re bearish on bitcoin, you need only buy some shares of BITI to express that thesis via the market and you’ll profit from bitcoin’s price decreasing if you’re right.

Bottom line

While there are a number of different types of bitcoin ETFs to buy, our analysis shows that the best bitcoin ETFs are all currently spot bitcoin ETFs.

If you’ve been looking to get exposure to bitcoin’s price in your retirement account or through a taxable account at a traditional brokerage, you now have trustworthy investment vehicles to use with spot bitcoin ETFs.

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Frequently asked questions

Is an ETF good for bitcoin?

The 11 spot bitcoin ETFs that recently came to market are good for bitcoin in that more people and institutions can now get price exposure to bitcoin through a regulated instrument. This will likely cause the asset’s price to rise over time. Some view it as a bad thing, though, because more actual bitcoin will now be concentrated in the hands of fewer people and institutions. This goes against the ethos of bitcoin, which includes the idea that it’s peer-to-peer money designed to be an alternative to traditional financial structures.

What are the best crypto ETFs?

A bitcoin ETF that actually holds bitcoin is called a spot bitcoin ETF. This type of ETF does not currently exist in US markets. Ten financial institutions, including VanEck and Valkyrie, have applied to bring one to market, but the SEC has yet to approve any of these applications.


Is GBTC or BITO better?

GBTC and BITO are two different types of bitcoin ETFs. GBTC is a spot bitcoin ETF while BITO is a futures bitcoin ETF. If you’re looking to purchase shares of an ETF that most closely tracks the price of bitcoin, then GBTC is the better option. However, other spot ETFs like FBTC or BITB have much lower expense ratios than GBTC, which makes them good options, as well.

What is the new bitcoin ETF called?

The bitcoin ETFs that came to market in January 2024 are called spot bitcoin ETFs. Spot ETFs hold the actual underlying asset, not derivative products for the asset. The shares of spot bitcoin ETFs track the price of the underlying asset.

Sources

1. Fidelity Wise Origin Bitcoin Fund, ETF Database, 18 January 2024
2. Bitwise Bitcoin ETF Trust, ETF Database, 18 January 2024
3. iShares Bitcoin Trust Registered, ETF Database, 18 January 2024
4. ARK 21Shares Bitcoin ETF Ben of Int, ETF Database, 18 January 2024
5. Invesco Galaxy Bitcoin ETF, ETF Database, 18 January 2024
6. Valkyrie Bitcoin Fund, ETF Database, 18 January 2024
7. ProShares Short Bitcoin Strategy ETF (BITI), Yahoo! Finance, 18 January 2024