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Explore the latest news on Bitcoin ETFs, comparing fees and assets under management (AUM) to help you decide if they're right for you and, if so, which is the best Bitcoin ETF for your investment portfolio
A Bitcoin ETF is a type of exchange-traded fund that allows investors to gain exposure to Bitcoin's price movements without owning the cryptocurrency directly. Instead, these ETFs invest in assets or companies that reflect Bitcoin's value and are traded on stock exchanges, enabling investors to access them through brokerage accounts.
There are a few important considerations when choosing which Bitcoin ETF you want to purchase. The first thing to look at is each issuer’s annual management fee. The current ETF offerings range in fees from 0.21 – 1.5%, with ARK Invest as the cheapest and Grayscale as the highest.
In addition to fees, you want to look at the company backing the ETF. You may have brand loyalty to one issuer or trust one over another. If you are a diehard Bitcoiner, you may want to support Bitwise and VanEck, who are donating a portion of their ETF profits to Bitcoin core developers.
Lastly, you want to ensure that your ETF of choice sees regular trading volume and performs as it should. The safe bet may be to go with the the ETFs that have attracted the most AUM. As of the end of the first week of the ETFs trading, Fidelity, Bitwise and BlackRock were leading in inflows.
At this time, there are 11 approved spot Bitcoin ETFs. While each spot ETF’s goal is to track the price of Bitcoin, these ETFs will have a few differences:
| Issuing Company | Ticker | AUM | Management Fee | Fee Waiver |
|---|---|---|---|---|
| Grayscale | GTBC | $20B* | 1.5% | N/A |
| VanEck | HODL | $134M | 0.21% | N/A |
| Fidelity | FBTC | $2.7B | 0.39% | N/A |
| 21 Shares & ARK | ARKB | $717M | 0.25% | No fees for the first 6 months OR first $1B of inflows |
| Blackrock | IBTC | $3.3B | 0.25% | 0.12% for the first 6 months OR first $5B on inflows |
| Invesco & Galaxy Digital | BTCW | $306M | 0.25% | No fees for the first 6 months OR first $5B of inflows |
| Hashdex | DEFI | $5M | 0.9% | N/A |
| Bitwise | BITB | $672M | 0.20% | No fees for the first 6 months OR first $5B of inflows |
| Wisdomtree | BTCW | $15M | 0.3% | N/A |
| Valkyrie | BRRR | $114M | 0.49% | N/A |
| Franklin Templeton | EZBC | $64M | 0.19% | No fees for the first $10B of inflows |
*Grayscale converted GBTC, an existing Bitcoin offering, into their spot ETF. As a result, they have a much higher AUM.
When you invest in an ETF, you pay an annual fee to the ETF issuer to cover management, trading, and marketing costs. These fees are automatically deducted from your brokerage account.
Issuers previously engaged in a fee battle, attempting to establish themselves as a market leader in the Bitcoin ETF race. As a result, numerous applicants have lowered their fees in amendments, and others, such as BlackRock and Bitwise, have even waived fees for an initial period.
It is important to note that Grayscale maintains the highest fee by a wide margin. Since Grayscale is converting its existing Bitcoin Trust into an ETF, it already has a lot of assets in its fund. As a result, they are betting that their investors will remain loyal or ignore the higher fee, as switching to another ETF would cause a taxable event for them.
Here is how the filers’ management fees stand:
| Issuing Company | Ticker | Annual Fee | Fee Waiver |
|---|---|---|---|
| Blackrock | IBTC | 0.25% | 0.12% for the first 6 months OR first $5B on inflows |
| Grayscale | GTBC | 1.5% | N/A |
| 21 Shares & ARK | ARKB | 0.21% | No fees for the first 6 months OR first $1B of inflows |
| Bitwise | BITB | 0.20% | No fees for the first 6 months OR first $5B of inflows |
| VanEck | HODL | 0.25% | N/A |
| Wisdomtree | BTCW | 0.30% | N/A |
| Invesco & Galaxy Digital | BTCO | 0.39% | No fees for the first 6 months OR first $5B of inflows |
| Fidelity | FBTC | 0.39% | N/A |
| Valkyrie | BRRR | 0.49% | N/A |
| Hashdex | DEFI | 0.9% | N/A |
| Franklin Templeton | EZBC | 0.19% | No fees for the first $10B of inflows |
All of this hype has been centered around spot ETFs, which provide investors with direct exposure to the current price of Bitcoin. However, there are other types of Bitcoin funds that are also available to investors.
BTC futures have been trading on the open market since 2021. And while they have the same goal of tracking the price of Bitcoin, they do so without providing direct exposure. Instead, these funds consist of assets related to Bitcoin, such as futures contracts and shares of companies exposed to the crypto industry.
The SEC approved Bitcoin spot ETFs for the first time on January 10, 2024. Going into the approval, there were 11 applicants, including standard ETF issuers like BlackRock and VanEck. While these institutions applied for ETFs at different times, the SEC approved them all at once to ensure a fair launch.
As we mentioned above, spot ETFs differ from futures ETFs for a few reasons. In addition to spot ETFs, the following futures ETFs are currently live and trading:
| Issuer | Ticker | AUM | Avg. Daily Volume | Annual Fee |
|---|---|---|---|---|
| Proshares | BITO | $880M | $15M | 0.95% |
| VanEck | XBTF | $46M | $32k | 0.76% |
| Valkyrie | BTF | $26M | $100k | 1.20% |
| Grayscale Trust | GBTC | $17B | $4.7M | 2% |
Note: There are others currently live for trading, but they are less popular, and we decided to leave them out as our focus is currently on Spot ETFs.
Many people want to get exposure to the crypto industry, but have never bought a token before. And in a lot of ways, getting started with crypto can feel like learning a new language. As a result, there are a lot of investors who simply feel more comfortable owning assets in their brokerage account.
Additionally, brokerage accounts come with other benefits such as asset protection, easy tax reporting, and low fees. Utilizing these accounts is a lot simpler than getting started with wallet addresses and seed phrases.
Lastly, accessing crypto through ETFs makes it a lot easier for people to allocate funds from their retirement accounts. In addition to institutions who must meet strict guidelines, there are many types of people who stand to benefit from buying a spot ETF over Bitcoin itself.
ETFs allow many new investors to access Bitcoin. While it may not happen all at once, this could lead to sustained buying pressure over time as institutions and retirement accounts begin incorporating it into their portfolios. And when you add in regular investors who were uncomfortable using crypto exchanges, the future looks promising for spot ETFs.
A common and optimistic comparison is to look at how the first gold ETF impacted gold's price:
The impact wasn't immediate, but the emergence of ETFs had a very positive result on the price of gold over time. Bitcoin ETFs have already passed silver ETFS in AUM.
Just like any company's stock price, you should not look at a low share price of an ETF and assume it is "cheap". While all ETFs aim to track the price of Bitcoin in terms of performance, the ETFs itself are priced in a much different way.
An ETF's price is dependent on the Net Asset Value (NAV) divided by the number of shares issued for a fund. NAV is a representation of the total value of underlying assets (Bitcoin) in a fund at the end of the previous trading day.
Since each Bitcoin spot ETF has different amounts of outstanding shares and holdings, they will be priced differently. Regardless, each ETF should perform relatively in line with the price of Bitcoin itself.
The first step to purchasing a Bitcoin ETF is to open a brokerage account. There are many options these days, with the main differences to consider being user experience, customer support, and fee structure.
Once you have an account and have funded it, purchasing a Bitcoin ETF is done the same way as purchasing any other stock or ETF. Simply search for the ticker symbol within your account, and enter the amount of shares or dollars-worth to purchase.
These shares will reside in your portfolio along with your other positions, and can be exchanged back for dollars at any time that the U.S. stock market is open. Note that the volatility and tax considerations are the same for buying and selling ETFs as they are for the token itself.