Financial Pros Flock to Hot New Bitcoin ETFs

Wall Street is going gaga over the new Bitcoin ETFs.

Nearly a dozen have been launched in the last month since the SEC gave the green light.

According to proprietary data from TrackStar, one ETF in particular has raced ahead of the pack in searches by financial professionals in recent weeks: the Fidelity Wise Origin Bitcoin Fund (FBTC). 

Launched just last month, FBTC is Fidelity’s ETF tracking the spot price of Bitcoin.

With the price of popular cryptocurrency stabilizing, investors want to know if this ETF is right for them.

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Key Facts About FBTC

• Net assets: $2.3 billion
• 12-month trailing yield: N/A
• Inception: January 10, 2024
• Expense ratio: 0.25%
• Number of holdings: 1

Fidelity’s newest ETF tracks the spot price of Bitcoin by…holding Bitcoins.

Why did we say it like that?

Because as you’ll see later, not all Bitcoin ETFs are backed by Bitcoins. Some use derivatives or other instruments, which can have advantages and drawbacks.

Fidelity is one of the oldest and most trusted names in the fund market, with hundreds of ETFs and mutual funds that serve clients inside and outside the firm.

Competition

Since most of these ETFs are less than 60 days old, we wanted to focus on the differences to help you make the right decision.

Here’s the basics for each of the top Bitcoin ETFs from our TrackStar data:

• Bitwise Bitcoin ETF Trust (BITB): Spot price Bitcoin ETF that invests directly in Bitcoin. Offers investors the lowest long-term fee among current spot bitcoin ETFs at 0.20%, with the fee set to 0% for the first six months on the first $1 billion of assets.
• IShares Bitcoin Trust Registered (IBIT): Same as BITB, except it’s offering a 0.12% expense ratio for the first year on the first $5 billion of assets, with a typical expense ratio of 0.25%. 
• ProShares Bitcoin Strategy ETF (BITO): An older ETF investing in Bitcoin futures. This got them in early but comes with close to 1% in expenses. Plus, futures dislocate from the spot price and lose value over time (like options).
• Invesco Galaxy Bitcoin ETF (BTCO): A bit different than the first two on this list, BTCO seeks to reflect the price performance of Bitcoin by investing in Bitcoin while shorting the U.S. dollar. It’s offering a 0% expense ratio for the first six months on the first $5 billion of assets.

Obviously, we don’t have much performance data on these newer ETFs.

BITO was extremely popular along with Grayscale’s Trust for years simply because they were the only choices available.

These new ETFs add a layer of competition and liquidity. Additionally, these new funds are backed by Bitcoin, reducing tracking errors and asset erosion that is typical with ETFs using derivatives.

Ideally, these new ETFs will add liquidity to the Bitcoin market, reducing price volatility over time.

Amongst the group, iShares has the highest liquidity while Bitwise has the lowest expense ratio. However, Bitwise has less than $1 billion in assets and is the second lowest in liquidity.

Although the volumes differ between FBTC and IBIT, the total dollar value traded daily is much closer. FBTC is around $40, while IBIT is around $26, making the daily dollar volume $220 billion and $325 billion, respectively.

Our Opinion 10/10 

With the newness of these Bitcoin ETFs, we prefer ones backed by Bitcoin holdings from a trustworthy company.

Fidelity’s FBTC fits the bill, as does iShares IBIT. You can’t go wrong with either. 

Since Fidelity currently offers a 0% expense ratio, it gets the edge. But after the first six months, we expect IBIT to be the winner until the end of the year.

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