Looking to Invest in Bitcoin? Try These 5 ETFs

Bitcoin has defied naysayers, managing to hold price near all-time highs.

Yet, the average investor is still skittish on cryptocurrency.

Many simply don’t want or care to learn how to own Bitcoins directly.

However, few have explored the ETF world.

Our TrackStar data noted an increase search volume for Bitcoin ETFs. And amongst retail investors, Proshares Bitcoin Strategy ETF BITO came out on top.

While this may be the most popular out there, it’s not necessarily the cheapest.

If you’re interested in investing in Bitcoin ETFs, here’s what you ended to know.

Key Facts About BITO

• Net assets: $2.1 billion
• 12-month trailing yield: 27.5%
• Inception: October 19, 2021
• Expense ratio: 0.35%
• Number of holdings: N/A

Proshares Bitcoin ETF is one of the oldest Bitcoin-related ETFs at almost three years old.

Until recently, Bitcoin ETFs could only own futures, not the actual Bitcoins themselves.

That’s why you see 96.5% of BITO’s holdings in Bitcoin futures.

Source: ProShares

This structure creates some unique attributes such as a hefty dividend payment.

No joke, the 12-month trailing yield is 27.5%.

Source: ProShares

How does this happen?

Without getting into the nitty gritty, it’s a function of how ETFs and futures contracts work. You can get a full explanation here.

Essentially, when Bitcoin prices are rising, you’re likely to get a dividend. They won’t be there when the price of Bitcoin drops.

Performance

Futures-based ETFs often lag the performance of the underlying asset.

Because of this, BITO’s YTD performance is about half that of Bitcoin.

Source: ProShares

Keep in mind the numbers above include dividend payments.

Competition

So, are the new wave of Bitcoin ETFs more investor friendly?

Yes, and here’s a few of them.

• IShares Bitcoin Trust (IBIT): From the popular iShares, IBIT tracks the spot price of Bitcoin.
• Fidelity Wise Origin Bitcoin Fund (FBTC): With the largest amount of asserts under management, FBTC is like IBIT and BITB, tracking the spot price of Bitcoin by holding Bitcoins.
• Bitwise Bitcoin ETF Trust (BITB): The cheapest ETF of the group at 0.20% expense ratio, BITB is like IBIT, tracking the spot price of Bitcoin.
• ARK 21Shares Bitcoin ETF (ARKB): Last up is ARKB, which like the others, tracks the price of Bitcoin by holding Bitcoin in cold storage.

All of these newer ETFs opened in January of 2024. So, their track record isn’t long.

However, their performance is far closer to that of Bitcoin prices than BITO’s.

Our Opinion 0/10 

BITO was a great option when there weren’t options.

Now, you can choose from multiple ETFs with cheaper expense rates and more direct exposure.

We’d prefer any of the other four options to BITO.

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