7 Cryptocurrency ETFs to Consider in 2024 The Motley Fool

Crypto ETFs allow you to gain exposure to these currencies through your regular brokerage account, eliminating the need to directly purchase and store the tokens yourself. These funds typically track the performance of one or more cryptocurrencies, providing investors with a convenient way to diversify their portfolios https://www.xcritical.com/ and benefit from the potential growth of this market. The first crypto futures funds launched in 2021; spot bitcoin ETFs joined them in early 2024 and spot ether (ETH) ETFs were effectively approved in May of the same year. For the investor, trading a bitcoin ETF may be more efficient than buying bitcoin directly.

ProShares Bitcoin Strategy ETF (BITU)

The extent to which companies held by the Fund utilize blockchain technology may vary. what is an etf crypto Please note that the availability of the products and services on the Crypto.com App is subject to jurisdictional limitations. Crypto.com may not offer certain products, features and/or services on the Crypto.com App in certain jurisdictions due to potential or actual regulatory restrictions.

Digital asset ETPs: Easier access to blockchain and crypto

The SEC approved the first bitcoin spot ETFs for retail markets in January 2024. On their first day of trading, these 11 funds had a combined $4.6 billion of trading volume. Investing in companies that hold cryptocurrencies on their balance sheet is another way to invest in crypto without owning the digital tokens. For example, MicroStrategy (MSTR) owned about 214,000 bitcoins as of May 2024. Galaxy Digital Holdings (BRPHF) and Tesla (TSLA) are other publicly listed companies with bitcoins on their balance sheets.

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The purpose of this website is solely to display information regarding the products and services available on the Crypto.com App. It is not intended to offer access to any of such products and services. You may obtain access to such products and services on the Crypto.com App. Notably, investors’ stake in the ETF fluctuates according to the price of the top cryptocurrency. Therefore, when the BTC’s value rises, the ETF’s value also increases and vice versa.

Global X Blockchain & Bitcoin Strategy ETF

Digital assets, such as blockchain and cryptocurrency, are becoming a major industry. Bitcoin can be traded for other cryptocurrencies, like Ethereum, Litecoin, XRP, and more. A Bitcoin ETF would not be eligible to trade for other cryptos, as it is not a cryptocurrency but simply an investment fund that tracks the price of Bitcoin.

Why do people add digital assets to their portfolios?

The only exceptions are the Fidelity Wise Origin Bitcoin Fund (FBTC), which uses Fidelity itself as a custodian, and the VanEck Bitcoin Trust (HODL), which uses Gemini. “We thought that maybe Bitcoin was a competitor to gold, but it has actually run up the leaderboard, and now it’s starting to nip at the heels of the S&P 500 Index ETFs,” MicroStrategy CEO Michael Saylor said at the time. Almost 4% of the entire supply of Bitcoin was held by Bitcoin ETFs by early March, with spot Bitcoin ETFs hitting $50 billion in AUM—more than half the value of AUM held by gold-backed ETFs. In January 2024, the SEC finally approved multiple spot Bitcoin ETFs, with SEC chair Gary Gensler conceding that “circumstances, however, have changed” following the court’s decision. Bitcoin ETFs track the current price of Bitcoin, and should act in lockstep with Bitcoin’s price swings. The coming months will tell whether the SEC has shifted its stance, especially in light of a recent court loss against crypto firm Grayscale.

Understanding equity classification schemes can help investors

They also eliminate the need to learn the technology behind blockchain-based assets. Generally, a crypto ETF simplifies investors’ indirect entry into the crypto ecosystem. Regulatory oversight ensures investor protection, market stability, and legal compliance, making spot Bitcoin ETFs appealing to a broader range of investors. However, stringent regulations and potential policy changes could pose challenges, limiting the growth and flexibility of these ETFs.

Fidelity Wise Origin Bitcoin Trust

An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Futures contracts are standardized, time-limited contracts that convey the right to buy or sell the underlying asset at some point in the future. As contracts approach expiration, they must be settled or traded for new contracts. Many times, the selling prices of expiring contracts are below the purchase prices of contracts expiring further in the future.

Competition from central bank digital currencies (“CDBCs”) and other digital assets could adversely affect the value of ether and other digital assets. Ownership of bitcoin is pseudonymous, and the supply of accessible bitcoin is unknown. Entities with substantial holdings in bitcoin may engage in large-scale sales or distributions, either on nonmarket terms or in the ordinary course, which could result in a reduction in in the price of bitcoin.

Investors should assess their risk appetite and conduct due diligence before investing. The Global X 21Shares Bitcoin ETF aims to offer investors returns that track the price of Bitcoin in Australian dollars. By holding shares in EBTC, investors gain an interest in Bitcoin stored in cold storage by Coinbase, the world’s largest custodian of cryptocurrencies. This storage method, away from internet access, adds an additional layer of security to the digital assets.

• Europe’s first exchange-traded fund for spot bitcoin launched this past August.
• The First Trust Indxx Innovative Transaction & Process ETF is another broad bet on crypto.
• In a spot crypto ETF, the fund can issue and redeem shares, offering retail and other investors a stake in the crypto market.
• This strategy, especially in the volatile world of cryptocurrencies, involves elevated risks and potentially unlimited losses, so it’s crucial to understand the dangers before going ahead.
• However, like all innovations, a Bitcoin ETF raises challenges and concerns, such as regulatory hurdles and market risks, which must be addressed for its successful implementation and acceptance.

This process is straightforward and familiar to those accustomed to traditional investments. In both retail and institutional use cases, investors benefit from the liquidity and transparency of ETFs, along with the reduced complexity and enhanced security of regulated financial products. There are also crypto ETFs that get you exposure to multiple cryptocurrencies, the underlying blockchain technology they’re built on, or companies with ties to the crypto space. Although this is a volatile market, investing in crypto ETFs can help you build a diverse portfolio of digital assets.

Smart contracts can be used for decentralized futures trading, whereby you can commit to buy or sell an asset at a predetermined price at a specific time via the blockchain. These contracts vary in value due to speculation on the underlying asset’s value, allowing the ETF to track the price of the asset without holding it. Institutions that invest in spot Bitcoin ETFs typically use brokerage accounts to purchase ETF shares, incorporating these into their diversified portfolios. The ETFs provide institutions with a liquid, tradable asset that aligns with their investment strategies and regulatory compliance requirements. Additionally, institutions may benefit from the oversight and security measures provided by custodians managing the ETFs’ underlying Bitcoin holdings. ETFs are a retail investor-friendly way to gain exposure to assets that might otherwise be too costly.

The fund is actively managed, so it has a hefty expense ratio of 2.5%, or $25 in annualized fees deducted from fund performance per $1,000 invested. Bitcoin futures mimic the daily moves in the value of an asset, in this case, Bitcoin. However, because the futures contracts need to be rolled over monthly, they will likely underperform Bitcoin’s price moves over the long term.

If you don’t want to actively manage your crypto investment, but you want a way to diversify your portfolio with a high-risk, high-reward asset, a Bitcoin ETF is a better option than directly buying Bitcoin. ETFs that are focused on cryptocurrencies, which are still relatively new asset classes, are even younger. Expect volatility in cryptos as well as companies that are developing them. With CAPEX, you can trade and invest in +50 crypto ETFs, including the hot new Bitcoin ETF and the recently approved 11 spot Bitcoin ETFs.

Prior to this approval, the SEC expressed concerns about Ethereum’s staking feature and its previous worries with bitcoin for fraud, volatility, and low investor protections in crypto markets. While U.S. regulators refused to approve crypto ETFs for several years—the SEC turned away some 20 proposals in spot ETFs from 2018 to 2023 alone—they were readily available to investors in Europe and Canada. The SEC approved the first crypto futures ETFs for the U.S. market in October 2021 and the first spot crypto ETFs in January 2024.

They function similarly to traditional ETFs but focus specifically on BTC as the underlying asset. There are eleven spot Bitcoin ETFs available today in the United States. Spot bitcoin ETFs hold actual bitcoin, while bitcoin futures ETFs do not. Spot ETFs are designed to hold an equivalent amount of the underlying asset that is represented by the ETF. This gives investors direct exposure to the spot price of bitcoin without having to purchase or store it themselves. However, these ETFs do not allow you to take custody of the bitcoin represented by your ETF shares.