The most optimal Bitcoin exchange-traded funds provide a pricing exposure to the original cryptocurrency that closely mirrors the actual asset, eliminating the need for direct purchase. This can be particularly advantageous for various reasons, many of which are related to regulatory considerations. This article is all about the top 5 Bitcoin ETFs.
These funds serve to address this need, extending the advantage to investors by sparing them from the requirement to secure their own Bitcoin holdings. This is especially beneficial for newcomers, as owning and managing Bitcoin holdings can be daunting and could amplify risks based on one’s approach.
It’s also worth highlighting that the U.S. Securities and Exchange Commission has declined to approve conventional spot Bitcoin ETFs. As a result, investing in futures contracts might present itself as the most viable alternative. This divergence could potentially widen the difference in returns between ETFs and actual Bitcoin, thereby warranting a more in-depth assessment of each fund.
What is Bitcoin ETF?
A Bitcoin ETF represents an exchange-traded fund designed to mirror the value of Bitcoin or assets linked to its price movement. Essentially, it’s a publicly traded investment tool enabling investors to access Bitcoin’s potential without direct ownership. These ETFs consist of shares that can be traded on traditional stock exchanges. Within the structure of Bitcoin ETFs, there’s an inclusion of futures contracts, which are agreements tied to purchasing or selling Bitcoin at a later date, or assets associated with Bitcoin’s value.
To illustrate, imagine you’re interested in investing in Bitcoin, but you’re hesitant about managing the cryptocurrency itself. Instead of purchasing Bitcoin directly, you invest in a Bitcoin ETF. This ETF mirrors Bitcoin’s price movements, so if Bitcoin’s value increases, the ETF’s value tends to rise as well. Since the ETF is traded on a stock exchange, you can easily buy or sell shares, just like you would with traditional stocks.
Regulation of Bitcoin ETFs falls under the oversight of the U.S. Securities and Exchange Commission (SEC), as they are categorized as investment companies. Historically, the SEC has turned down proposals for Bitcoin ETFs in the United States. However, there’s renewed optimism in 2023 that such ETFs might finally receive approval.
Top 5 Bitcoin ETFs
The shares within a Bitcoin ETF would be available for trading on a conventional stock exchange. A Bitcoin ETF is overseen by a company that purchases and retains the physical Bitcoin; the ETF’s valuation is tied to the quantity of Bitcoin held in the fund. This company then lists the ETF on a typical stock exchange, enabling investors to trade the ETF like regular stocks.
Bitcoin ETFs can include futures contracts, which are agreements connected to buying or selling Bitcoin at a later date, or assets linked to Bitcoin’s price fluctuations. Under the oversight of the U.S. Securities and Exchange Commission (SEC), Bitcoin ETFs are classified as investment companies and are subject to regulatory guidelines. Let’s take a look at the top 5 Bitcoin ETFs.
1. ProShares Bitcoin Strategy ETF (BITO)
The ProShares Bitcoin Strategy ETF, known as BITO, was the first Bitcoin ETF allowed to be traded in the United States. When it started in October 2021, many people traded it a lot, and it quickly gathered about $1 billion in value in just a few days.
BITO is like a managed fund that tries to make its value grow. It does this by dealing with special agreements related to the future price of Bitcoin. It might also keep some safe investments like Treasury securities and cash.
With BITO, people can easily invest in Bitcoin’s potential to make money. You can buy and sell BITO just like you do with regular stocks, so you don’t need to use a complicated cryptocurrency website or digital wallet.
BITO is the biggest and most traded ETF that’s connected to digital money.
It tries to make its value grow by using special agreements tied to the future price of bitcoin. BITO is a way for people to get into the world of bitcoin investments, but familiarly and easily like they do with regular stocks.
It can be a different kind of investment, a choice instead of regular money investments, and a way to try to make your money grow. As of August 30, 2023, the most important things BITO owns are United States Treasury Bills, Ps Cayman Bitcoin Strategy Port Etf Usd, and Cte – Proshares Trust M12. For this year, the amount of money BITO has made is 61.56%.
- Expense Ratio: 0.95%
- Assets Under Management: $1.1 billion
- Investing Strategy: Bitcoin Futures
2. ARK Next Generation Internet ETF (ARKW)
The ARK Next Generation Internet ETF, known as ARKW, is a special kind of investment fund that’s actively managed. It tries to make the most of the opportunities for growth from companies that are important for the future of the internet.
ARKW aims to help your money grow over a long time. It does this by investing in companies from the U.S. and other countries. These companies are related to the theme of the future internet, like new and advanced technologies on the internet. The fund puts money into companies that work on things like products and services on the internet, cloud computing, smart computer stuff, online shopping, and new ways of media.
- Expense Ratio: The expense ratio of ARKW is 0.88%
- Assets Under Management: As of August 2023, the assets under management of ARKW are $1.34 billion.
- Investing Strategy: Focusing on the “future internet” means businesses that will get better when new things are made for the internet or when technology improves.
3. ProShares Short Bitcoin ETF (BITI)
The ProShares Short Bitcoin ETF started in June 2022. It’s a special kind of investment allowed by the SEC that tries to do the opposite of what Bitcoin does each day.
The ETF does this by trying to give the opposite of what the S&P CME Bitcoin Futures Index does for just one day at a time. It manages this by dealing in a special market where people agree to pay each other based on whether the price of a futures contract goes up or down.
- Expense Ratio: 0.95%
- Assets Under Management: $80 million
- Investing Strategy: Focusing on the Decline in Bitcoin Futures
4. Simplify Bitcoin Strategy PLUS Inc ETF (MAXI)
The Bitcoin Strategy PLUS Inc ETF, known as MAXI, is a special fund that started in September 2022. It’s one of the newest funds on this list.
MAXI is a bit like other Bitcoin funds. It can’t buy actual BTC directly.
Instead, it tries to make its value grow by investing in special agreements tied to the future price of BTC. But it also does something extra: it uses short-term agreements on stock market measures to make money for its investors.
The goal of the fund is to help investors make more money and earn income. The MAXI ETF lets investors be a part of Bitcoin’s potential growth. It gets money by making special agreements connected to the future value of Bitcoin. The MAXI ETF is made to be a smart way to invest in Bitcoin and also get some extra money. The extra money can help if Bitcoin’s value goes down. The MAXI ETF is a special type of investment that can be bought and sold on stock markets, just like regular stocks.
- Expense Ratio: 0.97%
- Total Assets Managed: $25 million
- Investment Approach: Focused on Bitcoin Futures
5. Global X Blockchain & Bitcoin Strategy ETF (BITS)
The Global X Blockchain & Bitcoin Strategy ETF (BITS) is a special fund that started in November 2021. BITS is managed by people who make choices about where to put the money. BITS divides its investments between agreements tied to the future price of Bitcoin and owning some parts of companies related to blockchain technology.
This special type of ownership means BITS owns parts of another fund called Global X Blockchain ETF (BKCH), which has a bunch of stocks from companies linked to the blockchain. These companies could be doing things like digital money mining, running websites for cryptocurrencies, or creating new ways to use blockchain. As of April 2023, BITS had about half of its money in Bitcoin future agreements and the other half in BKCH.
BITS wants to make money grow over a long time. It does this by buying agreements for future Bitcoin prices and by investing in companies connected to blockchain technology, which is like the special technology behind digital money.
BITS doesn’t buy Bitcoin itself, but it invests in other funds that own parts of companies linked to blockchain. BITS is actively managed, which means people decide where to put the money. It takes the agreements for future Bitcoin prices and puts money into companies connected to blockchain technology to try to make more money.
- Expense Ratio: 0.65%
- Total Managed Assets: $13 million
- Investment Approach: Balancing Bitcoin Futures and Blockchain Stocks
Bitcoin ETFs are like special ways to invest in Bitcoin without actually having it. These funds let you experience how the price of Bitcoin goes up and down by using different methods, like agreements for future prices or investing in related things. They are made to feel familiar and safe, like regular investments, while still being about cryptocurrencies. But before investing, it’s really important to know all the details about each Bitcoin ETF, like how much they cost, how they work, and what rules they follow. As digital money keeps changing, Bitcoin ETFs are a big step in making it easier for more people to invest in cryptocurrencies.