The Best Cryptocurrency ETFs To Buy/ Invest now in 2022 | What is a Cryptocurrency ETF, and How Does It Work?
An ETF that tracks cryptocurrency exchange-traded funds (ETFs) is a fund made up of cryptocurrencies. Most ETFs track an index or a group of assets, and a cryptocurrency ETF tracks one or more digital tokens. The share price of cryptocurrency ETFs fluctuates daily based on investor purchases or sales. They are traded daily, just like other stocks. The 10 best Cryptocurrency ETF for 2022 are as follows.
- ProShares Bitcoin Strategy ETF (ticker: BITO)
- Amplify Transformational Data Sharing ETF BLOK
- Siren Nasdaq NexGen Economy ETF (BLCN)
- Bitwise 10 Crypto Index Fund BITW
- Grayscale Ethereum Trust (ETHE)
- Valkyrie Bitcoin Strategy ETF (BTF)
- First Trust Indxx Innovative Transaction & Process ETF. (LEDGER)
- VanEck Bitcoin Strategy ETF (XBTF)
- Grayscale Bitcoin Trust (GBTC)
- Purpose Bitcoin ETF(BTCC)
Is there an ETF for cryptocurrency?
It’s as simple to invest in Bitcoin with cryptocurrency ETFs as it is to purchase popular stocks. The BITO fund does not allow you to buy Bitcoin. Instead, it holds various Bitcoin futures contracts. The BITO ETF manages $1.4 billion of assets and has a 0.95% annual expense ratio. It means that $95 per $10,000 invested.
What Does a Cryptocurrency Exchange Trade Fund Do?
Investors have many benefits from cryptocurrency ETFs, including significantly lower cryptocurrency ownership costs and the outsourcing of the difficult learning curve necessary to trade cryptocurrencies.
What are the two types of cryptocurrency ETFs?
The first type can be backed by physical cryptocurrency. The fund’s investment manager purchases cryptocurrencies and ownership of the coins can be represented as shares. Investors will inadvertently own cryptocurrency when they purchase shares in the ETF. Owners can thus gain exposure to cryptocurrency without taking on the risk and incurring additional expenses.
The second type tracks cryptocurrency derivatives such as futures contracts or cryptocurrency exchange-traded products (ETPs). Many ETFs proposed to the U.S. Securities and Exchange Commission (SEC) follow the prices of bitcoin futures contracts at the Chicago Mercantile Exchange.
How can you buy cryptocurrency ETFs?
The Bitcoin Strategy ETF deals in Bitcoin futures on the Chicago Mercantile Exchange is the only way to purchase cryptocurrency exchange-traded funds in America. These products are already popular in the rest of the world, and more such options are possible.
What are the Benefits of Cryptocurrency ETFs?
The cryptocurrency ETFs market is still in its infancy. They could be one of your best options to hold cryptocurrencies. These are some of the many benefits to owning shares of cryptocurrency ETFs:
However, the most significant benefit of cryptocurrency ETFs is their ability to provide exposure to crypto without additional costs. There are many extra expenses associated with the physical ownership of cryptocurrency. Custody fees are one example. An annual fee is also charged for secure digital wallets that store purchased cryptocurrency. These fees add up to a substantial yearly amount. Other hidden fees associated with cryptocurrency ownership include transaction and network charges. These expenses are outsourced to ETF providers by Cryptocurrency ETFs.
The shares in cryptocurrency ETFs give you exposure to an asset class that is rapidly rising at a fraction of the cost of purchasing crypto. In the past couple of years, the price of cryptocurrencies–especially bitcoin–has skyrocketed. These cryptocurrencies have become difficult to access for the average investor. An ETF that holds cryptocurrency is an excellent option for investors who want to invest in the asset class. Consider the following scenario: Bitcoin’s price started at $29,405.12 in 2021. It then soared to $63,569 by April before retracing its gains to $35,000.7. Shares in Canada’s Purpose Blockchain ETF (BTCC.TO) fluctuated between $10.09 and $6.44. Traders would have seen significant profits if they had made a substantial investment in the ETF.
The technical jargon of cryptocurrency has been a constant roadblock to adoption. For average investors, it isn’t easy to understand the nature and operation of cryptocurrency. Crypto-speak can be confusing for investors who don’t know much about technology. The learning curve for cryptocurrency ETF investors is outsourced to analysts.
Since their launch, cryptocurrencies have been repeatedly hacked. That raises serious questions about the security of this emerging asset class. Individual investors may not know enough about cryptocurrencies to ensure safety. An ETF that trades in cryptocurrency can outsource security functions to these ETFs.
More than 1,800 cryptocurrencies are available on trading markets. As of now, the infrastructure for buying and selling these tokens has not been developed. Some tokens may be available on some cryptocurrency exchanges while others are not. These tokens can also be expensive to purchase. The cryptocurrency ETFs allow investors to diversify their portfolios without paying for each token.
What’s the difference between Bitcoin ETF and Bitcoin?
The primary difference between the Bitcoin & a Bitcoin ETF is that the former represents shares of a pool that actively invests Bitcoin, while a Bitcoin ETF would be Bitcoin owned by the ETF.
Best Alternatives To Cryptocurrency ETFs in 2022
There are currently no cryptocurrency ETFs that trade in the U.S. other than the ProShares Bitcoin Strategy ETF. Investors can still invest their money in other ETF-like products to get crypto exposure. The Bitcoin Investment Trust (GBTC) is the closest product to a cryptocurrency-ETF product. The trust is a closed-end fund that looks like an ETF, and it owns bitcoins for investors and trades in OTC markets.
Grayscale’s Bitcoin Investment Trust, however, is not an ETF. This trust is only available to accredited investors and high-net-worth individuals (HNWIs). It is not open to the general public. GBTC requires investors to invest a minimum amount, and each purchase of shares comes with a lock-up period.
Grayscale Investment Trust is the sponsor of the fund. This fee is the same as for ETFs. The fee, which is 2% of the fund’s assets, is significantly higher than the average annual fee for ETFs. GBTC shares prices can also be volatile as the underlying security. Also, the shares trade at a substantial difference to bitcoin‘s actual expenses. During the 2017 bitcoin price rise, investors paid a premium of 100 per cent to own GBTC shares.
Other products are also available on the market that looks similar to GBTC. The Bitwise Ethereum Fund (or Bitwise Uniswap Fund) tracks the price of Ethereum (ETHUSD) and the Uniswap token. These funds share many of Grayscale’s features: They trade at a significant price difference to the token itself. They are restricted to accredited investors and require a large minimum investment amount.
Another way to invest in cryptocurrency is to invest in companies with bitcoin on their balance sheets. Many publicly traded companies are now holdings of bitcoin. For example, MicroStrategy Inc. (MSTR) owned 114 042 bitcoins at an average price of $27,713 as of November 7, 2021. The company’s share prices had risen by approximately 460% since August 2020, when it announced its purchase. However, there has been no significant change to its business prospects.
Some observers believe that this has led to speculation about the rise in the share price of Tesla Inc. (TSLA), which began buying bitcoins in 2021. Galaxy Digital Holdings Ltd. (BRPHF) and Square Inc. (S.Q.) are other publicly traded companies with bitcoin on their balances.
These companies may have bitcoin on their balances, but their main business is not bitcoin. Square provides payment services, and Tesla makes electric cars. Bitwise Investments, a publicly-traded company, closely associated with crypto industry companies, has gathered stocks from these companies in its Bitwise Crypto Industry Innovators Exchange Fund (BITQ) for those interested in a concentrated exposure. Names like Riot Blockchain Inc. (RIOT) and Coinbase are included in the fund.
Some investment firms have created funds that include shares of companies using blockchain technology or involved in it. They are betting on investor enthusiasm for the underlying technology behind most cryptocurrencies. The Siren Nasdaq NexGen Economics ETF (BLCN) and the Amplify Transformal Data Sharing ETF BLOK are two examples of such funds.
Is there an ETF for ethereum?
According to Bloomberg analysts, a futures ETF for ethereum will be accessible before a bitcoin-holding direct ETF – approval could occur in the first quarter of 2022. A bitcoin futures-based ETF approval means that a similar offering for Ether is likely.
Top 10 Cryptocurrency ETFs To Buy now in 2022 for long term
1. ProShares Bitcoin Strategy ETF (ticker: BITO)
ProShares Bitcoin Strategy ETF has been a significant game-changer for cryptocurrency investors. In October, the BITO ETF became the first cryptocurrency ETF to be allowed by the Securities and Exchange Commission to trade on a major U.S. stock exchange. U.S. regulators approved the BITO fund after a long wait. The BITO fund does not buy Bitcoin. Instead, it holds various Bitcoin futures contracts. The BITO ETF manages $1.4 billion of assets and has a 0.95% annual expense ratio. It means that $95 per $10,000 invested.
2. Amplify Transformational Data Sharing ETF BLOK
Amplify Transformational Data Sharing ETF invests in companies that have exposure to blockchain technology. Silvergate Capital Corp., Galaxy Digital Holdings Ltd. (GLXY), and Coinbase Global Inc fund is the most popular fund. The BLOK ETF offers significant diversity in the blockchain space. The total number of holdings is 45, and its top 10 holdings make up 44% of the $1.7 billion in assets. Although the BLOK fund doesn’t hold cryptocurrencies directly, it does have several holdings, including Square Inc. (S.Q.) and Galaxy Digital. The expense ratio for the fund is 0.71%.
3. Siren Nasdaq NexGen Economy ETF (BLCN)
Another ETF focused on the blockchain is the Siren Nasdaq NexGen Economy ETF. It tracks the Nasdaq Blockchain Economy Index. The BLOK ETF doesn’t invest in cryptocurrency directly, but many holdings include crypto on their balance sheets. The correlation between cryptocurrency prices and stock prices that are blockchain-focused is high. Bakkt Holdings Inc., Silvergate Capital and Overstock.com Inc. are the top BLCN holdings. The BLCN ETF is smaller than the BLOK funds at $314 million and has a 0.68% expense rate.
4. Bitwise 10 Crypto Index Fund BITW
While most crypto funds are focused on Bitcoin and other cryptocurrencies, the Bitwise 10 Crypto Index Fund gives investors exposure to 10 of the most valuable cryptocurrencies according to market capitalization. Bitwise claims it screens the fund for potential risks, weighs it according to market capitalization and rebalances it every month. Altcoins like Algorand, Uniswap and Bitcoin are also included in the fund’s holdings. The BITW fund trades in the U.S. over-the-counter and is closed-ended. It is backed by assets of $1.4 billion and has a 2.5% expense ratio.
5. Grayscale Ethereum Trust (ETHE).
Bitcoin and Ethereum are the most popular and largest cryptocurrencies. Investors who want to concentrate on Ethereum can use the Grayscale Ethereum Trust to get their fix. Grayscale is likely to transition the ETHE trust from GBTC to ETF as soon as possible and possibly list it on a major stock exchange. The ETHE trust is $14.5 billion in assets with a 2.5% expense ratio. Each ETHE share is worth 0.01 Ethereum, which is the native token of the Ethereum platform.
6. Valkyrie Bitcoin Strategy ETF (BTF).
The Valkyrie Bitcoin Strategy ETF was launched on the Nasdaq days after the BITO funds began trading on the New York Stock Exchange. BTF, like the BITO fund, does not directly invest in Bitcoin, and it holds Chicago Mercantile Exchange Bitcoin futures. Valkyrie offers trusts for popular cryptocurrencies on international exchanges and plans to add more U.S.-listed crypto ETFs over the next few months. The BTF ETF has a smaller size and is less liquid than BITO. The fund has $59.5 million and a 0.95% expense rate.
7. First Trust Indxx Innovative Transaction & Process ETF. (LEDGER).
Another popular ETF for blockchain is the First Trust Indxx Innovative Transaction & Process ETF. It has a unique selection process and weighting. The fund weighting is split halfway between companies actively working on blockchain technologies and those who use them. This unique approach allows the fund to have a different composition and balance from other cryptos ETFs. The fund, valued at $142 million, has 101 holdings. These include Nvidia Corp. and Advanced Micro Devices Inc. The LEGO fund boasts a 1.28% yield and 0.65% expense ratio.
8. VanEck Bitcoin Strategy ETF (XBTF)
VanEck’s Bitcoin Strategy ETF was approved by the SEC in October. It is now available on the CBOE Exchange. It is the third Bitcoin futures ETF available in the United States. It is expected to be adopted due to VanEck’s reputation as one the most respected investment firms in the nation. Today, XBTF was launched on the NASDAQ stock exchange. It is currently trading at $60 per share. As demand grows, it could rise in the coming weeks or months.
9. Grayscale Bitcoin Trust (GBTC)
Before the launch of the BITO ETF, the Grayscale Bitcoin Trust was one of the best Bitcoin fund options for most investors. The GBTC fund is trust instead of an ETF. Still, Grayscale is in the procedure of converting it to an ETF. Presumably, it can transition from over-the-counter trading to a listing on a prominent U.S. exchange. Unlike other Bitcoin ETFs, GBTC bears actual cryptocurrency, and each share denotes about 0.0009 Bitcoin. The GBTC trust has $41.3 billion in assets and a 2% expense ratio.
10. Purpose Bitcoin ETF(BTCC)
The U.S. has yet to approve one spot Bitcoin ETF, and however, Canada, North America’s neighbour, has approved several. With more than $1B in assets under management, the Purpose Bitcoin ETF is the most prominent spot Bitcoin ETF in the world. The price of BTCC could rise as more investors look for ETFs with direct exposure to Bitcoin. That is especially true as the United States opposes similar funds being launched.