What is a Crypto ETF?
Note: This list is arranged according to the value of assets under management (AUM) and is presented in descending order, with the largest funds at the top and the smaller ones at the bottom.
Top Crypto ETFs to Buy In 2023
The top funds to consider if you are looking for some exposure to cryptocurrencies include the following crypto ETFs: One thing of note is that all these featured ETFs are available to US-based investors and can be accessed through popular financial instrument investment platforms. Let’s consider all these funds in greater detail.
The 8 Best Crypto ETFs: Complete List
1. ProShares Bitcoin Strategy ETF (BITO)
ProShares Bitcoin Strategy is an exchange-traded fund that tracks the performance of various CME Bitcoin futures as opposed to tracking the price of Bitcoin itself. Actively managed by ProShares, the fund was the first to launch in the United States following a green light from the Securities and Exchange Commission (SEC). It was first listed on the popular NYSE Arca exchange on October 18th, 2021, and so far has more than $544 million in investments or assets under management – AUM. Following the poor performance of Bitcoin and the overall cryptocurrency market in the 12-month period ending in December 2022, BITO has largely been in a downward trend shedding about 73% of its value since inception as of January 5th, 2023. The BITO fund has an annual expense ratio of 0.95%, meaning that it will cost you about $9.50 a year for every $1,000 invested. The reason most investors have gravitated toward it is that it is relatively cost-effective compared to other, more expensive funds. Additionally, since it is listed on the popular exchange, BITO, which is easily accessible for most investors through their favorite brokerage platforms.
2. Amplify Transformational Data Sharing ETF (BLOK)
Issued by Amplify Investments, Amplify ETF is an ETF that tracks the performance of several equities worldwide that focus on blockchain technology. According to Amplify, the fund comprises 70% of companies with direct exposure to blockchain, and the remaining 30% is made up of companies with indirect exposure to the technology. Notable companies whose shares make up BLOK include Coinbase exchange (COIN), Nvidia (NVDA), IBM, MicroStrategy Incorporated, Advanced Micro Devices (AMD), Hive Blockchain (HIVE), Overstock.com, Block, Inc., Galaxy Digital Holdings, Canaan Inc., and Robinhood Markets, among several others. The fund was created on the 16th of January, 2018, making it the oldest crypto ETF on our list. Similar to the BITO fund, BLOK is also listed on the NYSE Arca exchange and currently has over $358M AUM. Its performance over the last year has been in tandem with that of the overall crypto market, losing about 61% in 2022 alone. The annual active management fee on this fund is 0.71% making it slightly lower than what it costs to invest in BITO. Besides the lower cost, BLOK also appeals to investors due to its close relation to the performance of cryptocurrencies. Companies such as MicroStrategy that actively participate in the industry see their stock price rise and fall commensurate with the volatility of Bitcoin.
3. First Trust Indxx Innovative Transaction & Process ETF (LEGR)
LEGR is a fund issued and actively managed by First Trust. Launched on the 24th day of January 2018, the fund currently has a holding of 103 stocks of companies with varying exposure to blockchain technology. First Trust describes two main categories of the companies it includes in the fund. These are:
Enablers – these are firms that are actively supporting or contributing toward the development of blockchain. Companies such as Advanced Micro Devices (AMD), Nvidia, and Microsoft (MSFT), fall into this category; Users – these are companies that take advantage of blockchain technology to improve their processes. Notable stocks in this category are PayPal (PYPL), Visa (V), MasterCard (MA), IBM, and Mercedes Benz.
Over the last three years, the fund has returned ~5%, but this is mainly due to the underperformance of the cryptocurrency industry in 2022, a year in which the fund shed about 17% of its value. As of the time of publication, LEGR has about $109M of assets under management and an annual fund management fee of 0.65%. That’s relatively cheap and attractive in the eyes of many investors. The other reason why LEGR is popular is that the fund invests in companies both in the US and globally, which gives investors decent exposure to companies they may not have been able to include in their portfolio locally. Plus, LEGR is listed on NASDAQ, making it available to trade on US-based brokerage platforms.
4. ProShares Short Bitcoin Strategy ETF (BITI)
ProShares Short Bitcoin Strategy ETF is a unique fund created by ProShares that tracks the daily price of the S&P CME Bitcoin Futures Index. However, a rise in the price of the index causes a fall in the stock price of BITI and vice versa. Hence it’s referred to as an inverse fund. ProShares launched BITI in June 2022 in the middle of a protracted bear market. As of January 5th, 2023, the fund has shed about 4% since inception but taking into account the last six months, it has gained 6%. It’s worth noting that the Bitcoin market took a tumble in late November 2022 following the collapse of major crypto exchange FTX. There are close to $100M in AUM managed by ProShares with an annual expense ratio of 0.95%, which puts it at par with ProShares’ BITO fund. The fund could appeal to you if, like some investors, you actively avoid shorting equities or assets for various reasons.
5. Siren ETF Trust Siren Nasdaq NexGen Economy ETF (BLCN)
Siren Nasdaq NexGen Economy ETF is a NASDAQ-listed ETF that seeks to track the performance of the NASDAQ Blockchain Economy Index. The index tracks the performance of companies with active involvement in the development of blockchain technology. BLCN was launched on January 17th, 2018, as a joint collaboration between Siren and Nasdaq and so far manages funds of about $84M. Its annual fund management cost is 0.68% making it among the cheapest on this list. Among the largest companies tracked through the Siren NASDAQ Blockchain Economy Index include PayPal, Alibaba (BABA), Coinbase, Baidu, Tencent, Overstock, Visa, Microsoft, Nvidia, and Robinhood Markets. In 2022, the fund lost about half of its value due to the protracted cryptocurrency bear market. But since its inception, it has just about broken even as of the time of publication. Investors in BLCN enjoy the low expense ratio and the indirect exposure to the blockchain by investing in publicly listed equities. Also, the fund is listed on NASDAQ, making it easy for speculators to invest within the US.
6. Simplify US Equity PLUS GBTC ETF (SPBC)
Simplify US Equity PLUS GBTC ETF is an actively managed investment fund listed on the NASDAQ exchange. It was launched in May 2021 by Simplify to provide investors with an avenue through which to get exposure to Bitcoin and blockchain. It does this by tracking the performance of multiple equities in addition to a 10% exposure to Bitcoin through the Grayscale Bitcoin Trust (GBTC). The latter can be rebalanced to a maximum of 15% or a low of 0% and 100% to equities. Rebalancing is based on an arbitrary methodology developed by the fund manager attracting an annual expense ratio of 0.73%. A video introduction of the SPBC ETF: Between January and December of 2022, the fund lost about 28%, and since its inception, that figure stands at 17.5% as of the time of publication. The fund is especially attractive to investors due to its closer exposure to Bitcoin through the inclusion of GBTC and an investment in an overseas subsidiary based in the Cayman Islands. There is also access to high liquidity, and any income derived from investments in the Cayman Islands entity is passed on to fund investors as income for tax purposes.
7. Global X Blockchain ETF (BKCH)
Global X Blockchain ETF is an ETF issued and actively managed by Mirae Asset Global Investments Co., Ltd tracking the performance of the Solactive Blockchain Index. By investing in it, investors get exposure to crypto through the equities listed on public exchanges that deal directly with the development of blockchain technology. According to the prospectus, the fund portfolio is made of companies grouped into five categories which are:
Digital Asset Mining firms; Blockchain & Digital Asset Transactions companies; Blockchain Applications; Blockchain & Digital Asset Hardware; Blockchain & Digital Asset Integration.
The fund uses a market-cap weighted criteria to allocate portfolio representation, and as of the time of publication, these are some of the equities included with their allocations:
Block, Inc. (21.46%); Coinbase Global, Inc. (9.45%); Riot Platforms, Inc. (9.12%); Canaan Inc. (5.33%); Galaxy Digital Holdings Ltd. (4.66%); Bakkt Holdings, Inc. Class A (4.15%).
Currently, the fund holds 24 different equities. In 2022, the fund lost about 85% of its net asset value (NAV), making it one of the worst-performing ETFs of the year. Still, the BKCH fund remains attractive to investors due to its low expense ratio of 0.50%, high growth potential, and the need for portfolio diversification. As of publication time, the BKCH maintainer holds around $40.5 million in the fund.
8. Bitwise Crypto Industry Innovators ETF (BITQ)
Bitwise Crypto Industry Innovators ETF is a passively-managed crypto ETF issued by Exchange Traded Concepts, LLC, and managed by SEI Investments Global Funds Services since May 2021. It tracks the performance of Bitwise Index Services’ Crypto Innovators 30 Index. Although, it currently only has a holding of about 27 equities comprising firms engaged in the development and usage of blockchain technology. Fund holdings are divided into two tiers, with the first one comprised of stocks considered to be ‘Crypto Innovators’ and the second, those that are considered large-cap equities with significant investments in the crypto space. In this latter tier, the companies need to have at least one of their business models dependent on the blockchain. The first tier has been allocated about 20 spots with allocation market-cap weighted while the rest take up the remaining slots in equal measure. Allocation is rebalanced quarterly with advice from an index selection committee. Main equity allocations in the fund include Galaxy Digital, MicroStrategy, Coinbase, Riot Platforms, Canaan Mining, Hive Blockchain, and Bakkt, among others. In 2022, similar to most other crypto ETFs, BITQ underperformed, losing about 81% but has so far, in 2023, gained about 7% in the first week. BITQ is listed on the NYSE Arca exchange with an expense ratio of 0.85% and with about $36.2 million of AUM. Investors looking to diversify their portfolio and get some exposure to Bitcoin will find BITQ attractive due to its relatively low fees, and high liquidity with the potential for explosive growth.
Why Invest in Crypto ETFs Instead of Cryptocurrencies
There could be several reasons why an investor may opt to invest in a crypto ETF as opposed to buying Bitcoin or altcoins directly. These include:
Professionalism – EFTs are highly regulated financial instruments giving investors the peace of mind they may need to invest in crypto as opposed to engaging in DIY (do it yourself) methods used when directly investing in digital assets; Lack of technical know-how – creating and managing private keys is not everyone’s cup of tea and therefore investing in an ETF becomes one of the few options in which to get the crypto exposure with which they are more comfortable; Convenience – ETFs are exchange-traded assets, and those listed above are available for trading in the US on most of the popular brokerage platforms, which make it easy to invest in for those investors who are already trading on these platforms; Reduced volatility – crypto assets exhibit high volatility tendencies that can be avoided by buying in companies directly invested in the space. This method does not completely eliminate the market gyrations, but it does smooth out the equity curve, making it easy for most investors to make their market decisions.
Final thoughts
For any investor looking to diversify their portfolio with cryptocurrency or blockchain stocks, going the crypto ETF route is a good option. Not only are they highly regulated and offered by professional firms, but they also offer convenience and an easy way to get started with crypto. The eight crypto ETFs featured in this list represent a wide variety of options, from crypto futures to blockchain stocks and indices. They are, by no means, the only available funds to invest in if you are looking to add crypto to your current portfolio, but they are some of the best to consider due to their high liquidity and ease of access. Whichever crypto ETF you choose to go with, always remember to do your own thorough research to ensure that they fit into your investment criteria and goals. Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
