An ETF, short for exchange-traded fund, is a pool of investment securities that represent a certain commodity, sector, or even asset. They are very similar to mutual funds, but the only difference is that ETFs can be either purchased or sold through a brokerage company.
But how are ETFs different from other investment assets? And which are the best crypto ETFs that you can invest in? Let’s find out the answers to all these questions in this blog.
Blockchain ETF portfolios only contain the stocks of regulated companies, which include numerous sizable blue-chip technology companies that have adopted or are in the process of adopting blockchain technology. Compared to Bitcoin ETFs or cryptocurrency ETFs, which are more tightly focused on following the price of particular cryptocurrencies, they generally invest in a larger range of assets.
As mentioned earlier, ETFs can be of various types:
1. Index ETFs
2. Foreign market ETFs
3. Commodity ETFs
4. Sector or industry ETFs, and so on.
But these ETFs invest in thousands of businesses. They fall under the following general categories:
- Bitcoin-owning firms such as Tesla and MicroStrategy
- Blockchain-based tech companies such as Advanced Micro Devices, VMware, and Galaxy Digital Holdings
- Financial services companies such as BNP Paribas, HSBC, and NVIDIA Corp
- Crypto miners such as Marathon Digital and cryptocurrency exchanges such as Coinbase
But now the real question is: why should you invest in ETFs and how is it different from investing in cryptocurrencies and stocks?
Investing in the Best Crypto ETF
Cryptocurrencies have made big headlines recently for their massive profits and terrible losses. But blockchain, which enabled the cryptocurrency system, received far less attention than cryptocurrencies.
So, while smaller, more specialized businesses have made blockchain and cryptocurrencies the center of their operations, larger, more established public organizations have dabbled in the field. In either event, there hasn’t yet been a “killer app” that solidifies blockchain’s position as a cornerstone of the commercial and technological future.
This implies it’s exceedingly risky to invest in the stocks of just one or a few blockchain- or cryptocurrency-focused businesses. As a result, picking a diverse blockchain ETF is a less dangerous method to gain exposure to the sector. In simpler words, this is similar to the concept of how investing in stocks is a more risky investment alternative than investing in mutual funds.
So, now the next question is which is the best crypto ETF to consider?
Best Crypto ETF of 2023
- Siren Nasdaq NexGen Economy ETF (BLCN)
- Bitwise Crypto Industry Innovators ETF (BITQ)
- Amplify Transformational Data Sharing ETF (BLOK)
- Global X Blockchain ETF (BKCH)
- First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT)
- Fidelity Crypto Industry and Digital Payments ETF (FDIG)
- VanEck Bitcoin Strategy ETF (XBTF)
- Valkyrie Bitcoin Strategy ETF (BTF)
- Simplify Bitcoin Strategy PLUS Income ETF (MAXI)
- AdvisorShares Managed Bitcoin Strategy ETF (CRYP)
Let us take a look at each of these best crypto ETFs.
1. Siren Nasdaq NexGen Economy ETF (BLCN)
Launched in January 2018, The Siren Nasdaq NexGen Economy ETF is another fund that specializes in businesses that are involved in the development and application of blockchain technology.
BLCN provides a diverse portfolio of companies with 63 equities, and none of its top 10 holdings represents more than 4% of its net assets.
1. Expense ratio: 0.68%
2. Assets under management: $104 million
3. Three-Month Average Daily Volume: 34,386
4. Inception Date: 2018-01-16
2. Bitwise Crypto Industry Innovators ETF (BITQ)
Launched in the second quarter of 2021, Bitwise Crypto Industry Innovators ETF consists of 30 stocks. These stocks focus on early adopters of cryptocurrencies and innovators, and either has 75% of their net holdings in Bitcoin or another crypto asset, or at least 75% of their revenue comes from cryptocurrencies.
1. Expense ratio: 0.85%
2. Assets Under Management: $106 million
3. Three-Month Average Daily Volume: 118,239
4. Inception Date: 2021-04-27
3. Amplify Transformational Data Sharing ETF (BLOK)
The actively managed Amplify Transformational Data Sharing ETF invests in a variety of value and growth stocks with varying market capitalizations, employing a blended strategy.
BLOK invests a minimum of 80% of its net assets in stocks of businesses involved in the creation and application of blockchain technologies, including MicroStrategy Inc., Silvergate Capital Corp. (SI), and Overstock.com.
1. Expense ratio: 0.71%
2. Assets under management: $662.1 million
3. Three-Month Average Daily Volume: 306,053
4. Inception Date: 2018-01-16
4. Global X Blockchain ETF (BKCH)
A passively managed fund called the Global X Blockchain ETF (BKCH) states that blockchain technology can be used for much more than simply cryptocurrency. It makes the appropriate investments in 25 technology and Bitcoin mining companies that profit from the uptake of blockchain technology.
It is one of the best crypto ETFs as this consists of businesses creating novel blockchain solutions, cryptocurrency exchanges (such as Coinbase Global Inc.), and mining firms (such as Marathon Digital).
1. Expense ratio: 0.50%
2. Assets under management: $64 million
3. Three-Month Average Daily Volume: 179,196
4. Inception Date: 2021-07-12
5. First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT)
In our list of the best crypto ETF, the fifth top crypto ETF is the First Trust SkyBridge Crypto Industry and Digital Economy ETF. CRPT presently owns 30 equities, with the top ten holdings accounting for the majority of its assets.
Even though the fund consists of 103 stocks, financials account for little more than 37% of the portfolio, trailed by IT and consumer discretionary companies.
1. Expense ratio: 0.85%
2. Assets under management: $22 million
3. Three-Month Average Daily Volume: 48,678
4. Inception Date: 2021-09-20
6. Fidelity Crypto Industry and Digital Payments ETF (FDIG)
The success of international blockchain, cryptocurrency, and digital payment enterprises is tracked by this FDIG. FDIG presently owns 35 equities, with 33% of them in the sector of financial services and 63% in the tech sector. As a result, FDIG’s mission skews slightly in favor of the crypto business.
1. Expense ratio: 0.39%
2. Assets under management: $18 million
3. Three-Month Average Daily Volume: 48,678
4. Inception Date: 2022-04-19
7. VanEck Bitcoin Strategy ETF (XBTF
The VanEck Bitcoin Strategy ETF (XBTF) is the most popular Bitcoin pure-play ETF, with about $35 million in assets under management and a 0.65% expense ratio. The fund doesn’t invest in Bitcoin or other digital assets directly but offers indirect exposure by investing in cash-settled Bitcoin futures contracts traded on the CME.
8. Valkyrie Bitcoin Strategy ETF (BTF)
The Valkyrie Bitcoin Strategy ETF (BTF) is the second most popular crypto ETF with $26 million in assets under management and a 0.95% expense ratio. The fund managers invest indirectly in front-month bitcoin futures contracts through a wholly-owned Cayman Islands subsidiary to get around fund concentration limits.
9. Simplify Bitcoin Strategy PLUS Income ETF (MAXI)
The Simplify Bitcoin Strategy PLUS Income ETF (MAXI) provides long exposure to bitcoin futures while generating income through an active option overlay strategy. Since it’s still new, the amount of income remains to be determined, but the fund has already drawn in more than $23 million in assets despite its high 0.97% expense ratio.
10. AdvisorShares Managed Bitcoin Strategy ETF (CRYP)
The AdvisorShares Managed Bitcoin Strategy ETF (CRYP) is a fund-of-funds that invests in other ETFs targeting bitcoin futures. With about $230,000 in assets and a 1.59% expense ratio, the fund managers aim to use a systemic risk-managed approach to offer better risk-adjusted returns than competing pure-play funds.
Alternative Stocks & ETFs to Consider
The most popular publicly-traded bitcoin investment isn’t an ETF (yet) – it’s the Grayscale.
Bitcoin Trust (OTC: GBTC). The ~$11 billion trust owns approximately $17.5 billion in bitcoin assets with a 2% annual fee. Unlike the ETFs above, these are actual bitcoins and not futures contracts, providing extra security for some HODLRs.
There are also a handful of other ETFs offering exposure to crypto-adjacent opportunities, such as mining or blockchain tech:
Summary: 10 Best Crypto ETFs to Invest in 2023
|Top Crypto ETF||Expense Ratio||AUM||Three-Month Average Daily Volume||Inception Date|
|Siren Nasdaq NexGen Economy ETF (BLCN)||0.68%||$104 million||34,386||2018-01-16|
|Bitwise Crypto Industry Innovators ETF (BITQ)||0.85%||$106 million||118,239||2021-04-27|
|Amplify Transformational Data Sharing ETF (BLOK)||0.71%||$662.1 million||306,053||2018-01-16|
|Global X Blockchain ETF (BKCH)||0.50%||$64 million||179,196||2021-07-12|
|First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT)||0.85%||$22 million||48,678||2021-09-20|
|Fidelity Crypto Industry and Digital Payments ETF (FDIG)||0.39%||$18 million||48,678||2022-04-19|
Blockchain technology is still in its infancy. But considering how quickly the technology is developing, adding a blockchain ETF to your portfolio may be the best course of action for investing in it. However, there are a few things that you must keep in mind.
If you choose to invest, keep your stakes low. Focus on the long-term prospects of cryptocurrencies and blockchain technology as a whole. And lastly, you must be aware of the tax consequences of ETFs.
Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, tax, legal or financial advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.