7 Best Cryptocurrency ETFs to Buy in 2024

Cryptonews John Brightwater September 20, 2024

7 Best Cryptocurrency ETFs to Buy in 2024

Summary
The cryptocurrency ETF landscape underwent significant changes in 2024, notably with the launch of the first spot Bitcoin and Ether ETFs. These products provide direct exposure to cryptocurrencies through open-ended structures, enabling investors to trade them like stocks on traditional platforms. Notable options include the iShares Bitcoin Trust and Grayscale Ethereum Trust, reflecting substantial growth and investment opportunities. Challenges persist, such as limited trading hours and withdrawal processes; however, the overall development supports a growing market for cryptocurrency investments.

The cryptocurrency ETF landscape experienced transformative developments in 2024 with the introduction of the first spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds on January 11 and July 23, respectively. Chris Kline, Chief Operating Officer and Co-Founder of Bitcoin IRA, reflects on the evolution of this space, noting that in 2016 there was only one option to hold Bitcoin in retirement accounts. Today, the options available to investors for direct holdings in various financial accounts are extensive, marking a significant improvement in the market. These new ETFs provide investors with direct access to the underlying cryptocurrencies, securely custodied, setting them apart from earlier investment products like closed-end funds (CEFs) and trusts. Unlike CEFs, these newly emerged spot ETFs possess an open-ended structure enabling share creation and redemption that helps maintain a close alignment between market price and net asset value (NAV) without the premium or discount variations common in CEFs. Investors benefit from actual exposure to spot Bitcoin and Ether, rather than synthetic exposure derived from futures prices, resulting in a more accurate representation of live market prices during trading hours. Additionally, the simplicity of investing in these ETFs is noteworthy; they can be traded like stocks on regular brokerage platforms, integrating seamlessly into diversified portfolios and tax-advantaged accounts, including Roth IRAs. This convenience also mitigates potential security and custodial risks that investors faced during the turbulent “crypto winter” of 2022, when many cryptocurrency exchanges encountered bankruptcy. Nevertheless, it is important to acknowledge the limitations of these cryptocurrency ETFs, as Kline notes, “ETFs are limited to traditional trading hours, while direct-access platforms allow unrestricted trading.” Furthermore, upon retirement, the procedure for withdrawing these assets necessitates selling ETFs for cash, whereas direct-access platforms afford greater flexibility. The following are seven of the best cryptocurrency ETFs to consider for investment: 1. iShares Bitcoin Trust (IBIT) – Expense Ratio: 0.12% This ETF, benefiting from iShares brand recognition, currently surpasses $21.3 billion in assets under management (AUM) and tracks the CME CF Bitcoin Reference Rate, with minimal pricing discrepancies. 2. Grayscale Ethereum Trust (ETHE) – Expense Ratio: 2.5% Converted to an ETF in July 2024, ETHE has a substantial AUM of $4.2 billion, but its higher expense ratio may deter some investors. 3. Cyber Hornet S&P 500 and Bitcoin 75/25 Strategy ETF (ZZZ) – Expense Ratio: 1.01% This ETF balances 75% in S&P 500 equities and 25% in Bitcoin futures, demonstrating a 20.6% return since inception. 4. ProShares Bitcoin Strategy ETF (BITO) – Expense Ratio: 0.95% BITO combines Bitcoin futures and index-linked swaps and provides dividends to investors, although they are variable and not guaranteed. 5. Roundhill Bitcoin Covered Call Strategy ETF (YBTC) – Income Potential with Covered Call Strategy As noted by Dave Mazza, CEO of Roundhill Investments, YBTC aims to generate monthly income while providing Bitcoin exposure without the need for direct investment complexities. 6. Global X Blockchain ETF (BKCH) – Expense Ratio: 0.5% This ETF focuses on equities of blockchain technology companies rather than holding cryptocurrency directly, providing a different investment angle. 7. Global X Bitcoin Trend Strategy ETF (BTRN) – Expense Ratio: 0.95% This ETF employs a trend-following model to tactically adjust exposure between Bitcoin futures and T-bills based on market conditions. In summary, the emergence of cryptocurrency ETFs has enriched the investment landscape, facilitating access and simplifying involvement in the cryptocurrency market. IBIT and ETHE exemplify how these newer funds perform compared to their predecessors, while others like ZZZ and BITO present unique investment strategies that appeal to various investor needs. As Kline aptly states, “More options are good for investors, and the spot Bitcoin ETFs are a welcome addition to the market.” Overall, these developments contribute to the growing adoption of cryptocurrency investments across diverse financial portfolios, enhancing opportunities for both seasoned and novice investors.

The rise of cryptocurrency exchange-traded funds (ETFs) represents a remarkable evolution in how investors can access digital assets. Historically, the direct inclusion of assets like Bitcoin in retirement accounts was limited, with few options available. However, recent years have seen the introduction of spot ETFs, which allow for more straightforward exposure to Bitcoin and Ethereum, as well as a range of strategies integrating these assets into diversified portfolios. The development of spot ETFs addresses prior complexities associated with investing in cryptocurrencies and positions them for broader adoption among both retail and institutional investors. As these products continue to mature, their performance, management fees, and investment strategies are critical considerations for prospective investors.

In conclusion, the advent of cryptocurrency ETFs marks a pivotal moment in the investment landscape, providing more accessible, secure, and efficient options for investors seeking exposure to digital currency assets. The diverse range of available ETFs caters to various investment strategies and risk appetites, allowing investors to seamlessly integrate cryptocurrencies into their financial portfolios. While these ETFs simplify the investment process, it is essential to remain cognizant of their limitations, such as trading hour restrictions and unique fee structures. As the crypto market evolves, the increasing acceptance of cryptocurrency ETFs is likely to facilitate broader market participation and foster continued innovation in this domain.

Original Source: money.usnews.com