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The rise of Bitcoin ETFs has opened up a new avenue for investors to gain exposure to the world’s most popular cryptocurrency. These exchange-traded funds offer a familiar way to invest in Bitcoin. However, with a growing number of Bitcoin ETFs available, choosing the right one can be overwhelming. This article delves into the key factors to consider when comparing Bitcoin ETFs, including Assets Under Management (AUM), daily volume, and fees. We’ll also explore the pros and cons of investing in Bitcoin ETFs versus directly acquiring Bitcoin, helping you make an informed decision that aligns with your investment goals.
AUM (Assets Under Management)
AUM refers to the total amount of money invested in that particular ETF. Here’s why AUM is important:
- Investor Confidence: A higher AUM can indicate greater investor confidence in a specific Bitcoin ETF. This can be reassuring, suggesting the ETF is well-regarded and has a track record of attracting investors.
- Liquidity: Generally, ETFs with higher AUM tend to have higher trading volume. This translates to easier buying and selling of shares without significantly impacting the price.
- Stability: A larger AUM suggests the ETF has a more established presence in the market. This can provide a sense of stability, especially for new investors entering the cryptocurrency space.
Popular Bitcoin ETFs
| ETF Name & symbol | AUM ($MM) as of May 16,2024 |
|---|---|
|
Grayscale Bitcoin Trust (GBTC) |
$ 17,760.30 |
|
iShares Bitcoin Trust (IBIT) |
$ 16,897.40 |
|
Fidelity Wise Origin Bitcoin Fund (FBTC) |
$ 9,460.11 |
|
Ark 21Shares Bitcoin ETF (ARKB) |
$ 2,810.50 |
|
Bitwise Bitcoin ETF (BITB) |
$ 2,148.59 |
|
VanEck Bitcoin Trust (HODL) |
$ 595.10 |
|
Valkyrie Bitcoin Fund (BRRR) |
$ 499.73 |
|
Invesco Galaxy Bitcoin ETF (BTCO) |
$ 425.95 |
|
Franklin Templeton Digital Holdings Trust (EZBC) |
$ 372.78 |
|
WisdomTree Bitcoin Fund (BTCW) |
$ 69.57 |
|
Hashdex Bitcoin ETF (DEFI) |
$ 11.28 |
Source: https://etfdb.com/
As of May 16th, 2024, Grayscale Bitcoin Trust (GBTC) boasts the highest AUM, which could be seen as a sign of investor confidence. However, there are key structural differences between GBTC and newer, SEC-regulated Bitcoin ETFs:
- Regulation: GBTC operates as a trust under OCC regulations, while newer ETFs are SEC-regulated. This impacts features like:
- Creation and Redemption: Newer ETFs allow for on-demand creation and redemption of shares, while GBTC has limited options.
- Fees: GBTC’s expense ratio is typically higher due to its structure.
- Underlying Asset: While some Bitcoin ETFs hold actual Bitcoin, GBTC may use Bitcoin futures contracts. This can introduce tracking errors (meaning the ETF’s price might not perfectly reflect Bitcoin’s price) and potentially higher volatility.
The current AUM landscape shows a hierarchy:
- Dominant Players: The top three (Grayscale Bitcoin Trust (GBTC), iShares Bitcoin Trust (IBIT), and Fidelity Wise Origin Bitcoin Fund (FBTC)) hold a significant majority of the total AUM, with GBTC leading the pack.
- Mid-Tier Contenders: Ark 21Shares Bitcoin ETF (ARKB) and Bitwise Bitcoin ETF (BITB) occupy a mid-tier range with AUMs around $4-5 billion.
- Emerging Players: The remaining ETFs on our list (HODL, BRRR, BTCO, EZBC, BTCW, DEFI) have a considerably smaller AUM, all falling below $2 billion.
By understanding AUM and its implications, you can make more informed decisions when choosing a Bitcoin ETF.
Daily volume
When evaluating Bitcoin ETFs, daily trading volume is a key metric that unlocks valuable insights into two crucial aspects: liquidity and investor interest. Let’s delve into what daily volume tells us and how to interpret it effectively:
Liquidity:
- Higher Volume = Easier Buying/Selling: A higher daily trading volume generally indicates greater liquidity for the ETF. This means you can more easily buy and sell shares at the current market price without significantly impacting the price yourself.
- Lower Volume = Potential Difficulty: With ETFs that have a lower daily trading volume it might be harder to enter or exit positions quickly, especially for larger investments. You might have to accept a less favorable price due to a lack of buyers or sellers.
Investor Interest:
- High Volume = Potential Popularity: A consistently high daily trading volume can suggest investor interest in the specific Bitcoin ETF. This might be a sign of confidence in the fund’s management or its underlying investment strategy.
- Low Volume Doesn’t Necessarily Mean Disinterest: However, don’t automatically dismiss an ETF with lower trading volume. Research the fund itself. It could be a newer option gaining traction or cater to a more niche investment strategy.
Source : www.theblock.co
As of May 15, 2024, iShares Bitcoin Trust (IBIT) boasts the highest daily trading volume, followed by Grayscale Bitcoin Trust (GBTC). It’s important to note that March 2024 saw the highest overall volume for Bitcoin ETFs, reaching a peak of almost 10 billion on its busiest week. This record level hasn’t been surpassed since.
Bitcoin ETF Fees Comparison
Even a small difference in fees can significantly impact on your returns over time. A lower expense ratio means you keep more of your profits.
| ETF Name | Ticker | Fee | Fee waiver |
|---|---|---|---|
|
Franklin Templeton Digital Holdings Trust |
EZBC |
0.19% |
Free until 8/2/24 or $10 billion AUM (whichever comes first). |
|
Bitwise Bitcoin ETF |
BITB |
0.20% |
Free for 1st 6 months OR $1 billion AUM (whichever comes first). |
|
VanEck Bitcoin Trust |
HODL |
0.20% |
Free until 3/31/ 2025 OR $1.5 billion AUM (whichever comes first). |
|
Ark 21Shares Bitcoin ETF |
ARKB |
0.21% |
No fee for 1st 6 months OR $1 billion AUM (whichever comes first). |
|
iShares Bitcoin Trust |
IBIT |
0.25% |
0.12% fee for 1st year OR $5 billion AUM (whichever comes first), then 0.25%. |
|
Fidelity Wise Origin Bitcoin Fund |
FBTC |
0.25% |
Free until 8/1/2024 |
|
Valkyrie Bitcoin Fund |
BRRR |
0.25% |
Free for the first 3 months. |
|
Invesco Galaxy Bitcoin ETF |
BTCO |
0.25% |
Free for 1st 6 months OR $5 billion AUM (whichever comes first). |
|
Hashdex Bitcoin ETF |
DEFI |
0.90% |
N/A |
|
Grayscale Bitcoin Trust |
GBTC |
1.50% |
N/A |
While fee waivers can be enticing, we excluded them from our comparison as they’re temporary. Looking at long-term costs, Franklin Templeton Digital Holdings Trust (EZBC) currently holds the crown for the lowest expense ratio (0.19%) among established Bitcoin ETFs. Remember, Grayscale Bitcoin Trust (GBTC) operates as a trust with a higher expense ratio (1.50%).
Digging Deeper: Features to Shape Your Bitcoin ETF Decision
While daily volume, AUM, and fees are crucial factors in comparing Bitcoin ETFs, they don’t tell the whole story. To make an informed decision, it’s essential to delve deeper into the underlying structure and features of each ETF. Here’s a comparison table highlighting key features like:
- 1 Month Return: See how each ETF has performed in the last month. This can offer a glimpse into recent performance.
- Custodian Security: Who safeguards the ETF’s Bitcoin assets?
| ETF Name & Symbol | 1 Month Return (As of 05/17/24) | Custodian Security |
|---|---|---|
|
Grayscale Bitcoin Trust (GBTC) |
2.91% |
Coinbase Custody |
|
iShares Bitcoin Trust (IBIT) |
2.97% |
Coinbase Custody |
|
Fidelity Wise Origin Bitcoin Fund (FBTC) |
3% |
Fidelity Digital Assets |
|
Ark 21Shares Bitcoin ETF (ARKB) |
3.02% |
Coinbase Custody |
|
Bitwise Bitcoin ETF (BITB) |
2.96% |
Coinbase Custody |
|
VanEck Bitcoin Trust (HODL) |
2.94% |
Gemini Custody |
|
Valkyrie Bitcoin Fund (BRRR) |
2.90% |
Coinbase Custody |
|
Invesco Galaxy Bitcoin ETF (BTCO) |
3.05% |
Coinbase Custody |
|
Franklin Templeton Digital Holdings Trust (EZBC) |
3.11% |
Coinbase Custody |
|
WisdomTree Bitcoin Fund (BTCW) |
3.02% |
Coinbase Custody |
Sources: etfdb.com , ud.hk
By understanding these aspects, you can choose a Bitcoin ETF that aligns with your investment strategy and risk tolerance.
What´s the best Bitcoin ETF?
It’s important to understand that there’s no single “best” Bitcoin ETF as it depends on your individual investment goals and priorities. However, here are 3 popular Bitcoin ETFs that consistently rank well based on various factors, including fees:
1.Bitwise Bitcoin ETF (BITB):
- Pros: Low fees (0.20% as of May 15, 2024), high liquidity, strong issuer reputation (Bitwise Asset Management).
- Cons: Relatively new compared to some competitors.
2. iShares Bitcoin Trust (IBIT):
- Pros: Moderate fees (around 0.25%), high liquidity, established issuer (BlackRock).
- Cons: Expense ratio slightly higher than BITB.
3. Fidelity Wise Origin Bitcoin Fund (FBTC):
- Pros: Moderate Fees (0.25%), Fidelity brand; trusted name inspires confidence in security and management, Fidelity Digital Assets acts as custodian, potentially offering additional control.
- Cons: Lower daily volume compared to BITB and IBIT, but still maintains good liquidity among newer ETFs.
Investing Directly in Bitcoin with a Crypto IRA vs Bitcoin ETFs
Investing Directly in Bitcoin
Advantages:
- Possible tax benefits.
- Greater control over your investment choices.
- Direct ownership of Bitcoin.
- Higher diversification opportunities.
- 24/7 accessibility (in most cases).
- When you reach retirement age, you can elect to distribute your Bitcoin in-kind to your personal wallet.
- Potential for higher returns.
Disadvantages:
- Fees associated with cryptocurrency transactions and storage.
Investing in Bitcoin Through a Bitcoin ETF
Advantages:
- Familiar investment vehicle.
Disadvantages:
- Limited control over the underlying Bitcoin holdings.
- The ETF may not track the price of Bitcoin perfectly.
- Bitcoin ETFs may charge management fees, which can reduce your overall returns.
- Bitcoin ETFs are still a relatively new investment option.
- ETFs can only be bought or sold during market hours.
- Restricted only to Bitcoin.
- Upon reaching retirement, ETFs are required to be sold off and you can only distribute USD.
In summary:
- There’s no single “best” Bitcoin ETF. The ideal choice depends on your individual circumstances and financial goals.
- If you prioritize control and potentially higher returns, then directly owning Bitcoin might be a better option.
- If you prefer a familiar investment structure and easier storage a Bitcoin ETF could be a good choice. However, be aware of limitations on control and potential tracking errors.
Empower Your Bitcoin Journey: Crypto IRAs for Tax-Smart Control
Believe in the Bitcoin revolution and want to take charge of your cryptocurrency future? Look beyond Bitcoin ETFs and explore the possibilities of a Crypto IRA. Unlike ETFs, Crypto IRAs offer direct ownership of Bitcoin and a wider range of cryptocurrencies, placing you in the driver’s seat of your investment strategy.
But the advantages don’t stop there. Crypto IRAs hold the potential for significant tax benefits, similar to regular IRAs. This means you can potentially grow your cryptocurrency and maximize your retirement savings.
Crypto IRAs are ideal for investors who:
- Believe in the long-term potential of cryptocurrency.
- Want more control over their crypto holdings.
- Seek tax-advantaged options for retirement saving.
Ready to take charge of your Bitcoin future and explore the potential of Crypto IRAs? Open a BitcoinIRA¹ account today and start building your crypto-powered retirement! Here’s how:
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- Phone: 866-570-1947
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- Bitcoin IRA is a platform that connects consumers to qualified custodians, digital wallets and cryptocurrency exchanges. The company is not a custodian, is not a digital wallet and is not an exchange. The information provided in this article is for educational purposes only. We encourage you to consult an adviser or professional to determine whether Bitcoin IRA makes sense for you.
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