What is an ETF?
An ‘ETF’ which stands for Exchange Traded Fund, acts as a type of security. It tracks a commodity, sector, or asset which can be traded on a stock exchange just like stock. Moreover, cryptocurrency ETFs track the price of one or more digital tokens instead of commodities or indexes. So a cryptocurrency ETF will consist of cryptocurrencies (at least for now). These ETFs track a single cryptocurrency or a basket of different digital tokens. They can be traded daily.
The first cryptocurrency ETF started trading in October 2021 (ProShares Bitcoin Strategy ETF) making it a very new industry. After many regulatory hurdles, Canada and the US have come to the forefront of this space, while there is strong global interest.
What are the main cryptocurrency ETFs available right now?
- ProShares Bitcoin Strategy ETF (BITO)
The first cryptocurrency-focused ETF was introduced in October 2021. This type of ETF tracks the performance of future contracts in Bitcoins. The funds contain a variety of Bitcoin future contracts and have grown to accumulate almost $1.4 billion assets after a month of beginning. The ETF has an expense ratio of 0.95% making it an attractive investment to investors.
- Valkyrie Bitcoin Strategy ETF (BTF)
Similarly, to BITO, BTF also uses Bitcoin futures for its ETF. BTF however, trades on the NASDAQ stock exchange and similarly to BITO does not invest directly in Bitcoin. Instead, BTF possesses front-month Chicago Mercantile Exchange Bitcoin futures.
However, BTF accumulated a slower start than BITO generating only $59.2 million in assets under management.
- VanEck Bitcoin Strategy ETF
This ETF launched its first United States listed Bitcoin in November. VanEck Bitcoin Strategy ETF sets itself apart from its competitors by being one of the lowest-cost ETFs. Similar to BTF and BITO, it offers Bitcoin future contracts. However, VanEck Bitcoin Strategy does this for an expense ratio of only 0.65%.
This ETF has already generated a good track record after accumulation of just less than $10 million in assets after its first day of trading.
This ETF space is constantly changing and it is expected that investors will have access to more products like this in the next few years. If you are interested in the space, this is a useful guide on cryptocurrency wallets.
