7 Crypto ETFs To Buy In 2022
Indirect investing in Cryptocurrencies is now available thanks to Cryptocurrency exchange-traded funds (ETFs). There are more and more Cryptocurrencies and investments associated with them daily. Instead of undertaking concentrated risk by investing in just one individual Crypto, investing in a Crypto ETF allows investors to easily access Crypto assets while mitigating risk through the ETF’s diversified properties.
Each fund’s investments are directly linked to digital assets or blockchain technology in varying degrees, but Crypto ETFs’ is pegged by the performance of major Cryptocurrencies like Bitcoin (BTC) and Ether (ETH). Cryptocurrency-themed ETFs are available; however, they have significant management costs. Here are 7 of the best Cryptocurrency ETFs that offer exposure to Cryptocurrency or Crypto futures contracts.
1. ProShares Bitcoin Strategy ETF (BITO)
In October 2021, the ProShares Bitcoin Strategy ETF became the first ETF related to bitcoin. Through this ETF, investors may obtain exposure to Bitcoin without physically owning it. BITO does not directly invest in Bitcoin. Rather, the fund seeks to produce returns through exposure to Bitcoin futures contracts. Investors may consider BITO to replace actual assets such as gold and other commodities as an alternative to traditional currency investments or as a hedge against inflation. BITO has around $1 billion in net assets and a 0.95 percent expense ratio, translating to a $95 yearly cost for every $10,000 invested.
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2. Grayscale Bitcoin Trust (GBTC)
As one of the first alternative investments whose value is determined exclusively by the price of Bitcoin, Grayscale Bitcoin Trust is unique. Since its inception in 2013, the fund has returned more than 28,000 percent to investors. GBTC manages $28 billion in assets, making it one of the largest Crypto funds on the market, and its benchmark is the CoinDesk Bitcoin Price Index (XBX). The trust is only available to direct contributions from authorized investors with a minimum investment of $50,000, but anybody may buy GBTC shares on the secondary market through several internet brokers. The fund may potentially incur expenditures that are not covered by its annual expense ratio of 2%.
3. Amplify Transformational Data Sharing ETF
In April 2022, the Amplify Transformational Data Sharing ETF had over $955 million in assets under administration, making it one of the largest funds specializing in the Cryptocurrency and digital asset markets. Although it does not directly invest in Cryptocurrencies, it is a fantastic place to start your quest for the top Crypto sector ETFs. The product has an annual cost ratio of 0.71 percent, which indicates that for a $1000 investment, $7.10 in fees are removed from the fund’s return each year. The Amplify Transformational Data Sharing ETF is made up of 47 different corporate equities. It was introduced in January 2018, making it one of the most established ETFs on this list.
4. Grayscale Ethereum Trust (ETHE)
Similar to the Grayscale Bitcoin Trust, the Grayscale Ethereum Trust is a fund focused on the second-largest Cryptocurrency in the market. ETHE’s value is determined by the price of Ethereum’s token, Ether (ETH), and it uses the CoinDesk Ether Price Index (ETX) as a guideline. Grayscale invests in Ether passively, allowing investors to obtain exposure to the famous Cryptocurrency without having to worry about purchasing it directly, storing it, or preserving it. ETHE manages $10 billion in assets and has a 2.5 percent expense ratio.
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5. Bitwise 10 Crypto Index Fund (BITW)
On our list, Bitwise 10 Crypto Index Fund is a unique product. Initially, it was a private placement fund, but now, shares can be purchased and sold on the open market. Because the fund is actively managed, it has a high cost ratio of 2.5 percent, which translates to $25 in yearly deducted fees from fund performance for $1000 invested. The Bitwise 10 Crypto Index Fund invests in the top ten Cryptocurrencies and is rebalanced weekly to account for price fluctuations. Because this fund trades over the counter, it may trade at a significant discount or premium to the underlying Crypto values it owns at times, depending on share demand. Investors should proceed with caution.
6. Valkyrie Bitcoin Strategy ETF (BTF)
Bitcoin contracts are primarily invested in this exchange-traded fund, which is traded on Nasdaq. For liquidity purposes, a portion of the fund is invested in cash, US Treasury bills, and corporate bonds. BTF’s portfolio is 73.8 percent Bitcoin futures and 26.2 percent Treasury notes. BTF has net assets of around $45.8 million and a total expense ratio of 0.95 percent. As a result, BTF is smaller and less liquid than BITO, which has assets worth $1 billion. The asset management business that runs BTF is what distinguishes it. Valkyrie specializes in digital asset management and is dedicated to increasing access to investing in developing asset classes.
7. Siren Nasdaq NexGen Economy ETF
The Siren Nasdaq NexGen Economy ETF is another fund that invests in companies developing and exploiting blockchain technology. Its assets under management are significantly lower than those of Amplify’s comparable ETF product, but it does provide a somewhat different perspective on this market. For starters, the ETF is made up of 64 equities. Its target has widened to include more general technology companies that may have a Crypto or blockchain sector, such as IBM, a top holding. It also includes shares of traditional lenders and digital payment networks like American Express and Visa that have begun experimenting in the realm of Cryptocurrency. It has a 0.68 percent expense ratio.
ETFs focusing on Cryptocurrencies are a relatively new asset class, much younger than bitcoin itself. Cryptocurrencies, as well as enterprises focused on their growth, are very volatile. If you decide to invest, keep these two points in mind. Maintain your focus on the long-term potential of Cryptocurrency and blockchain technology in general.
Disclaimer — The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.