The Best Bitcoin ETFs of August 2023
As the cryptocurrency market continues to capture the attention of investors and financial institutions worldwide, the introduction of Bitcoin Exchange-Traded Funds (ETFs) has been a significant development. These ETFs offer investors an accessible and regulated way to gain exposure to the world’s leading cryptocurrency, Bitcoin. In this article, we’ll explore the top Bitcoin ETFs as of August 2023, analyzing their assets under management (AUM), investing strategies, and why they stand out.
1. ProShares Bitcoin Strategy ETF (BITO)
- AUM: $1.1 billion
- Expense Ratio: 0.95%
- Investing Strategy: Bitcoin futures
Why We Picked It: The ProShares Bitcoin Strategy ETF (BITO) holds the distinction of being the first Bitcoin ETF approved for trading in the U.S. market. Launched in October 2021, BITO made waves by attracting approximately $1 billion in assets within just a few days. This actively managed fund seeks capital appreciation through transparent exposure to Bitcoin futures contracts. It may also hold Treasury securities and cash, providing a diversified approach to Bitcoin investment. To learn more about Bitcoin IRAs Click here.
2. ProShares Short Bitcoin ETF (BITI)
- AUM: $80 million
- Expense Ratio: 0.95%
- Investing Strategy: Decline in Bitcoin futures
Why We Picked It: The ProShares Short Bitcoin ETF (BITI) is a unique offering in the Bitcoin ETF space. Launched in June 2022, it is the only SEC-approved ETF designed to provide the inverse of Bitcoin’s daily performance. BITI accomplishes this by mirroring the inverse of the S&P CME Bitcoin Futures Index for a single day. This fund’s approach allows investors to capitalize on Bitcoin’s price declines through cash-settled futures trading.
3. VanEck Bitcoin Strategy ETF (XBTF)
- AUM: $45 million
- Expense Ratio: 0.76%
- Investing Strategy: Bitcoin futures
Why We Picked It: The VanEck Bitcoin Strategy ETF (XBTF) distinguishes itself through its actively managed approach. Launched in November 2021, XBTF aims to provide capital appreciation by investing in BTC futures. What sets XBTF apart is its tax-efficient structure as a C-corporation. This structure allows investors to potentially benefit from lower taxable distributions compared to other investment corporations.
4. Valkyrie Bitcoin Strategy ETF (BTF)
- AUM: $29 million
- Expense Ratio: 0.95%
- Investing Strategy: Bitcoin futures
Why We Picked It: The Valkyrie Bitcoin Strategy ETF (BTF) stands out as an actively managed fund with a focus on Bitcoin futures contracts. Launched in October 2021, BTF aims to allocate as much of its net assets as possible to Bitcoin futures contracts, with remaining assets invested in U.S. government securities, money market funds, and corporate bonds. BTF’s strategy aligns with the core approach of Bitcoin ETFs.
5. Simplify Bitcoin Strategy PLUS Inc ETF (MAXI)
- AUM: $25 million
- Expense Ratio: 0.97%
- Investing Strategy: Bitcoin futures
Why We Picked It: The Simplify Bitcoin Strategy PLUS Inc ETF (MAXI) is a relatively new entrant, having launched in September 2022. Similar to other Bitcoin ETFs, MAXI aims for capital appreciation through Bitcoin futures. What sets MAXI apart is its additional strategy of using short-dated put or call spreads on global equity indices to generate income. This innovative approach could appeal to investors seeking a diversified income source.
6. Global X Blockchain & Bitcoin Strategy ETF (BITS)
- AUM: $13 million
- Expense Ratio: 0.65%
- Investing Strategy: Bitcoin futures and blockchain stocks
Why We Picked It: The Global X Blockchain & Bitcoin Strategy ETF (BITS) offers a unique blend of Bitcoin futures exposure and indirect holdings in blockchain-related companies. Launched in November 2021, BITS invests in CME Bitcoin futures contracts and holds shares in the Global X Blockchain ETF (BKCH), which focuses on blockchain stocks. This dual exposure approach allows investors to benefit from both the cryptocurrency and the underlying technology.
Methodology and Future Outlook
As of August 2023, the landscape of Bitcoin ETFs has expanded, providing investors with various options to gain exposure to the cryptocurrency market. Currently, there are seven Bitcoin ETFs approved by the SEC for trading in the United States, with more awaiting approval. This signals the growing interest in regulated cryptocurrency investment vehicles.
Our selection methodology focused on ETFs primarily invested in Bitcoin futures contracts, excluding those solely focused on blockchain-related stocks or other cryptocurrencies. Additionally, we filtered for ETFs with AUM exceeding $10 million to ensure a certain level of market participation.
As the world of Bitcoin ETFs evolves, our future selection methodology will adapt to encompass an even larger universe of similar funds. The rapid pace of innovation and development in the cryptocurrency space highlights the need for ongoing analysis and assessment of investment options.
In conclusion, Bitcoin ETFs offer investors a regulated and accessible pathway to gain exposure to the cryptocurrency market. Each of the selected ETFs provides a unique approach to capturing potential gains from Bitcoin’s price movements. As the market continues to mature, investors can expect to see more diverse offerings and investment strategies within the realm of cryptocurrency ETFs.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as investment advice. Before making any investment decisions, it’s essential to conduct thorough research and consult with a qualified financial advisor.
Frequently Asked Questions (FAQ) About Bitcoin ETFs
What are Bitcoin ETFs?
Bitcoin ETFs, or Bitcoin Exchange-Traded Funds, are investment funds that track the performance of Bitcoin. They provide investors with an accessible and regulated way to gain exposure to the cryptocurrency market without directly owning Bitcoin.
How do Bitcoin ETFs work?
Bitcoin ETFs work by holding Bitcoin futures contracts or other derivatives tied to the price of Bitcoin. When investors buy shares of a Bitcoin ETF, they indirectly gain exposure to Bitcoin’s price movements without needing to hold the cryptocurrency itself.
Are Bitcoin ETFs available in the United States?
Yes, there are several Bitcoin ETFs that have been approved by the U.S. Securities and Exchange Commission (SEC) for trading in the United States.
What is the ProShares Bitcoin Strategy ETF (BITO)?
BITO is the first Bitcoin ETF approved for trading in the U.S. market. It aims to provide exposure to Bitcoin futures contracts, seeking capital appreciation through an actively managed approach.
What is the investing strategy of ProShares Short Bitcoin ETF (BITI)?
BITI is designed to provide inverse exposure to Bitcoin’s daily performance. It accomplishes this by mirroring the inverse of the S&P CME Bitcoin Futures Index for a single day.
What does the VanEck Bitcoin Strategy ETF (XBTF) offer?
XBTF is an actively managed fund that invests in Bitcoin futures contracts. Its unique C-corporation structure aims to provide tax-efficiency for investors.
What is the Valkyrie Bitcoin Strategy ETF (BTF)?
BTF is an actively managed ETF that primarily invests in Bitcoin futures contracts. It aims to allocate as much of its net assets as possible to Bitcoin futures.
Tell me about the Simplify Bitcoin Strategy PLUS Inc ETF (MAXI).
MAXI is an actively managed fund that invests in Bitcoin futures contracts. It also utilizes short-dated put or call spreads on global equity indices to generate income.
What does the Global X Blockchain & Bitcoin Strategy ETF (BITS) offer investors?
BITS is an actively managed fund that provides exposure to both Bitcoin futures contracts and indirect holdings in blockchain-related companies through its sister ETF, BKCH.
How were these ETFs selected?
The selection methodology focused on ETFs primarily invested in Bitcoin futures contracts and those with AUM exceeding $10 million, ensuring a certain level of market participation.
How many Bitcoin ETFs are available?
As of now, there are seven Bitcoin ETFs approved for trading by the SEC in the United States.
Are more Bitcoin ETFs expected to be approved?
Yes, there are over 20 additional Bitcoin ETF filings awaiting approval from the SEC, some of which directly own Bitcoin.
Can I directly invest in Bitcoin through these ETFs?
No, these ETFs invest in Bitcoin futures contracts or related derivatives, not direct Bitcoin ownership.
What is the expense ratio of ProShares Bitcoin Strategy ETF (BITO)?
BITO has an expense ratio of 0.95%.
What is the expense ratio of ProShares Short Bitcoin ETF (BITI)?
BITI has an expense ratio of 0.95%.
What is the expense ratio of VanEck Bitcoin Strategy ETF (XBTF)?
XBTF has an expense ratio of 0.76%.
What is the expense ratio of Valkyrie Bitcoin Strategy ETF (BTF)?
BTF has an expense ratio of 0.95%.
What is the expense ratio of Simplify Bitcoin Strategy PLUS Inc ETF (MAXI)?
MAXI has an expense ratio of 0.97%.
What is the expense ratio of Global X Blockchain & Bitcoin Strategy ETF (BITS)?
BITS has an expense ratio of 0.65%.
What is the goal of investing in Bitcoin futures?
Investing in Bitcoin futures allows investors to gain exposure to Bitcoin’s price movements without owning the actual cryptocurrency.
What is the purpose of holding Treasury securities and cash in Bitcoin ETFs?
Some Bitcoin ETFs may hold Treasury securities and cash to manage risk and provide liquidity.
How can I benefit from Bitcoin price declines through ETFs?
ETFs like ProShares Short Bitcoin ETF (BITI) offer inverse exposure to Bitcoin’s daily performance, allowing investors to profit from price declines.
What advantages does the C-corporation structure of VanEck Bitcoin Strategy ETF (XBTF) offer?
The C-corporation structure may provide tax efficiency by avoiding long-term capital gains distribution as dividends.
Are there risks associated with Bitcoin ETFs?
Yes, Bitcoin ETFs are subject to risks such as price volatility, regulatory changes, and futures market risks.
Can Bitcoin ETFs provide income generation?
Yes, some Bitcoin ETFs, like Simplify Bitcoin Strategy PLUS Inc ETF (MAXI), use short-dated put or call spreads on equity indices to generate income.
What is the investing strategy of Global X Blockchain & Bitcoin Strategy ETF (BITS)?
BITS invests in both Bitcoin futures contracts and blockchain-related stocks through its sister ETF, BKCH.
Where is the data sourced for this article?
All data is sourced from company filings and StockRover, current as of Aug. 2, 2023.
Will the methodology for selecting these ETFs change in the future?
Yes, as the world of Bitcoin ETFs evolves, the methodology will adapt to encompass a larger universe of similar funds.
Is this article intended as investment advice?
No, the information provided in this article is for informational purposes only and should not be considered as investment advice. It’s essential to conduct thorough research and consult with a qualified financial advisor before making any investment decisions.
