- First to Launch
- Lowest Cost
- Changes Ahead
In the past few months, three new Bitcoin ETFs (Exchange Traded Fund) have been launched. All three ETFs follow the same model, of tracking future of the Bitcoin, instead of tracking Bitcoin’s spot price.
First to Launch
Often, it is seen that the first to the market in a category, gains the most assets. The same is the case with Bitcoin ETFs, the first ETF to launch was ProShares Bitcoin Strategy ETF (BITO). This ETF now holds over a billion in assets.
Apart from BITO, now there also are VanEck Bitcoin Strategy ETF (XBTF) and the Valkyrie Bitcoin Strategy ETF (BTF). Technically, all the three ETFs work on a similar model, holding Bitcoin futures as a way to track the prices of Bitcoin.
There also are other approaches that are present, for example, tracking Bitcoin spot price. However, these implementations are yet to be approved by the SEC, in the US ETF structure.
As the investment model of the three Bitcoin ETFs is the same, their performance is also very likely to be the same. So in this case it is wise to go for the ETF that is the least expensive. Among the three, the least expensive is VanEck Bitcoin Strategy ETF, which charges about 0.65% a year, meaning that for every $10,000 invested in VanEck Bitcoin Strategy ETF you will have to pay $65 each year.
For ProShares and Valkyrie, the fee is around 0.95%. Here, it is important to understand, that for long-term holders of ETF the expense ratio is likely to be their main cost. For traders, who trade frequently, the better option is ProShares, because of the larger size, improved liquidity and lower bid/ask spreads. There is also a slight difference in the tax structure of the three ETFs, which for long-term investors may have some implications.
For crypto ETFs, it is still early stage. It is expected that an ETF that will track spot prices rather than future markets will soon get approval. An ETF, tracking spot price rather than future, has its pros and cons and it is also not necessary that it will be better.
It is also expected that in the coming years, an ETF that will combine different cryptocurrencies and offers broader diversification will get launched.
But for now, out of the three ETFs, VanEck may be the best option in terms of low fees, when all three ETFs are giving the same return.
Disclaimer: The article is just to provide information and shouldn’t be considered as any financial advice. It is advisable to conduct thorough research before investing in any cryptocurrency.
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