There are several ways to invest in today’s world with many people leaning toward crypto exchange-traded funds (ETFs) to diversify portfolios and potentially reduce the amount of risk generally involved with investing in digital assets.
Specifically, ETFs are similar in many ways to mutual funds, except that ETFs are bought and sold from other owners throughout the day on stock exchanges, whereas mutual funds are bought and sold from the issuer based on their price at the day’s end.
Cryptocurrency ETFs provide several benefits to investors, such as significantly lowering crypto ownership costs and versatility, and letting you easily move money between specific asset classes, like stocks, bonds, or commodities.
ETFs are not entirely new to the financial market, as they are popular among investors within the traditional financial market. The value of assets of exchange-traded funds (ETFs) worldwide grew markedly during the period from 2003 to 2021, reaching over 10 trillion U.S. dollars in 2021.
If you are looking for some of the best cryptocurrency ETFs to dip your hands into, then we have got you covered with this article. Below, we have carefully curated a list of some of the top 10 cryptocurrency ETFs that you could consider buying in 2022.
Before we proceed to the list, it is important to keep in mind that this article is not financial advice to invest in crypto ETFs. If you do invest, make sure to do your own research on each. That said, the following are our top picks for the best-performing crypto ETFs of 2022.
Top 10 Cryptocurrency ETFs to Buy in 2022
10. Simplify US Equity Plus GBTC ETF
The first, and last on the list based on descending order, is Simplify U.S. Equity Plus GBTC ETF or SPBC, an ETF that invests both in U.S. stocks and the Grayscale Bitcoin Trust. Only 10% of the capital is invested in the Grayscale Bitcoin Trust. The fund invests in stocks and trusts and in turn, provides shares that investors can trade in U.S. open stock markets.
The top portfolios it is invested in are the iShares Index Fund, GBTC, and the S&P 500 Emini FUT. However, since the Bitcoin ETF approval, it has only been domiciled in the United States. Founded in May 2021, it has $108,859,711 in assets under management (AUM) and an expense ratio of 0.74%.
9. Amplify Transformational Data Sharing ETF (BLOK)
The Amplify Transformational Data Sharing ETF was founded in 2018, to invest at least 80% of assets, including borrowing, in companies that use blockchain or provide blockchain products and services.
43.7% of the funds are invested in large companies, 26.7% in mid-caps, and 29.7% in small caps. The rest, or 20%, of the fund is invested in companies that partner with it.
The top holdings currently are Galaxy Digital Holdings, Digital Garage Inc., NVIDIA Corp, PayPal, and Microstrategy, etc. It has $1.01 billion in assets under management (AUM) and an expense ratio of 0.70%.
8. Siren Nasdaq NextGen Economy ETFs (BLCN)
The Siren Nasdaq NextGen Economy ETF or BLCN tracks the Nasdaq Blockchain Economy Index and invests in top blockchain stocks on the index. It focuses on companies that have more than $200 million of market capitalization. Since its birth in 2018, the fund has over 60 holdings.
Some of its major holdings are Coinbase, Microstrategy, and IBM. 53% of the funds are held in the United States, followed by Japan and China. It has $200.30 million in assets under management (AUM) and an expense ratio of 0.68%.
7. Bitwise 10 Crypto Index Fund (BITW)
Bitwise 10 Crypto Index Fund is an ETF that offers diversified exposure to the 10 most highly valued cryptocurrencies weighted by market capitalization. The fund is weighted toward the largest cryptocurrencies, with a 62% allocation toward Bitcoin and 26.7% for Ethereum as of March.
But there are other popular altcoins in the mix of holdings, including Solana (SOL), Cardano (ADA), Avalanche (AVAX), Polkadot (DOT), and Polygon (MATIC).
It has $383M in assets under management (AUM) and a daily trade volume of 60,841 shares. It also has a competitive expense ratio of 2.50%.
6. Blockchain & Bitcoin Strategy ETF (BITS)
Launched in November 2021, the Blockchain & Bitcoin Strategy ETF is Global X’s second blockchain-related ETF. The BITS fund offers investors exposure to both Bitcoin futures contracts and companies exposed to blockchain technology.
Stocks held in the BITS fund include cryptocurrency mining companies, companies involved in digital asset transactions, and companies with blockchain applications and software services.
The BITS fund has $9.8 million in assets under management (AUM) and an average daily trading volume of 11,400 shares. It also has a competitive expense ratio of 0.65%.
5. Valkyrie Balance Sheet Opportunities ETF (VBB)
The Valkyrie Balance Sheet Opportunities ETF doesn’t invest in Bitcoin directly, rather it provides indirect exposure to cryptocurrencies by investing in companies that hold Bitcoin on their balance sheets or profit from Bitcoin transactions.
The VBB fund has $650.5 million in assets under management (AUM) and an average daily trading volume of 1,200 shares. Top fund holdings include Tesla Inc. (TSLA), Microstrategy Inc. (MSTR), and Block Inc. (SQ), which together account for nearly a third of the fund’s allocation.
4. VanEck Bitcoin Strategy ETF (XBTF)
The VanEck Bitcoin Strategy ETF is VanEck’s version of a Bitcoin futures fund. The XBTF fund launched in November 2021 seeks capital appreciation by investing in bitcoin futures contracts. The fund is actively managed and offers exposure to bitcoin-linked investments through an accessible exchange-traded vehicle.
The XBTF differs from its predecessors, BITO and BTF, in two major ways. First, the XBTF fund has a significantly lower expense ratio than the other two funds, at just 0.65%. Furthermore, the fund offers an effective tax rate of 22.15% by structuring itself as a C-corporation instead of a Regulated Investment Company (RIC) as is common with most ETFs. The fund’s AUM is $23.6 million, and its daily trading volume is around 28,500. Both numbers are on the lower side for ETFs.
3. Grayscale Bitcoin Trust (GBTC)
Before the BITO ETF got into the market, the Grayscale Bitcoin Trust was the most preferable Bitcoin fund option for more than half of crypto investors. The Grayscale Bitcoin Trust is one of the first investment vehicles to derive value solely from the price of Bitcoin.
Since its launch in 2013, it has returned more than 28,000% to investors. The trust is open to direct investments by accredited investors putting up a minimum investment of $50,000, but anyone can access shares of GBTC on the secondary market through various online brokers.
The GBTC has $28 billion in assets under management (AUM), making it one of the largest crypto funds on the market, and uses the CoinDesk Bitcoin Price Index (XBX) as its benchmark. It has an average trading volume of 4.4 million shares. Unlike other Bitcoin ETFs, the GBTC fund holds actual cryptocurrency, and each share currently represents 0.0009235 Bitcoins.
2. Valkyrie Bitcoin Strategy ETF (BTF)
Valkyrie Bitcoin Strategy ETF is a Nasdaq-listed ETF primarily invested in Bitcoin futures contracts. Like the BITO fund, the BTF fund does not invest in Bitcoin directly. Instead, the fund seeks to achieve its investment objective by investing all or substantially all of its assets in exchange-traded futures contracts on Bitcoin and “Collateral Investments.”
Part of the fund holds cash, U.S. Treasurys, or corporate bonds for liquidity purposes. BTF’s portfolio allocation is 73.8% in Bitcoin futures and 26.2% in Treasury bills. BTF holds net assets of about $45.8 million and carries a total expense ratio of 0.95%. This makes BTF smaller and less liquid than the BITO ETF, which holds $1 billion in assets and has a daily trading volume of around 254,000.
1. ProShares Bitcoin Strategy ETF (BITO)
The ProShares Bitcoin Strategy ETF changed the game for investors in cryptocurrency. The BITO ETF made history in October when it became the first cryptocurrency ETF that the U.S. Securities and Exchange Commission allowed trading on a major U.S. exchange. This was a huge win for wary Bitcoin investors who were waiting for a nod from U.S. regulators. Instead of buying Bitcoin itself, the BITO fund holds different Bitcoin futures contracts.
The BITO ETF has about $800 million in assets under management and a daily trading volume of 6.6 million shares. This month, ProShares launched the new short bitcoin strategy fund (BITI) in the U.S. with its CEO, Michael L. Sapir, saying that it traded more than 870,000 shares, or $35 million of value, on its second day of trading.
The number of ETFs worldwide grew from 276 in 2003, up to almost 8,600 in 2021, which has led to impressive and steady growth of new investors coming in. Most of the ETFs listed are Bitcoin futures. Few invest in both futures and other stocks. Regardless, these are the top 10 we recommend that you keep an eye on.
If you are new to ETF investment, before you begin your journey, ensure you have an investment strategy, and understand the ETF and its assets, know the costs, commissions, fees, tax implications, etc.