One of the major factors in the cryptocurrency rally of the past few months is the arrival of spot Bitcoin (BTC -2.44%) exchange-traded funds (ETFs). At a stroke, these new securities make investing in the No. 1 cryptocurrency much easier, as investors can buy and sell it like any other market-tradable asset (such as stocks or bonds). Previously, an investor had to open, manage, and keep secure a dedicated digital wallet.
As many investors and pundits expected, spot Bitcoin ETFs have been hot items since winning approval for listing by the Securities and Exchange Commission (SEC) in January. Eleven were given the nod, but not all were created equal. In my view, two spot Bitcoin ETFs stand out among that crowd -- iShares Bitcoin Trust (IBIT -1.47%) and ARK 21Shares Bitcoin ETF (ARKB -1.61%).
1. iShares Bitcoin Trust
iShares is the ETF brand of the world's No. 1 manager of such securities, BlackRock, with a staggering $3.5 trillion in ETF assets under management (AUM). In any ETF, spot Bitcoin or otherwise, as investors we owe it to ourselves to place our money in the most trusted hands possible. iShares operates some of the top ETFs on the scene, including the massive iShares Core S&P 500 ETF.
So you can be sure BlackRock's got a solid team running iShares Bitcoin Trust and a vested interest in making its new product succeed.
On top of that, the ETF's manager has thrown in an enticing sweetener for investors. Its 0.25% sponsor fee -- i.e., the percentage of an investor's holdings he or she must pay for owning the ETF -- has been sliced in half and then some... at least for a limited time. Until the fund hits $5 billion in assets or reaches its 12-month anniversary (it started trading on Jan. 11), the sponsor fee will stay at 0.12%.
One caveat: This grace period might not last long, as the ETF's net assets just topped $3.9 billion. Still, even that 0.25% is on the low side for the inaugural group of spot Bitcoin ETFs. So ultimately with iShares Bitcoin Trust, investors are getting a highly experienced and ambitious management company, and they're paying relatively little for the privilege -- particularly at the inaugural stages of this ETF's life.
2. ARK 21Shares Bitcoin ETF
Speaking of high-profile fund families, no less an entity than star investor Cathie Wood's ARK Invest has gotten an early start in the spot Bitcoin ETF game. Its ARK 21Shares Bitcoin ETF, one of the smaller issues, launched along with the 10 other newcomers in January. Its assets under management (AUM) tally crept up to over $428 million, as of Jan. 22.
Despite the closely followed Wood's renown and visibility, ARK 21Shares is much smaller than the rapidly ascending iShares Bitcoin Trust. That means the crypto-curious might have a longer grace period to take advantage of the fund's fee waiver, in which its nominal 0.21% charge is on ice at 0% until July 10 or its assets hit $1 billion, whichever event occurs earlier.
Like BlackRock, Wood and company have a big spotlight on them and, therefore, a strong incentive to succeed with their new ETF.
And while this team has stumbled with some of its traditional ETFs, for the most part, it has proven to be very savvy about investments on the cutting edge of both technology and finance -- and it's hard to dispute that cryptocurrency is the current Favorite Child from the marriage of those two sectors.
I also like the involvement of veteran crypto exchange-traded products (ETPs) specialist 21Shares. It's smart to team with a business that has been brokering such products for years; under the terms of their collaboration, 21Shares is obligated to provide advisory services and assist in the marketing of the ETF.
