There are also crypto ETFs that get you exposure to multiple cryptocurrencies, the underlying blockchain technology they're built on, or companies with ties to the crypto space. Although this is a volatile market, investing in crypto ETFs can help you build a diverse portfolio of digital assets. That gives you a better chance of finding successful investments.
Seven top cryptocurrency ETFs
Investing in cryptocurrency ETFs
There are several types of cryptocurrency ETFs available. The largest are Bitcoin ETFs, which invest solely in Bitcoin. They're followed by Ethereum ETFs, which invest solely in Ethereum. One notable benefit of these ETFs is that you could invest in them through a Roth IRA for tax-free withdrawals in retirement.
You can also find ETFs that invest in multiple cryptocurrencies, crypto-related companies, or crypto futures contracts. Note that futures, in general, and especially crypto futures, carry much more risk.
What is a cryptocurrency ETF?
An ETF is an investment fund that can be bought just like a stock. Investing in one is a quick and easy way to build a diversified portfolio since most ETFs invest in a group of stocks, bonds, and/or other assets -- in this case, cryptocurrencies and the companies involved in their development. That's not always the case with crypto ETFs, though, since the largest invest only in Bitcoin or Ethereum.
Here's a list of seven cryptocurrency ETFs to consider:
1. Fidelity Wise Origin Bitcoin Fund
Expense Ratio
2. iShares Ethereum Trust ETF
If you want to invest in the second-largest cryptocurrency, the iShares Ethereum Trust ETF is a good choice. It was part of the first group of Ethereum ETFs approved by the SEC and quickly became the largest by assets under management (AUM). It's also 100% invested in Ethereum.
The iShares Ethereum Trust ETF has a 0.25% expense ratio, which is in line with similar funds. However, the fee is reduced to 0.12% for the first $2.5 billion in fund assets. The fee reduction was in place for the 12-month period starting on July 23, 2024.
3. Amplify Transformational Data Sharing ETF
4. First Trust Indxx Innovative Transaction & Process ETF
The First Trust Indxx Innovative Transaction & Process ETF is another broad bet on crypto. The fund contains more than 100 stocks, making it the most diversified crypto ETF listed here.
First Trust is also a large and well-established company that has created all sorts of investment products, which might check the box for some investors worried about track record and fund manager reputation. The First Trust Indxx Innovative Transaction & Process ETF has an annual expense ratio of 0.65%.
The fact that this ETF is more diversified has its pros and cons. It provides sweeping exposure to the crypto space, including many international tech companies that might be harder to come by for U.S.-based investors (Chinese companies comprise more than 10% of the portfolio).
It's also less volatile than many of its crypto-fund peers. That means its value normally doesn't increase as much as the values of other funds when the crypto market is doing well, but it also doesn't lose as much value during bear markets.
5. Schwab Crypto Thematic ETF
Cryptocurrency ETFs will be a volatile investment
Cryptocurrencies are still a new asset class, and ETFs focused on them are even younger. As with any emerging asset class, expect lots of volatility -- both in cryptos themselves and in the companies focused on their development. If you want more stability, consider long-term ETFs in other assets, such as stocks or real estate.
If you decide to invest, bear two important points in mind. Keep any bet small, and stay focused on the long-term potential for cryptocurrency and blockchain technology overall.
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