If you're looking for an easy way to invest in crypto, a cryptocurrency exchange-traded fund (ETF) could be the solution. The Securities and Exchange Commission (SEC) began approving Bitcoin (BTC -0.25%) and Ethereum (CRYPTO:ETH) ETFs in 2024, giving investors a new way to get the two largest cryptocurrencies in their portfolios.
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 crypto ETFs
Seven top cryptocurrency ETFs
Overview
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.
Crypto ETFs
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
The Fidelity Wise Origin Bitcoin Fund was one of the 11 Bitcoin ETFs launched in January 2024 after SEC approval. It's one of the largest Bitcoin funds in terms of assets.
Fidelity is a highly regarded broker and is notable for having custody of its Bitcoin. Many companies that offer Bitcoin ETFs use other crypto brokers, typically Coinbase Global (COIN -1.23%), for custody. Some investors prefer going with Fidelity for that reason. The Bitcoin ETF has an expense ratio of 0.25%, or $2.50 in annual fees for a $1,000 investment.
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
The Amplify Transformational Data Sharing ETF doesn't directly invest in cryptocurrencies. Instead, it invests in companies involved in blockchain technology. It could be a smart pick if you're looking for the best crypto industry ETFs.
It contains about 50 company stocks. Top holdings in the fund include:
- MicroStrategy (MSTR -1.25%)
- Robinhood Markets (HOOD 0.33%)
- Core Scientific (CORZ 0.0%)
- Coinbase Global
- PayPal (PYPL 0.13%)
The Amplify Transformational Data Sharing ETF was launched in January 2018, making it one of the longest-tenured ETFs on this list. It has a 0.73% annual expense ratio, or $7.30 in annual fees for a $1,000 investment.
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
The Schwab Crypto Thematic ETF provides exposure to companies that could benefit from the utilization of cryptocurrencies and digital assets. It also invests in companies with business activities connected to blockchain and other digital assets.
It holds more than 40 stocks but doesn't invest directly in any cryptocurrencies. Top holdings include MicroStrategy, Bitdeer Technologies Group (BTDR 4.46%), and CleanSpark (CLSK -0.84%).
Not only do you get a fairly diversified portfolio of crypto companies with this ETF, you don't need to pay too much for it. The expense ratio is just 0.30%, making it one of the more affordable crypto ETF options.
6. Global X Blockchain & Bitcoin Strategy ETF
Launched in November 2021, the Global X Blockchain & Bitcoin Strategy ETF takes a two-pronged approach. Almost half of its holdings are in the Global X Blockchain ETF (BKCH 0.91%), which invests in tech companies and crypto mining stocks.
The other half is invested in Bitcoin futures. Bitcoin futures mimic the daily moves in the value of an asset, in this case, Bitcoin. However, because the futures contracts need to be rolled over monthly, they will likely underperform Bitcoin's price moves over the long term.
Other funds that invest in Bitcoin futures have experienced this problem in recent years. However, if you want some extra indirect Bitcoin investment in the mix, Global X's recent ETF launch might be what you're looking for. The annual expense ratio for this ETF is 0.65%.
7. Fidelity Crypto Industry and Digital Payments ETF
The Fidelity Crypto Industry and Digital Payments ETF is another fund that invests in crypto stocks. In this case, it's companies engaged in activities related to cryptocurrency, blockchain technology, and digital payments processing.
For an idea of what this ETF invests in, here are a few of its largest holdings:
The expense ratio is reasonable at 0.40%. This Fidelity ETF has also paid a solid dividend so far, which means it could set you up for some passive income.
Related cryptocurrency topics
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.
