Top Bitcoin ETFs: A Guide to the Best Investment Options for US Investors

Bitcoin (BTC) ETFs are gaining attention despite underperforming expectations. Asset managers and financial advisors are expected to diversify portfolios with these funds, boosting their potential. The recent Bitcoin halving event highlighted its resilience, increasing investor confidence and interest in ETFs.

Bitcoin ETFs: A Comprehensive Guide to the Best Investment Options

Introduction

Bitcoin exchange-traded funds (ETFs) have garnered significant attention in the financial landscape, offering investors a regulated and accessible gateway into the burgeoning cryptocurrency market. While their performance may not fully align with the lofty expectations of crypto enthusiasts, these funds hold notable potential for growth. Asset managers and financial advisors are increasingly incorporating Bitcoin ETFs into their portfolios, seeking to diversify their clients' assets and capitalize on the potential upside.

Post-Halving Rally Highlights Bitcoin's Resilience

The recent Bitcoin halving event, where the block reward for miners is halved, has been met with a robust recovery in Bitcoin's price. Despite a brief dip below $60,000, the cryptocurrency has rebounded to trade near $67,000 at the time of writing. This rally underscores Bitcoin's resilience and ability to withstand market fluctuations. The bullish momentum is expected to encourage investor confidence and further fuel interest in Bitcoin and related investment vehicles, such as ETFs.

Top Bitcoin ETFs for Investors' Consideration

Amidst the growing landscape of Bitcoin ETFs, several stand out for their unique features and performance track records. Here are three of the best Bitcoin ETFs that investors may wish to consider:

1. Valkyrie Bitcoin and Ether Strategy ETF (BTF)

Valkyrie Bitcoin and Ether Strategy ETF (BTF), listed on the New York Stock Exchange (NYSE), aims to track the performance of both Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization. This ETF offers investors exposure to both cryptocurrencies through futures contracts and other instruments, providing a degree of diversification despite their correlated nature. BTF holds approximately equal proportions of Bitcoin and Ethereum via futures contracts.

BTF has assets under management (AUM) of $50.84 million and an expense ratio of 1.24%. The fund has 2.70 million shares outstanding and pays a dividend yield of 11.53%, with a trailing 12-month dividend of $2.23. BTF has delivered a 1-year return of +81.22% and has a beta of 0.74, indicating a slightly lower volatility than the overall market.

It is important to note that the high dividend yield is atypical over extended periods and may be influenced by market volatility.

2. Bitcoin Strategy ETF (BITO)

Bitcoin Strategy ETF (BITO), also traded on the NYSE, seeks to replicate the price movements of Bitcoin by investing solely in Bitcoin futures contracts traded on regulated exchanges. Like BTF, BITO allows investors to participate in Bitcoin's price action without directly holding the cryptocurrency.

BITO has AUM totaling $2.38 billion, with an expense ratio of 0.95%. The fund has 85.22 million shares outstanding and pays a dividend yield of 15.91%, with a trailing 12-month dividend of $4.62. BITO has a 1-year return of +78.19% and a beta of 0.68, suggesting a slightly lower volatility than BTF.

BITO was one of the first Bitcoin ETFs based on futures contracts. While futures contracts provide high return potential, they may not accurately reflect the underlying asset's performance. Additionally, the dividend payments may affect the total return potential due to price adjustments in the stock market after dividend issuances and capital erosion.

3. Valkyrie Bitcoin Fund (BRRR)

Valkyrie Bitcoin Fund (BRRR), listed on the Nasdaq exchange, aims to track the performance of Bitcoin as represented by the CME CF Bitcoin Reference Rate. Unlike BTF and BITO, which utilize futures contracts, BRRR is a spot ETF that holds the underlying Bitcoin asset in cold storage. This structure theoretically provides a closer alignment with the actual Bitcoin price and may offer lower expense ratios.

BRRR has AUM of $509.34 million and a low expense ratio of 0.25%. With 40,000 shares outstanding, BRRR offers investors a beta of 0.92, indicating a volatility level similar to the overall market.

Analysts speculate that spot ETFs like BRRR may outperform futures-based ETFs on a total return basis due to their lower expense ratios and simpler management structure.

Conclusion

Bitcoin ETFs present investors with an accessible means of gaining exposure to the cryptocurrency market. While their performance may not always meet the overly optimistic expectations of crypto enthusiasts, these funds offer the potential for diversification and long-term growth. The ETFs highlighted in this article, Valkyrie Bitcoin and Ether Strategy ETF (BTF), Bitcoin Strategy ETF (BITO), and Valkyrie Bitcoin Fund (BRRR), each possess unique characteristics and investment strategies. Investors are encouraged to carefully consider their individual circumstances and risk tolerance before selecting an ETF to complement their portfolio.