Owning cryptocurrency isn't for the faint of heart. And whether you're thinking of investing in crypto, its underlying technology or the cryptocurrency market in general, you may be wondering how you might choose the best exchange-traded fund (ETF) to invest in cryptocurrency. There are dozens of cryptocurrencies, and the largest crypto market in terms of market capitalization, Ethereum, is no longer the go-to investment for many novice crypto-fans. But there are also tons of quality funds to invest in and tons of potential volatility to anticipate, which is why you may want to invest in a fund that are given in the following list:
1. EOS - Ethereum Network
EOS is the second most valuable cryptocurrency with a market cap of $5.4 billion as of Jan. 8. The fund's founding team has nearly 50 years of cryptocurrency and blockchain experience, and it has already raised over $3 billion in capital. And if you are looking for Crypto Hedge Fund List, you can check here.
But EOS isn't a traditional ETF. It isn't intended for market-timing nor does it directly invest in the cryptocurrency market. EOS is a software development platform that operates an online voting platform known as the Ethereum Network. Its blockchain is also expected to change the way society trades shares of business in the future.
2. Bitcoin Investment Trust (OTC: GBTC) - Bitcoin
The Bitcoin Investment Trust, the oldest and largest fund for buying and holding bitcoin, is what's known as a private fund. It's neither an ETF nor a public entity. It isn't traded on any exchange and is not listed on any stock exchange. And what makes it unique is that it charges a hefty $500 application and redemption fee, plus the trust charges a 2.75% management fee. It also has an in-house Bitcoin administrator that invests money in Bitcoin and a Bitcoin custodian that holds the cryptocurrency for the trust.
The Bitcoin Investment Trust does hold Bitcoin in its portfolio. In fact, it is the largest ETF in the world in terms of total holdings. Its holdings are worth $11.5 billion as of Dec. 31, and it has had daily trading volumes of almost $100 million, according to the company's website. However, like any other fund, it isn't all good. The fund's holdings are much more volatile than most other crypto funds, averaging a roughly 12% swing in value each day in 2018, according to Bloomberg data. And its fee structure is steep, as well.
3. SolidX Bitcoin Trust - Bitcoin
SolidX, the first ETF to trade over-the-counter, or OTC, offers an even higher-risk approach to investing in Bitcoin. It's one of the riskiest funds for investors, and it carries a higher load of risk than its peers in the crypto fund category. Its total assets under management are $209 million, and its average daily trading volume was $45 million as of Dec. 31.
And SolidX charges an annual fee of $1.50 per share and charges a management fee of 1.75%. The SolidX fund is a best-in-class fund, as it invests in the Bitcoin Investment Trust, the first ETF to invest in Bitcoin. Its holdings are worth about $200 million as of Dec. 31, and it has daily trading volumes of almost $100 million. The a16z portfolio is quite worth visiting.
4. Bitwise XRP-USD - Ripple
Bitwise operates four funds, two of which are dedicated to holding Ripple (XRP). It charges a whopping 40% administration fee as well as a performance fee for those that follow the fund's recommended benchmark. The other two funds in Bitwise's lineup focus on holding Ethereum (ETH) and Litecoin (LTC), two of the most widely used cryptocurrencies. Both funds have daily trading volumes of about $70 million.
The largest of the two is the Bitwise Pure Alpha XRP-USD fund, which has $10 million in assets under management and charges an annual fee of 40%. The fund's holdings are worth $14 million as of Dec. 31, and it has daily trading volume of over $100 million. The coinbase ventures portfolio, the other fund in the lineup, has much more in assets under management and charges a less fee.
5. iPath Fed Fund SR FL Index Fund - Bitcoin
One of the largest crypto funds in the world, according to data from Coindesk, is the iPath Fed Fund SR FL Index Fund. It's not a fully-fledged ETF but is a fund of funds that trades like an ETF. It comprises the following ETFs: iShares JP Morgan USD Emerging Markets Bond ETF (NYSE: EMBI), iShares JPMorgan USD Emerging Markets Bond ETF (EMB), and iShares JPMorgan USD Emerging Markets Bond Fund (EMB).
As of Dec. 31, it had a total of $3.4 billion in assets under management, and its average daily trading volume was $89 million. The fund charges a fee of 35 basis points for those that follow it, while the fees for those that follow the ETFs are 0.15% and 0.12%, respectively. The expense ratio is similar to that of the First Trust Strategic High Yield Bond ETF (HYLS), which charges a similar fee. And like most other funds that hold ETFs, the iPath fund is a higher-risk approach than a regular fund.
6. PowerShares DB US Dollar Index Bullish ETF - USD
The PowerShares DB US Dollar Index Bullish ETF is the oldest and most popular ETF dedicated to the dollar. The currency and the ETF also share an important connection: The ETF is an attractive hedge against losses in the dollar, which would result from a slowdown in the U.S. economy.
The ETF has a total of $2.2 billion in assets under management. And as of Dec. 31, its holdings were worth $3.3 billion, and it has daily trading volume of nearly $200 million. The fund charges a management fee of 50 basis points, which is the same as that charged by the SPDR Bloomberg Barclays High Yield Bond ETF (JNK).
7. ProShares Short US Dollar ETF - DX
One of the three ETFs that ProShares offers that bet against the dollar, the ProShares Short US Dollar ETF (NYSE: SH) follows the PowerShares DB US Dollar Index Short ETF.
The fund's holdings are worth about $357 million as of Dec. 31, and it has daily trading volume of about $30 million. The fund charges a fee of 40 basis points. And polychain capital portfolio, an ETF-related hedge fund that follows the Bitcoin blockchain, has a similar investment.
Wrapping - Up!
Bitcoin isn't a buy-and-hold type of asset, but the demand for Bitcoin ETFs has risen substantially in 2022, and ETFs are the way to make a bullish bet on the cryptocurrency. The crypto funds mentioned above aren't the only funds that have sought to enter the Bitcoin ETF game. You can also check out other crypto funds online.