Bitcoin ETFs are doing well, helped by the strong performance of the underlying assets. They have all jumped by double-digits, outperforming the broader market indices like the S&P 500 and Nasdaq 100. As shown below, these ETFs have a similar performance.
Bitcoin ETFs are seeing strong demand
These ETFs have seen substantial inflows in the past three months as investors embraced Bitcoin as an alternative assets. The iShares Bitcoin Trust (IBIT) ETF has had the most inflows as it added over $15.6 billion in assets.
The other biggest Bitcoin ETFs are the likes of Fidelity’s FBTC, Ark’s ARKB, and Bitwise’s BITB. These ones are followed by VanEck’s HODL, Valkyrie’s BRRR, and Invesco’s BTCO.
The Grayscale Bitcoin Trust (GBTC) is still the biggest Bitcoin ETF with over $23 billion. However, as I have written before, it is not an ideal ETF because of the substantial fees it charges. It has an expense ratio of 1.50%, meaning that investors are paying substantial sums of money.
Therefore, the question among many investors is on the best spot Bitcoin ETF to invest in today. By the numbers, it seems like most investors have selected the iShares Bitcoin Trust.
There are two main things to consider when investing in a spot Bitcoin ETF since they will always move in the same direction. First, consider the expense ratio, where the lower is the better option. Second, you should focus on the fund’s liquidity.
The IBIT, FBTC, BTCO, and BRRR have an expense ratio of 0.25%. Cathie Wood’s ARKB ETF has a ratio of 0.21% while VanEck’s ETF has a ratio of 0.20%. Some ETFs like ARKB, BRRR, and BTCO have waived their fees for a while. BTCO will start charging its sponsor fees through July 10th.
Therefore, using the fees approach, the best Bitcoin ETF to buy is VanEck’s ETF (HODL) because it is a few points cheaper than other funds. It has an expense ratio of 0.20%. This means that a $100,000 investment will cost about $200 per year, all factors constant. The other funds, with their 0.25% will cost $250. This $50 difference will add up over time.
Cathie Wood’s ARKB follows nearby since it has an expense ratio of 0.21%. Franklin Templeton’s EZBT is also a good Bitcoin ETF, with its 0.19% expense ratio. It has over $235 million in assets.
Fund liquidity
The other approach is to consider the fund’s liquidity, meaning how easy it is to get in and out. In most cases, funds with more assets tend to be the most liquid. As such, the iShares Bitcoin Trust (IBIT) and the Fidelity’s FBTC are ideal in this situation.
However, the reality is that getting in and out of the other ETFs is fairly easy since their assets are growing. As such, there is no big difference of investing in IBIT and HODL, which has $507 million in net assets. Moreso, the liquidity is not all that important since most Bitcoin ETF investors hope to buy and hold for a long time.
Therefore, if you are choosing a good Bitcoin ETF to invest in, the three best ones are from Franklin Templeton, VanEck, and Ark Invest. The other better approach is to avoid these fees and buy Bitcoin and store it in your wallet.
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