Top 7 Bitcoin ETFs and Crypto Funds in 2022
Bitcoin and cryptocurrency have once again made their way into headlines with the latest buzz surrounding the launch of the first bitcoin-linked exchange-traded fund on October 19, 2021.
Cryptocurrency investors looking to take advantage of bitcoin exchange-traded funds (ETFs) were excited to witness the debut of ProShares, the first bitcoin ETF to hit the US market.
This followed the Securities and Exchange Commission’s (SEC) approval of the Volt Crypto Industry Revolution and Tech ETF, providing investors access to companies with huge exposure to Bitcoin.
Though other funds are expected to follow suit in the next few weeks, the road to launching the first bitcoin ETFs wasn’t an easy one. This is mainly because the cryptocurrency market is generally new, largely untested, and volatile, resulting in the SEC’s hesitancy in releasing it to the public.
What is an ETF?
An ETF is an investment channel that allows the performance tracking of assets, whether individual or in a group. This allows investors looking to focus only on gains and losses to access a simpler alternative to buying and selling individual assets as you would with regular stocks.
The Securities and Exchange Commission has received a number of proposals to sell bitcoin ETFs to investors. Experts are estimating that more bitcoin ETFs and crypto funds will be approved in 2022, making it a year to look into these investments. We’ll cover some of the top bitcoin ETFs and crypto funds that are set to make an appearance in the next year.
7 Best Bitcoin ETFs and Crypto Funds in 2022
1. Grayscale Bitcoin Trust (GBTC)
GBTC is not yet an ETF, but neither is it a mutual fund. It’s categorized as a “closed-end grantor trust.” What does this mean? It means it’s an investment channel that holds bitcoins that are mined and transmitted through the peer-to-peer Bitcoin network. This also allows investors to trade those shares in over the counter market.
The price of GBTC shares aim to mimic the price of Bitcoin available on the CoinDesk Bitcoin Price Index. Investors interested in GBTC can buy shares just like you would any normal stocks or shares.
It’s also helpful to note that Grayscale Investments currently manages more than $38 billion in digital currency assets, making it a reliable investment option. Some investors might find the management fee of 2% considerably high compared to mutual funds or other ETFs.
Though GBTC is not a bitcoin ETF yet, it most likely will be converted into an ETF in 2022, making it one of the best bitcoin ETFs to keep an eye on.
2. ProShares Bitcoin Strategy ETF (BITO)
BITO is the first U.S bitcoin-linked ETF launched on October 19, 2021 which aims to expose potential investors to bitcoin futures. It provides investors a unique opportunity to build up their bitcoin returns in a convenient, and more importantly, a transparent way through bitcoin futures contracts.
One important thing to note about BITO is that it does not directly invest in Bitcoin but in cash-settled, front-month bitcoin futures instead. These are contracts with the shortest time to maturity. This also means that the price and performance of bitcoin futures can be different than the current price of bitcoin.
3. Amplify Transformational Data Sharing ETF (BLOK)
BLOK is like many U.S. cryptocurrency ETFs that are usually invested in equities but provides a little more direct exposure to bitcoins. This is because BLOK invests in what’s known as Purpose Bitcoin ETF and the 3iQ CoinShares Bitcoin ETF – two of which are Canadian ETFs in Canadian dollars, while the other is in U.S. dollars.
It is also an actively managed ETF that aims to provide returns with investments from companies that are actively involved in blockchain technologies’ utilization and development.
BLOK’s top three allocations in the blockchain industry are divided into venture capital, crypto miners, and the last being exposure, which represents the three ETFs mentioned above.
BLOK is sponsored by Amplify Investments, a company that believes ETFs empower investors and can cast a wider net of investment opportunities.
4. Bitwise Crypto Industry Innovators ETF (BITQ)
BITQ is another cryptocurrency ETF that is focused on equity. It currently tracks the performance of an index created by Bitwise Index Services LLC, known as the Bitwise Crypto Innovators 30 Index.
Experts will agree that buying into this ETF will give you certain benefits no other ETFs will. Some of these benefits include:
- Exposure to the crypto market without having to directly own the crypto assets
- Exposure to companies currently developing the crypto infrastructure, including miners and platforms
- Access to a piece of global cryptocurrency players
One of the other major benefits of BITQ is that, while it carries the same stocks as other crypto funds, its top 10 holdings account for 64% of its assets. If you are completely confident in the rise of Bitcoin and cryptocurrencies, BITQ may be a good option to invest in next year.
5. Bitcoin Strategy ProFund Investor (BTCFX)
In case you missed it, Bitcoin futures mutual fund was launched in late July 2021, just a few months before the launch of BITO.
Known as the Bitcoin Strategy ProFund Investor (BTCFX), this first publicly available Bitcoin futures mutual fund aims to eliminate the need to manage your bitcoin exposure separately through exchanges or wallets.
It’s also designed to provide investment results by investing in Bitcoin futures contracts or through Canadian ETFs that invest in Bitcoin. The fund features a $1,000 minimum initial purchase. If you’re looking for a way to gain returns similar to an investment in Bitcoin without actually investing in Bitcoin, this may be the option for you. BTCFX paves the way for you to gain exposure to bitcoin without the need to do all the heavy lifting that comes with investing in it.
6. First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT)
CRPT is a fairly new ETF that is looking to invest in companies that are driving innovation in the digital economy and cryptocurrency world. According to a statement on its website, CRPT plans to invest at least 80% of its net assets into these companies.
CRPT is similar to other bitcoin ETFs in that it has a portfolio of 30 holdings with 10 of the top holdings accounting for 60% of its assets. These include top names like Coinbase and Marathon Digital.
7. VanEck Digital Transformation ETF (DAPP)
The DAPP is a newer cryptocurrency ETF that invests in companies that are in the loop of the digital asset economy. Just like BITQ, the DAPP is a smaller, more focused ETF with 25 holdings. The top 10 of its holdings account for 64% of its total assets.
DAPP is a small portfolio with three-quarters of it invested in technology stocks and the rest in financials. Don’t let the small portfolio fool you, as it’s one of the most diversified amongst other stocks.
What’s Next?
The approval of Volt Crypto Industry Revolution and ProShares are indications that regulators are warming up to the idea of cryptocurrency ETFs. Although there have been delays with more than a dozen more bitcoin ETFs waiting for approval including VanEck and Global X, analysts are foreseeing that most of these approvals will happen in 2022.
It’s expected that once SEC begins approving Bitcoin ETF, there’s going to be cutthroat competition with a mix of fintech companies, investment firms, and existing ETF issuers all fighting for a place in the bitcoin and cryptocurrency market. This may impact fees and market data distribution, so it’s best to speak to your fund manager or finance professional while awaiting the approvals of more bitcoin ETFs and crypto funds in 2022.
