ETFs
3 Best Crypto ETFs to Buy Now and Hold for the Long Term
Investors looking to diversify their cryptocurrency holdings now have a choice, thanks to these three ETFs.
The launch of a new spot Bitcoin (BTC -1.01%) ETFs in January were a watershed event for the crypto industry. This is arguably the biggest new product launch on Wall Street in nearly 30 years. The new ETFs have opened up crypto investing to the individual investor, making Bitcoin as easy to buy and sell as a tech stock.
In doing so, these new spot Bitcoin ETFs opened a discussion on the best ways to create and diversify a long-term crypto portfolio. In some cases, invest in a basket of companies or cryptocurrencies can be more effective than trying to pick a winner in a volatile sector. With that in mind, here’s a closer look at the three top crypto ETFs to buy and hold for the long term.
iShares Bitcoin Trust
There are almost a dozen new spot Bitcoin ETFs choice, but the undisputed leader at the moment is the iShares Bitcoin Trust (I BITE 0.10%). It now has over $17 billion in assets under management and has an expense ratio of just 0.25%. The ETF is black rockthe world’s largest asset manager.
Image source: Getty Images.
Granted, there isn’t much difference between the top-performing Bitcoin ETFs. All of them hold only one asset – Bitcoin – and all of them are trying to do it as cheaply and efficiently as possible. From my perspective, the two main points of differentiation are size (assets under management) and fees.
In both of these areas, the iShares Bitcoin Trust excels. It’s the largest of the new spot Bitcoin ETFs, and its 0.25% expense ratio is now the industry standard (although you can find slightly cheaper fees with Ark Invest, which offers a expense ratio of 0.21% for its ETF).
Bitwise 10 Cryptocurrency Index Fund
If you invest in crypto, you will probably want to diversify beyond Bitcoin at some point, and one way to do this is through the Bitwise 10 Cryptocurrency Index Fund (BITW -0.53%). This exchange-traded fund tracks a diverse mix of the top 10 cryptocurrencies, weighted by market cap and rebalanced monthly. It is one of the largest crypto-focused ETFs, with approximately $1.1 billion in assets under management.
Given this ETF’s focus on market cap, Bitcoin represents 68% of the fund’s holdings. Ethereum (ETH -1.75%) represents an additional 23%. Solana (GROUND -2.46%) and XRP (XRP -1.38%) combined represent an additional 5.2%. All other cryptos have a weighting of less than 1%.
Just keep in mind that if you already hold a large position in Bitcoin, either directly or indirectly (e.g. through iShares Bitcoin Trust), you may not get nearly the same price. benefits of diversification that you expect to receive. Yes, the fund holds 10 cryptos. But Bitcoin easily represents the lion’s share of the fund’s holdings.
Once the newly approved Ethereum spot ETFs begin trading, you will be able to make the case that it will be simpler and more profitable to simply purchase the Bitcoin and Ethereum ETFs. It really depends on how much exposure you want to smaller, lesser-known cryptocurrencies that can help round out a diversified portfolio.
Amplify Transformational Data Sharing ETF
Finally, it is worth considering how to gain exposure to companies in the blockchain and crypto industry. This includes exposure to Bitcoin mining companies, as well as cryptocurrency exchanges and blockchain payments companies.
A good choice here is the Amplify Transformational Data Sharing ETF (BLOCK -0.39%), which provides access to a wide range of more than 50 blockchain and crypto securities. Currently, the fund’s largest holdings include Global Coinbase, Robinhood MarketsAnd MicroStrategy. He also invests in Bitcoin mining companies like Marathon Digital Funds and blockchain payment companies like Block.
While you could theoretically buy all of these crypto stocks individually, letting the ETF handle this for you is likely cheaper and more efficient. The expense ratio is just 0.76% and the fund’s holdings appear to be balanced among the top companies driving innovation in the crypto market. No single company represents a share greater than 5% of the fund’s assets.
Diversify with ETFs
Most likely, Wall Street is not yet finished offering new ETFs to crypto investors. If the new Ethereum spot ETFs perform much like the new Bitcoin spot ETFs, it is highly likely that the process will continue with other single-cryptocurrency ETF offerings.
When you mix these single-cryptocurrency ETF offerings with ETFs that provide broad exposure to the blockchain sector, you can enjoy even greater diversification benefits. Don’t forget to take a look under the hood before purchasing. If you like the fund’s holdings and are comfortable with the expense ratios charged, these crypto ETFs could be a fantastic way to diversify your portfolio and build wealth over the long term.
Dominique Basulto has positions in Bitcoin, Ethereum and Solana. The Motley Fool holds positions and recommends Bitcoin, Block, Coinbase Global, Ethereum, Solana and XRP. The Motley Fool has a disclosure policy.