ETFs
3 Crypto ETFs to Buy in June
These exchange-traded funds provide exposure to Bitcoin as well as leading companies in the crypto industry.
If you want to expand your exposure to the crypto sector, the growing number of crypto-themed exchange-traded funds (ETFs) can help. diversify your portfolio. Some of them invest in cryptocurrencies such as Bitcoin (BTC 0.81%), while others invest in technology companies with direct exposure to the crypto sector.
Remember: It’s always important to take a look under the hood to see what these ETFs actually contain. You might be surprised to learn, for example, that not all Bitcoin ETFs are equal. Some of them hold Bitcoin directly, while others rely on financial derivatives to track the price of Bitcoin. With that in mind, here are three crypto ETFs to buy in June.
The Best Bitcoin Spot ETF
Although there are currently nearly a dozen spot Bitcoin ETFs to choose, the one that catches my attention is the iShares Bitcoin Trust (I BITE 2.29%). It is managed by black rock (BLACK -0.23%), the world’s largest asset manager.
Image source: Getty Images.
Since its launch in early January, the iShares Bitcoin ETF has quickly become the most popular of the new spot Bitcoin ETFs, with over $17 billion in assets under management. When analysts talk about the influx of new investors into spot Bitcoin ETFs, this is the one that is typically used as a benchmark for investor sentiment. At one point in late April, the iShares Bitcoin Trust experienced a 71-day streak of net investor inflows, which became a symbol of the scale of untapped demand for Bitcoin.
This ETF does nothing other than track the price of Bitcoin – its only investment. So if you don’t want to buy Bitcoin directly, you can hold this ETF instead. This makes it a perfect investment for the first-time crypto investor and a great way to passively invest in Bitcoin for the long term.
Since all new spot Bitcoin ETFs only hold Bitcoins, it is difficult to find meaningful points of differentiation between them. That said, the iShares Bitcoin Trust has a slightly higher management fee (0.25%) than the cheapest option (0.20%). But if you buy and hold for the long term, the impact of this difference should be negligible.
Two Crypto Stock ETFs
If you’re looking to track the broader performance of the crypto and blockchain sector, there are several good options. Two that stand out are the Amplify Transformational Data Sharing ETF (BLOCK 1.71%) and the First Trust SkyBridge ETF for the Crypto Industry and Digital Economy (CRPT 6.03%).
Both hold diverse baskets of crypto stocks, but the difference between them is actually quite profound, even though they hold largely the same companies. For example, the Amplify Transformational ETF does not have a single security representing more than 5% of the portfolio value. Its risk is well spread across more than 50 securities.
In contrast, the First Trust SkyBridge ETF has two holdings: MicroStrategy (MSTR 2.89%) and Global Coinbase (PIECE OF MONEY 3.19%) — that each represents almost 20% of the total portfolio. It also carries a 10% weighting for two Bitcoin minersand an additional weighting of 10% for Galaxy Digital Funds (GLXY 3.77%). So just five companies represent 70% of the portfolio, representing a much more concentrated degree of risk.
The differences in their approaches had profound impacts on their performance. The Amplify Transformational ETF is up 20% year to date and 65% over the past 12 months. The First Trust SkyBridge ETF is up 40% year to date and 146% over the past 12 months.
Obviously, if you are only looking for short-term performance, the obvious choice would be to choose the ETF that offers superior short-term returns. But if you’re more risk averse and have a longer time horizon, you may prefer to spread your bets across a wider range of companies.
New ETFs to Watch
Although you can’t subscribe to them at the moment, the new Ethereum spot ETFs are worth a quick mention. They were approved by the Securities and Exchange Commission in late May and have not yet begun trading. When they do, they will function as an easy way to invest in Ethereum (just like spot Bitcoin ETFs do with this crypto). As such, they should be on your watchlist.
The main advantage of any ETF is the ease of portfolio diversification. So, if you are new to cryptocurrencies or simply looking for exposure to cryptocurrencies within a more traditional portfolio, any of these ETFs could provide you with what you are looking for.