Bitcoin (BTC-USD) ETFs have been in the spotlight lately. And while their performance hasn’t quite lived up to the expectations of crypto enthusiasts, there’s still potential for growth. I anticipate a surge in investments flowing into these funds as wealth managers and financial advisors allocate even small portions of client capital into the best Bitcoin ETFs to diversify.
The halving event has come and gone with a sharp recovery in Bitcoin price. It briefly dipped below $60,000 and has since retraced to $67,000 at the time of writing.
This rebound underscores Bitcoin’s resilience and ability to bounce back from market fluctuations. Investors are likely reassured by this upward momentum, further bolstering interest in Bitcoin and related investment vehicles like ETFs.
Here are three of the best Bitcoin ETFs for investors to consider.
Valkyrie Bitcoin and Ether Strategy ETF (BTF)
Valkyrie Bitcoin Strategy ETF (NYSE:BTF) aims to track Bitcoin’s and Ethereum’s (ETH-USD) performance.
This ETF provides investors with a convenient way to gain exposure to Bitcoin’s price movements without directly holding the cryptocurrency. Its strategy to achieve this involves future contracts and other instruments.
It holds roughly an equal mix of Bitcoin and Ethereum through its futures contracts, which may give some level of diversification despite their correlated natures.
BTF holds assets worth $50.84 million with an expense ratio of 1.24%. It has 2.70 million shares outstanding and offers a dividend yield of 11.53%, with a trailing twelve-month dividend of $2.23. BTF has a 1-year return of +81.22% and a beta of 0.74.
The strong dividend is not typical over long periods and is a symptom of the significant market volatility.
Bitcoin Strategy ETF (BITO)
Bitcoin Strategy ETF (NYSE:BITO) seeks to replicate Bitcoin’s performance by investing in Bitcoin futures contracts traded on regulated exchanges.
Like the other best Bitcoin ETFs, BITO provides investors with a regulated and transparent way to gain exposure to Bitcoin’s price movements without directly holding the cryptocurrency.
BITO boasts assets totaling $2.38 billion, with an expense ratio of 0.95%. It has 85.22 million shares outstanding and offers a dividend yield of 15.91%, with a trailing twelve-month dividend of $4.62. BITO has a 1-year return of +78.19% and a beta of 0.68.
BITO was one of the original Bitcoin ETFs that relied on future contracts. This starkly contrasts the spot ETFs that own the underlying asset.
The pros of using futures are that it gives strong income potential but does not track the underlying as accurately. Also, the dividend means that total return potential could be less than simply owning Bitcoin due to the price adjustment at the exchange once the dividend is issued and capital erosion, as seen in other ETFs that pay big dividends.
Valkyrie Bitcoin Fund (BRRR)
With cold storage custody of its bitcoin holdings and expertise from digital asset-focused investment firms, Valkyrie Bitcoin Fund (NASDAQ:BRRR) aims to replicate the performance of bitcoin as represented by the CME CF Bitcoin Reference Rate.
BRRR boasts assets of $509.34 million with a low expense ratio of 0.25%. With 40,000 shares outstanding and a beta of 0.92, BRRR offers investors a regulated and accessible avenue to gain exposure to Bitcoin’s performance.
In theory, spot ETFs like BRRR should track the underlying price more accurately than futures-baed ETFs such as BITO. Some analysts also believe ETFs like BRRR could outperform them on a total return basis due to having lower expense ratios and being a less complex instrument to manage.
If holding Bitcoin in a wallet isn’t suitable for you, BRRR could be worth considering. Especially if you won’t benefit from the substantial dividend of the other ETFs that could perform less well over the long run.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
