The S&P 500's return this year looks impressive — until you look at bitcoin's 145% gain to above $100,000. And investors are turning to bitcoin ETFs to cash in on the cryptocurrency's run.
Shares of the largest of these ETFs are up an average 114% since February — the first full month most of the funds had been trading. But while it's tempting to treat all the bitcoin ETFs the same, as they're all basically tracking the same asset, they have important distinctions.
One futures-based ETF, ProShares Bitcoin, even yields 52.3%. That's a big difference from most of the spot-price bitcoin ETFs that yield nothing. But it's another reminder of how investors are still looking for the best ways to play cryptocurrency.
"We believe many advisors and investors that have access to bitcoin via ETFs do so as a small low-single-digit percentage of the portfolio in a risk-on manner," said Todd Rosenbluth, head of research at TMX Vetta Fi. "However many people have remained on the sidelines perhaps waiting for a better entry point or a way to access without the same volatility."
Bitcoin ETF Winners By Assets
Which such ETFs are winning over the most investors during this year's boom?
iShares Bitcoin Trust emerged as the big victor. It's now the largest, by far, with $51.1 billion in assets, says ETFDB.com.
But Fidelity is making a solid run, too. Its Fidelity Wise Origin Bitcoin Fund grabbed roughly $20 billion in assets. Both the Fidelity and iShares Bitcoin ETFs are up 138% this year since February. That tops the 113% gain by the $20 billion Grayscale Bitcoin Trust.
Grayscale Bitcoin, though, converted its preexisting futures-based trust into a spot price-based ETF. As a result, it paid a yield of 7.7%.
High-Yield Bitcoin ETF?
Most investors prefer the spot-price ETFs. But use of futures contracts has its perk: Sky-high yields.
The ProShares Bitcoin ETF's 52% yield is the best example. "For tax purposes, each fund recognizes any net income of its subsidiary, including gains on such futures contracts or swap agreements in which its subsidiary invests, as an ordinary dividend on the final day of the subsidiary's tax year," says ProShares' website.
But that yield may not be an asset. It comes at a price. Rather than being up 138% since February like the spot-price bitcoin ETFs, ProShares Bitcoin is up just 28%. Keep in mind, too, the dividends may trigger a taxable event for some investors.
"Bitcoin futures based ETFs have moved out of focus for many investors," Rosenbluth said. "They were initially the best way to access the price of bitcoin in ETF wrapper. However BITO has seen net outflows since the middle of January."
Bitcoin ETFs Drop Off Fast
Following the iShares and Fidelity funds, the ETFs drop off fast. Even ARK Invest's ARK 21Shares Bitcoin ETF lured less than $5 billion in assets. VanEck Bitcoin ETF drew in barely more than $1 billion. And those are still big enough to be considered successful. Franklin Bitcoin lured less than $800 million.
"A strong ETF brand with broader distribution has helped in a crowded market," Rosenbluth said.
Largest Bitcoin ETFs
| ETF | Symbol | Assets ($ billions) | % ch. since Feb. 2024 | Yield % |
|---|---|---|---|---|
| iShares Bitcoin Trust | IBIT | $51.1 | 138.4% | 0% |
| Grayscale Bitcoin Trust (BTC) | GBTC | 20.4 | 112.6% | 7.72 |
| Fidelity Wise Origin Bitcoin | FBTC | 19.7 | 138.8% | 0 |
| ARK 21Shares Bitcoin | ARKB | 4.6 | 138.7% | 0 |
| Bitwise Bitcoin | BITB | 3.9 | 138.5% | 0 |
| ProShares Bitcoin | BITO | 2.5 | 27.5% | 52.27 |
| 2x Bitcoin Strategy | BITX | 2 | 193.1% | 8.53 |
| ARK Next Generation Internet | ARKW | 1.9 | 68.5% | 0 |
| VanEck Bitcoin | HODL | 1.3 | 138.5% | 0 |
| Coinshares Valkyrie Bitcoin Fund | BRRR | 0.9 | 139.0% | 0 |
Sources: ETFDB, S&P Global Market Intelligence, IBD
Follow Matt Krantz on X (Twitter) @mattkrantz
