When ease, simplicity, and security are high on the priority list, an ETF that tracks the underlying crypto asset may be the right choice for you. For those interested in most closely mimicking the price action of the underlying asset, a spot ETF would likely be a better choice than one that invests in futures contracts or other models. While there are currently a number of such ETFs on the market, and more popping up every day, these are two pretty solid options.
Things to consider when choosing an ETF that tracks the valuenof a particular cryptocurrency include:
- Trading volume and liquidity
- Reputation and experience of the institution offering the fund
- Fees and expense ratios
The iShares Bitcoin ETF is run by Blackrock, one of the most trusted and reputable asset managers today. It quickly rose to be the largest such fund, and with it, will have great trading volume and liquidity, along with peace of mind that the fund will be run responsibly.
The Grayscale Ethereum Minitrust was the first Ethereum ETF of its kind. It has been around for quite some time, making it a relatively reliable bet when looking to track spot Ether prices. The Grayscalr ETF also offers among thr lowest fee structures, making it an exceptional value to investors compared to others of its kind.
First those interested in more diversified approach, without the need to invest in a multitude of ETFs, one might consider a Multi-crypto ETF. These act as a one stop shop for a diversified portfolio across a range of cryptocurrencies,greatly simplifying all aspects of trading and investing in crypto. There are a number of such funds available, so you will have to do your homework before choosing the right one for you and your goals and situation. One interesting option is the Bitwise 10 Crypto Index Fund [TICKER: BITW]. This trades on the smaller and less established OTC markets, so extra caution should be exercised for such an investment. As always, please talk to a financial professional before investing to ensure you find the best products and strategies for you and your goals!
While many people tend to invest in crypto for its long term appreciation potential, the volatile nature of it lends itself well to potential, and sometimes violent pull acks in its price. This dynamic can be taken advantage of by short term traders using directional ETFs. When an investor feels there is a clear uptrend in the future of a cryptocurrency, they may choose the normal ETFs we have been speaking of, but if they think a pullback in price is coming, they may choose to use one of the short ETFs such as the #####. These ETFs go up in value in a proportional way when bitcoin or another crypto token go down in price. This is essentially an ETF strategy that is sinilar to what a stock options trader would call a PUT. This can be a long term strategy for individuals who feel cryptocurrencies are worthless and should be worth nothing.
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