Contributor, Benzinga
Updated: June 16, 2022

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Since the introduction of Bitcoin in 2009, the cryptocurrency market has been growing steadily across the globe. Cryptocurrency is a completely digital asset that can be exchanged between people from anywhere in the world and at any time. 

There are more than 1,000 cryptocurrencies that have emerged such as Ethereum, Uniswap and Aave. If investing in these digital assets individually is challenging for you, you can invest in exchange-traded funds (ETFs), or crypto ETFs. Cryptocurrency ETFs consist of a gamut of companies that develop technologies for enabling cryptocurrency trade. 

ETFs are financial products that track an underlying asset or index. Investing in ETFs can be more suitable for passive investors who do not have the time to constantly monitor the price of cryptocurrencies. Since you need to sign up for a digital wallet and a crypto exchange to trade cryptocurrencies, putting your money behind crypto ETFs can be faster and safer for new investors.   

Take a look at why investing in a cryptocurrency ETF can be profitable for your portfolio.  

Crypto ETFs Biggest Gainers and Losers

Here’s a quick look at the crypto ETFs with the biggest price movements on the market.

TickerCompany±%PriceInvest

Why Invest in Crypto ETFs?

For new investors, cryptocurrency ETFs can offer a few distinct advantages compared to directly investing in cryptocurrency.

Crypto ETFs are passively managed. 

Blockchain and crypto-focused ETFs are professionally managed by fund managers. The crypto market is highly volatile and can be a risky investment. Individual cryptocurrencies such as Bitcoin and Dogecoin can be hard to track without the right tools and trading platform. 

Crypto ETFs are generally backed by multiple companies involved in blockchain technologies. The underlying assets of cryptocurrency-based ETFs provide a range of companies to buy and hold with a single trade. The low cost of a cryptocurrency ETF gives you the benefit of holding several profitable companies in your portfolio at once. It can prove to be a better investment option for tracking and trading individual cryptocurrencies on the digital markets.   

ETFs provide instant diversification.

In most cases, ETFs hold assets in multiple companies or commodities. Crypto ETFs can have more than a dozen companies from different asset classes as its underlying assets. These ETFs can provide your portfolio with instant diversification. Make sure you go through all of the listed companies before investing in crypto-based ETFs. 

Cryptocurrency ETFs are more secure. 

Cryptocurrency owners are prone to cyber attacks. You might have to invest in hardware wallets to store your public and private keys for protecting your digital assets from cyber threats. Unlike cryptocurrency, crypto ETFs give you a more secure and reliable investment alternative to trading crypto.   

Crypto ETFs are tax-efficient. 

Although billions of dollars worth of cryptocurrencies are traded on the digital market every day, they are still decentralized and widely unregulated. Crypto ETFs, on the other hand, are listed on major stock exchanges such as Nasdaq and the NYSE, making them more regulated than many altcoins and decentralized applications built on the blockchain. 

Most pension funds and tax havens do not allow the direct purchase of Bitcoin. However, crypto-focused ETFs are regulated by authority bodies such as the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).     

ETFs trading in cryptocurrency offer a safer bet than crypto itself. 

Price movements of cryptocurrencies such as Ethereum and Litecoin can be hard to predict. The rapid fluctuations in the price of cryptocurrencies may not fit the trading style of low-risk profile traders. Crypto ETFs are comparatively less risky to invest in and may provide better returns in the long-term. 

While you probably won't find the astronomical returns found in cryptos like Shiba Inu and Dogecoin, you're still exposed to a high growth industry. Since these ETFs are vetted by regulators and managed by institutions, you'll be able to gain exposure to cryptocurrency without needing to take on extreme amounts of risk.

6 Cryptocurrency ETFs Rated by AUM

Consider investing in these top crypto-based ETFs available on the market.

Amplify Transformational Data Sharing ETF (NYSEARCA: BLOK)

Amplify Transformational Data Sharing ETF has been on the market since 2018. Unlike most ETFs, this ETF does not track an index. It has holdings in several companies that are involved with the development and deployment of blockchain technologies. These companies include Silvergate Capital Corp. (SI), MicroStrategy Incorporated (MSTR) and HIVE Blockchain Technologies (HIVE)

This ETF has an expense ratio of 0.70% and has assets under management (AUM) of $547 million. It has a 52-week low of $18.36 and a 52-week high of $57.01. Amplify Transformational Data Sharing ETF has high liquidity and trades more than 34,000 shares per day. It has an annual dividend yield of $5.75 per share. This ETF has a 1-year return rate of over -60%.

Reality Shares Nasdaq NexGen Economy ETF (NASDAQ: BLCN)

Reality Shares Nasdaq NexGen Economy ETF has been open to trade since 2018. It tracks the Reality Shares Nasdaq Blockchain Economy Index and has holdings in 73 companies. These companies include Galaxy Digital Holdings Ltd. (BRPHF), Baidu, Inc. (BIDU) and Micron Technologies (MU)

This ETF has an expense ratio of 0.68% and has an AUM of $155.53 million. It has a 52-week low of $26.14 and a 52-week high of $52.28. Reality Shares Nasdaq NexGen Economy ETF has an annual dividend yield of $0.20 per share. It trades more than 7,000 shares per day. Currently, the ETF is down over 40% on its 1-year return rate.

First Trust Indxx Innovative Transaction & Process ETF (NASDAQ: LEGR) 

First Trust Indxx Innovative Transaction & Process ETF has been listed on the stock exchange since 2018. It tracks the Indxx Blockchain Index and has holdings in 100 companies. These companies include Baidu, Inc. (BIDU), Micron Technologies (MU) and Advanced Micro Devices (AMD). 

This ETF has an expense ratio of 0.65% and has an AUM of $133.31 million. It has a 52-week low of $33.89 and a 52-week high of $45.38. First Trust Indxx Innovative Transaction & Process ETF has an annual dividend yield of $0.82 per share. It trades more than 13,000 shares per day. This ETF has a 1-year return rate of -17.80%. 

Purpose Bitcoin ETF (TSX: BTTC)

Purpose Bitcoin ETF, the world's first bitcoin ETF, kicked off with more than $590 million in assets under management after launching in February 2020. The ETF carries a management fee of 1%.

BTTC directly purchases bitcoin and holds it in cold storage without the risk of trading at large premiums to the value of the ETF's underlying bitcoin holdings. This approach allows you to gain more direct exposure without buying and selling crypto directly through a wallet on an exchange like Coinbase.

Related content: Best Utilities ETFs Right Now

Innovation Shares NextGen Protocol ETF (NYSEARCA: KOIN) 

Innovation Shares NextGen Protocol ETF has been open to trade since 2018. It tracks the Innovation Labs Blockchain Innovators Index and has holdings in 45 companies. These companies include Microsoft Corporation (MSFT), NVIDIA Corporation (NVDA) and Visa Inc. (V).

This ETF has an expense ratio of 0.95% and has an AUM of $21.77M. It has a 52-week low of $32.32 and a 52-week high of $46.21. Innovation Shares NextGen Protocol ETF has an annual dividend yield of $0.70 per share. It trades more than 2,600 shares per day. This ETF has a 1-year return rate of -20%.

Grayscale Bitcoin Trust (OTCQX: GBTC)

The Grayscale Bitcoin Trust sits at $13.3B AUM as of June 2022. The trust is available by prospectus only, opening periodically to accept new funding. Additionally, Grayscale has committed to converting the fund into an ETF. If you wish to avail yourself of this future cryptocurrency ETF, Vanguard and similar investment firms can help you gain access when the fund is available. Reach out to a broker who can contact you when they know GBTC is taking on more investors.

Since its inception in 2013, the trust has become a popular place for large banks and investment firms to increase their exposure on the crypto market. Recently, Morgan Stanley bought $240M in shares of GBTC, becoming the second-largest shareholder after ARK Invest.

Best Online Brokers for Crypto-Centric ETFs

You can buy and sell shares of a cryptocurrency ETF with an online broker. Most online brokers let you trade stocks and ETFs commission-free. You might be required to maintain a minimum balance to open an account on these trading platforms.

Online brokers let you easily manage your portfolio. It also provides plenty of advanced tools and educational resources to improve your trading tactics. 

Here’s a rundown of the best online brokers to help you get started. 

  • TD Ameritrade
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    Best For
    Options Trading
    Overall Rating
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    securely through TD Ameritrade's website
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  • Webull
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    Best For
    Intermediate Traders and Investors
    Overall Rating
    Read Review
    securely through Webull's website
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  • Robinhood
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    Best For
    Beginners
    Overall Rating
    Read Review
    securely through Robinhood's website
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  • IBKR Stocks & ETFs
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    Best For
    Stocks & ETFs
    Overall Rating
    Read Review
    securely through IBKR Stocks & ETFs's website
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  • public.com
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    Best For
    Trading Ideas
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    securely through public.com's website
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  • TradeStation – Online Broker – ONL-TRA-INVE-2737
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    Best For
    Futures Trading
    Overall Rating
    Read Review
    securely through TradeStation – Online Broker – ONL-TRA-INVE-2737's website
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Crypto ETFs Offer Less Risk and More Rewards

As a result of increasing regulations imposed on cryptocurrency, crypto-based ETFs were introduced to the market. The price movements of leading cryptocurrencies such as Bitcoin can be unpredictable and your digital assets may not entirely be safe from cyber-attacks.

Crypto ETFs let you manage your assets at your convenience. Cryptocurrency ETFs also allow you to diversify your holdings with limited capital. It has helped fuel the growth of digital currencies without having to trade crypto directly.  

Frequently Asked Questions

Q
Should I buy Bitcoin or a Crypto ETF?
A

If you aren’t looking to actively manage your crypto investments but you want exposure to the high risk high reward volatility of cryptocurrencies a crypto ETF might be a good option for you. Crypto ETF’s will give you less risk through diversification while still giving you some exposure to the crypto and web3 world.

Related content: Best Utilities ETFs Right Now

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