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, Zcash and Dash. If investing in these digital assets individually is challenging for you, you can invest in exchange-traded funds (ETFs) or crypto ETFs. Crypto 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 crypto ETFs 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.
|BLOK||Amplify Transformational Data Sharing ETF||
|BLCN||Siren Nasdaq NexGen Economy ETF||
|LEGR||First Trust Indxx Innovative Transaction & Process ETF||
|KOIN||Capital Link NextGen Protocol ETF||
Why Invest in Crypto ETFs?
For new investors, crypto ETFs can offer a few distinct advantages compared to directly investing in cryptocurrency.
Crypto ETFs are passively managed.
Blockchain and crypto 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 crypto ETFs provide a range of companies to buy and hold with a single trade. The low cost of crypto ETFs 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.
Crypto 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 ETFs.
Crypto 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 unregulated. Crypto ETFs, on the other hand, are listed on major stock exchanges such as Nasdaq and the NYSE, making them tax efficient.
Most pension funds and tax havens do not allow the direct purchase of Bitcoin. However, crypto ETFs are regulated by authority bodies such as the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Crypto ETFs offer better returns than cryptocurrency.
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 provide better returns in the long-term.
5 Crypto ETFs by AUM
Consider investing in these top crypto 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 $365 million. It has a 52-week low of $12.79 and a 52-week high of $36.69. Amplify Transformational Data Sharing ETF has high liquidity and trades more than 270,526 shares per day. It has an annual dividend yield of $0.66 per share. This ETF has a 1-year return rate of 92.11%.
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. (GLXY), Baidu, Inc. (BIDU) and Micron Technologies (MU).
This ETF has an expense ratio of 0.68% and has an AUM of $188 million. It has a 52-week low of $17.55 and a 52-week high of $41.68. Reality Shares Nasdaq NexGen Economy ETF has an annual dividend yield of $0.31 per share. It trades more than 69,473 shares per day. This ETF has a 1-year return rate of 58.66%.eeee
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 $54.4 million. It has a 52-week low of $18.85 and a 52-week high of $38.09. First Trust Indxx Innovative Transaction & Process ETF has an annual dividend yield of $0.36 per share. It trades more than 3,527 shares per day. This ETF has a 1-year return rate of 17.90%.
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 $20.6 million. It has a 52-week low of $20.54 and a 52-week high of $38.34. Innovation Shares NextGen Protocol ETF has an annual dividend yield of $0.15 per share. It trades more than 19,404 shares per day. This ETF has a 1-year return rate of 30.85%.
Best Online Brokers for Crypto ETFs
You can buy and sell shares of crypto ETFs on 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.
Crypto ETFs Offer Less Risk and More Rewards
As a result of increasing regulations imposed on cryptocurrency, crypto 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. These ETFs also provide higher returns than investing in cryptocurrencies. It has helped fuel the growth of digital currencies without having to trade crypto.
Related content: Best Utilities ETFs Right Now
Benzinga crafted a specific methodology to rank cryptocurrency exchanges and tools. We prioritized platforms based on offerings, pricing and promotions, customer service, mobile app, user experience and benefits, and security. To see a comprehensive breakdown of our methodology, please visit see our Cryptocurrency Methodology page.
Gemini builds crypto products to help you buy, sell, and store your bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and access all the tools you need to understand the crypto market and start investing, all through one clear, attractive interface. Gemini Crypto Platform offers excellent account management options. You can manage your account at a glance, view your account balance 24-hour changes and percent changes. Get started with Gemini now.