Best Crypto Investment Funds for Retail Investors

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Contributor, Benzinga
January 12, 2022

In the grand scheme of things, cryptocurrency is an extremely new idea. Its novelty has caused mixed feelings about the innovation, with some hesitant to invest. For this reason, a variety of crypto-related funds have been established to give investors a new way to invest. 

The Top Crypto Funds for Retail Investors

Here are some of the most popular crypto funds. They range from Bitcoin funds to funds of companies that incorporate blockchain technology. 

ProShares Bitcoin Strategy ETF

The ProShares Bitcoin Strategy ETF (NYSEARCA: BITO) was the first exchange-traded fund (ETF) to track a specific cryptocurrency. In this case, the underlying asset is Bitcoin. Through futures contracts, the fund allows users to gain access to a liquid Bitcoin investment without having to directly purchase the asset. Since its inception in October 2021, it has fallen over 30%, while the crypto market is down approximately 25% over the same time period. 

Valkyrie Bitcoin Strategy ETF

The Valkyrie Bitcoin Strategy ETF (NASDAQ: BTF) is similar to the ProShares Bitcoin ETF. The fund tracks Bitcoin’s price and mimics it in the fund. Unlike ProShares, Valkyrie is an asset management company that focuses primarily on digital assets. The fund was also listed in late October 2021 and has fallen over 30% since then. 

Grayscale Bitcoin Trust

The Grayscale Bitcoin Trust (OTCMKTS: GBTC) has been around since 2013. However, it was only available for accredited investors until January 2020, when it became a U.S. Securities and Exchange Commission (SEC) reporting company. GBTC tracks the price of Bitcoin. However, it does have a 2% fee and is not available on all brokerages. The trust has been around for quite some time, and the price has appreciated by nearly 30,000%. 

Amplify Transformational Data Sharing ETF

The Amplify Transformational Data Sharing ETF (NYSEARCA: BLOK) resembles a traditional ETF. It has a variety of companies that compose the fund. All these companies have some relation to blockchain technology, such as Coinbase Global Inc. (NASDAQ: COIN) or PayPal Holdings Inc. (NASDAQ: PYPL). The ETF has been around since early 2018 and has almost doubled since then. 

Bitwise 10 Crypto Index Units Beneficial Interest Fund

The Bitwise 10 Crypto Index Units Beneficial Interest Fund (OTCMKTS: BITW) is a fund that tracks the top 10 cryptocurrencies by market capitalization. The weighting of each currency depends on market capitalization and is rebalanced monthly. BITW has been trading since late 2020 and is up over 300%. 

Siren Nasdaq NexGen Economy ETF

The Siren Nasdaq NexGen Economy ETF (NASDAQ: BLCN) tracks companies that invest in blockchain, which ranges from supporting to actively developing the technology. The ETF is composed of companies such as IBM Common Stock (NYSE: IBM) and JPMorgan Chase & Co. (NYSE: JPM). Since its inception in early 2018, it is up over 70%. 

Why Try an Investment Fund?

Several reasons could influence an investor to choose an investment fund as opposed to a direct crypto investment. Risk management and ease of investment are among the main reasons you may decide to use an investment fund.

Risk is often a deterrent to investing in cryptocurrency. Because of crypto’s volatility, direct investments carry high risk. Investment funds can help reduce risk by diversifying the investor’s holdings. Additionally, funds are subject to more regulation, reducing the potential for fraud. 

Funds can also be a much easier way to invest in crypto. Direct crypto investments can be confusing and involve several steps, whereas funds can be bought from most brokerages. Additionally, fund managers adjust a fund’s holdings, making for a less time-consuming investment for the investor.

Comparison of Grayscale and Proshares Bitcoin ETF

While the Grayscale Bitcoin Trust (GBTC) and the ProShares Bitcoin ETF (BITO) both revolve around Bitcoin, they are different in nature. 

GBTC is directed more towards private investors as it is not listed on major exchanges and has management fees. As a listed fund, BITO is for average investors.

Additionally, BITO uses Bitcoin futures contracts while GBTC uses its own Bitcoin holdings to determine the price. While this is not a major difference, it is worth noting. 

If you want to learn more about GBTC and BITO, Benzinga offers a variety of insights and reviews on both.

Compare Crypto Exchange & Brokers

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Conclusion

In the past several years, the number of options for crypto-related investment funds has grown dramatically. The variety has also increased. This transformation gives retail investors tons of options and directions to go in with crypto investments. No matter what you are looking for, you can probably find a fund to match your preferences.

Frequently Asked Questions

Q

Do retail investors invest in mutual funds?

A

Retail investors certainly can invest in mutual funds, though it may not be the best option. This is because mutual funds charge management fees, which can eat away at your gains.

Q

What is the investment limit for retail investors?

A

There is no investment limit for retail investors. However, investors with less than $25,000 cannot make more than three day trades in a five-day trading period. Except for this rule, retail investors face few limitations.

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About Caden Pok

Caden has been involved with cryptocurrency for several years. He began trading and investing in crypto in 2018. Now, we mines multiple coins and holds positions in Cardano and Ethereum. He is very experienced with DeFi technology.