6 Best Bitcoin ETFs to Buy in 2022

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An ETF, or exchange-traded fund, is a collection of similar investments that people can buy. ETFs create a diversified portfolio without the investor having to choose from a range of stocks. Similarly, Bitcoin ETFs are pools of Bitcoin-related investments. If you’re looking to get into crypto investing but feel investing in Bitcoin or altcoins is too much of a risk – or you don’t want to worry about finding the best places to store crypto – investing in a Bitcoin ETF could be something for you .

An article by Forbes points out that Bitcoin ETFs currently do not include Bitcoin, but instead hold Bitcoin futures contracts or shares in companies related to Bitcoin and other crypto. For example, a Bitcoin ETF can include the stock of a crypto exchange, the manufacturer of cold wallets, or – more commonly in the case of the best Bitcoin ETFS – Bitcoin futures.

What are Bitcoin Futures?

Futures represent a legal agreement to buy or sell a specific commodity at a predetermined price at a specific time. When you buy Bitcoin futures, you agree to buy Bitcoin. Remember that when you trade in futures, you are selling the commodity before it ever reaches your hands. You don’t have to worry about choosing a crypto exchange or buying a cold wallet for safe storage. You don’t actually want to hold Bitcoin.

The Securities and Exchange Commission will not allow ETFs to hold Bitcoin or any other crypto, since crypto is traded on unregulated exchanges. Futures, on the other hand, are regulated by the SEC. Many sophisticated investors are familiar and comfortable with futures, so these ETFs are growing rapidly as an alternative to Bitcoin trading.

Best Bitcoin ETFs

The SEC has currently approved six Bitcoin ETFs for trading, according to Forbes. While we’re calling these the best Bitcoin ETFs to buy in 2022, they’re also the only ones available — at least for now.

ProShares Bitcoin Strategy ETF

ProShares was the first Bitcoin ETF to hit the market, back in October 2021. It got $1 billion in growth in the first few days. The ETF has fallen dramatically since its launch, in line with the crypto winter in which Bitcoin lost 70% of its all-time high value. The crypto has plunged from $68,000 on November 10, 2021 to less than $20,000 on August 31, 2022.

Similarly, Proshares (BITO) is down 70% since launch. You’ll find similar bearish numbers with all the ETFs on this list. The crypto winter may represent a time to buy. As investor and author Robert Kiyosaki tweeted at the beginning of the 2022 crypto crash, “Crash is the best time to get rich.”

In addition to Bitcoin futures, the ProShares BITO ETF holds Treasuries and cash, according to Forbes, providing some diversity and a hedge against the crypto winter. The ETF is currently trading for just under $12 per share, which could provide an opportunity to take a position without a large investment.

ProShares Short Bitcoin ETF

If you are bearish on Bitcoin and believe that the current crypto winter will drag on, with no reversal in sight, consider the ProShares Short Bitcoin ETF (BITI). Unlike the other ETFs on this list, the ProShares Short Bitcoin ETF is speculating on a further decline in the price of Bitcoin. It was launched in June 2022, just before the crypto winter and has started to climb. With some experts saying that crypto winter could end by 2023 or 2024, there is still time to get in on BITI.

Valkyrie Bitcoin Strategy ETF

Valkyrie trades almost exclusively in Bitcoin futures, and currently has $22 million in assets. In addition, assets can consist of government securities, money market funds and corporate bonds. It does not deal in Bitcoin stocks or companies otherwise related to Bitcoin. For this reason, Valkyrie closely tracks Bitcoin’s value, but the company warns, “investors seeking direct exposure to the price of Bitcoin should consider another investment.”

Part of the Nasdaq Composite, Valkyrie is an actively managed ETF listed as “non-diversified” under the Investment Company Act of 1940. It has a limited number of US Treasury bills, but close to 100% of its net assets are tied up. in Bitcoin futures. Valkyrie traded for just $7.28 per share at the beginning of September. If you believe that the crypto winter will eventually pass, Valkyrie could be a solid investment to buy and hold.

VanEck Bitcoin Strategy ETF

Like Valkyrie, VanEck aims to keep most of his investments in Bitcoin futures, but may have some assets invested in government bonds and cash. VanEck differs from the other investments on this list because it is managed as a C-Corp tax entity, rather than a registered investment company. That means it doesn’t have to distribute dividends to investors, which can mean lower taxable distributions. VanEck also manages a number of other equity and futures-based ETFs, including VanEck Gaming, VanEck Environmental Services, VanEck Biotech, VanEck Video Gaming and eSports and VanEck Digital Transformation. The company’s focus on emerging industries, sustainability and specialized exposures promises longevity. VanEck is one of several investment firms that have submitted an application for a spot Bitcoin ETF, which would track the price of Bitcoin, rather than Bitcoin futures. The company’s innovative approach could make the VanEck Bitcoin Strategy ETF a tempting investment. It is currently trading at a 52-week low of $18.15, which is still higher than some of the other ETFs on this list.

AdvisorShares Managed Bitcoin Strategy ETF

The actively managed AdvisorShares Managed Bitcoin Strategy ETF (CRYP) invests primarily in Bitcoin futures, with some Treasuries, cash and even related ETFs as part of the portfolio. Depending on the price of Bitcoin, the Fund can reduce or increase its Bitcoin futures exposure from zero to 100%. It manages just $184,000 in assets and is the latest Bitcoin ETF to gain SEC approval. It hit the market in April 2022. Actively managed by Mark Yusko, CEO and Chief Investment Officer of Morgan Creek Capital Management, the fund mitigates much of the risk associated with Bitcoin futures, as well as the investment challenges associated with trading Bitcoin.

Global X Blockchain and Bitcoin Strategy ETF

Global X combines Bitcoin futures and blockchain stocks to create a more diversified portfolio than many of the other ETFs on this list. Specifically, Global X owns shares in the Global X Blockchain ETF, which focuses on blockchain development companies, crypto exchanges and digital mining companies. In August 2022, the company split its $10 million in assets with 44% in Bitcoin futures and 56% in the Global X Blockchain ETF.

Global X’s experience with global exposure across multiple industries can make the ETF a tempting investment. It is currently trading near its 52-week low, leaving plenty of room for growth.

Final Take

Bitcoin ETFs allow you to take advantage of a high-risk – and potentially high-reward – asset without actively managing your portfolio. A Bitcoin ETF may be the right choice if you don’t want to mess with the technology behind trading Bitcoin and prefer a regulated investment.

You should talk to a financial advisor who can offer the guidance you need and help you add Bitcoin ETFs to your portfolio or start an investment account.

The information is accurate as of September 8, 2022.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, assessments or recommendations expressed in this article are the author’s alone and have not been reviewed, approved or otherwise endorsed by any entity mentioned in this article.