The Brave New World of Crypto ETFs
There’s a lot of chatter about the brave new world of crypto ETFs. So, what’s going on?
Bitcoin (BTC) and Ethereum (ETH) are two of the most popular and heavily capitalised cryptocurrencies on the digital assets market today. Both have gained a reputation for being a starter home of sorts for new investors who are finally ‘ready and willing’ to take their first steps into the world of cryptocurrency investing.
Cryptocurrencies have gone an a remarkable run these past two quarters and while many investors remain wary of the market hysteria, they can also benefit from its innovations. In terms of investment opportunities, the proliferation of new cryptocurrency exchange traded funds (ETFs) has further simplified (and accelerated) the adoption of digital currency investments among newcomers to the digital assets market.
The History of ETFs
ETFs are a widely adopted strategy used by investors who want to ‘diversify’ their exposure to a particular industry, class, or sector. They were first introduced in the 1990s and rapidly gained popularity with individual investors for their simplicity.
The first Bitcoin ETF in the US started trading on October 19, 2021, and now several crypto ETFs have followed suit. Some of them offer access not only to Bitcoin, but also Ethereum and other popularly traded coins.
Here are examples of crypto ETFs setting the trends:
ProShares Bitcoin Strategy ETF (ticker: BITO)
Kiplinger has officially called the ProShares Bitcoin Strategy ETF ‘a blockbuster’. A fitting name for an ETF that successfully attracted a mind-boggling $1 billion of investors’ money over the course of 48 hours after the ETF was launched. The BITO ETF is historical in the sense that it was the first crypto ETF that the Securities and Exchange Commission allowed to trade on a major US exchange. At present, the BITO ETF has close to $1.5 billion in assets.
Grayscale Ethereum Trust (Ticker: ETHE)
For investors willing to invest outside the ‘safety’ of Bitcoin, Grayscale offers their Ethereum Trust ETF. Widely recognised as the number two cryptocurrency, Ethereum came to fruition once people began to realise that Bitcoin’s blockchain technology could be utilised in myriad ways. Voila! The world found the second most popular digital token – Ethereum. As the name would suggest, this ETF seeks to track the ETH market price and presently has $14.5 billion in assets.
Bitwise 10 Crypto Index Fund (Ticker: BITW)
For those with an appetite for more risk, this ETF is the world’s first crypto index fund offered to provide investors with a way to get more exposure to the crypto market beyond what Bitcoin alone may offer. Earlier this summer, it was reported that Bitcoin’s share of the total market capitalisation of the crypto market fell from 69% to 42% as other assets like Ethereum, Cardano and Solana have grown in popularity. Bitwise says it screens the fund’s holdings for certain risks and rebalances it monthly. While Bitcoin and Ethereum both have a role to play in this ETF, additional holdings include digital assets such as Algorand and Uniswap. The BITW fund has $1.4 billion in assets.
Investors that are looking for space in between the world of traditional stock investing and the wildly innovative and volatile ecosystem of cryptocurrencies may find what their looking for in the expanding market of crypto ETFs.
Author: Greyson Kelly
Greyson Kelly is a business writer living in Milwaukee, Wisconsin. He writes extensively on technological trends, cryptocurrency, and ‘cutting edge’ industry topics. He has an MBA in Business and has over a decade of experience in communications and public relations.