Bitcoin
Top 3 Crypto ETFs to Buy Now and Hold for the Long Term
Launch of the new spot Bitcoin (CRYPTO:BTC) January ETFs were a watershed moment for the crypto industry. Arguably, it was the biggest new product launch on Wall Street in nearly 30 years. New ETFs have opened up crypto investing to the individual investor, making Bitcoin as easy to buy and sell as a technology stock.
In the process, these new spot Bitcoin ETFs opened up a discussion about the best ways to build and diversify a long-term crypto portfolio. In some cases, invest in a basket of companies or cryptocurrencies can be more effective than trying to pick a winner in a volatile industry. With that in mind, here’s a closer look at the top three crypto ETFs to buy and hold for the long term.
iShares Bitcoin Trust
There are nearly a dozen new Bitcoin ETFs in sight to choose from, but the clear leader right now is iShares Bitcoin Trust (NASDAQ:IBIT). It now has more than $17 billion in assets under management and has an expense ratio of just 0.25%. The ETF is Black stonethe largest asset manager in the world.
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Admittedly, there is not much difference between the top-tier Bitcoin ETFs. They all hold just a single asset – Bitcoin – and they all try to do so as cheaply and efficiently as possible. From my perspective, the two main points of differentiation are size (assets under management) and fees.
On both counts, the iShares Bitcoin Trust is excellent. It’s the largest of the new spot Bitcoin ETFs, and its 0.25% expense ratio is now the industry standard (although you can find slightly cheaper fees with Ark Invest, which offers an expense ratio of 0.21 % for your ETF).
Bitwise 10 Crypto Index Fund
If you’re investing in crypto, you’ll probably want to diversify away from Bitcoin at some point, and one way to do that is with Bitwise 10 Crypto Index Fund (OTC: BITW). This exchange-traded fund tracks a diverse mix of the top 10 cryptocurrencies, weighted by market cap and rebalanced monthly. It is one of the largest crypto-oriented ETFs, with approximately $1.1 billion in assets under management.
Given the emphasis this ETF places on market capitalization, Bitcoin represents an impressive 68% of the fund’s holdings. Ethereum (CRYPTO: ETH) accounts for another 23%. Solana (CRYPTO: SOL) and XRP (CRYPTO:XRP) combined account for another 5.2%. All other cryptocurrencies have a weight of less than 1%.
Just keep in mind: if you already have a large position in Bitcoin, whether directly or indirectly (such as through the iShares Bitcoin Trust), then you may not be getting nearly the diversification benefits you think you could be getting. Yes, the fund has 10 cryptocurrencies. But Bitcoin easily accounts for the majority of the fund’s holdings.
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Once the newly approved spot Ethereum ETFs begin trading, you could argue that it will be simpler and more cost-effective to just buy the Bitcoin and Ethereum ETFs. It really depends on how much exposure you want to smaller, lesser-known cryptocurrencies that can help round out a diversified portfolio.
Amplify Transformational Data Sharing ETF
Finally, it’s worth thinking about how to gain exposure to companies in the blockchain and crypto sector. This includes exposure to Bitcoin mining companies, as well as cryptocurrency exchanges and blockchain payment companies.
A good choice here is the Amplify Transformational Data Sharing ETF (NYSEMKT: BLOK), which offers access to a wide range of 50+ blockchains and crypto assets. Right now, the fund’s largest holdings include Coinbase Global, Robinhood MarketsIt is Microstrategy. It also invests in Bitcoin mining companies like Marathon Digital Holdings and blockchain payment companies like Block.
While you could theoretically buy all of these crypto stocks individually, letting the ETF handle it for you is probably cheaper and more efficient. The expense ratio is just 0.76% and the fund’s holdings appear to be balanced among the best companies driving innovation in the crypto market. No company represents more than 5% of the fund’s holdings.
Diversifying with ETFs
Most likely, Wall Street is not yet done offering new ETFs to crypto investors. If the new spot Ethereum ETFs perform close to the performance of the new spot Bitcoin ETFs, it is highly likely that the process will continue with other single crypto ETF offerings.
By combining these single crypto ETF offerings with ETFs that offer broad exposure to the blockchain sector, you can achieve even greater diversification benefits. Just remember to take a look under the hood before you buy. If you like the fund’s holdings and are comfortable with the expense ratios charged, these crypto ETFs can be a fantastic way to diversify your portfolio and build wealth over the long term.
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Dominic Basulto has positions in Bitcoin, Ethereum and Solana. The Motley Fool has positions and recommends Bitcoin, Block, Coinbase Global, Ethereum, Solana, and XRP. The motley fool has a disclosure policy.
Top 3 Crypto ETFs to Buy Now and Hold for the Long Term was originally published by The Motley Fool