Best Crypto ETFs for 2024-2025: Investor Guide

As crypto innovations proceed to revamp the financial industry, market participants eagerly hunt for fresh ways to join in this digital revolution. Crypto ETFs serve as a bridge between traditional investing and the dynamic world of digital assets. 

These exchange-traded funds offer a simplified, regulated, and efficient avenue to gain crypto exposure without requiring direct ownership or complex management.

In 2025, the crypto ETF market is poised for unprecedented growth, driven by groundbreaking regulatory approvals and surging investor interest. From spot-based ETFs that directly hold Bitcoin to thematic funds focused on blockchain innovation, crypto ETFs are emerging as a cornerstone for seasoned investors and those new to the digital asset space.

This article is a quick guide to the world of crypto ETFs and explains what they are and what types they are categorised into. You will also learn what the best digital asset-based ETFs are to buy in 2024-2025.

What Are Crypto ETFs and What Benefits Do They Bring?

Crypto ETFs, or cryptocurrency exchange-traded funds, are investment funds traded on traditional stock exchanges that offer exposure to cryptocurrencies or related assets.

They function similarly to traditional ETFs, which track the performance of a particular index, commodity, or asset. Crypto ETFs aim to provide investors with a way to gain exposure to the cryptocurrency market without directly owning or managing individual digital assets.

Crypto ETFs provide a bridge between the cryptocurrency market and traditional finance, offering a simplified way for investors to access the fast-evolving world of digital assets. 

Cryptocurrency ETFs present a convenient and regulated alternative for those hesitant to deal with the complexities of owning cryptocurrencies directly — such as setting up wallets, securing private keys, or navigating cryptocurrency exchanges. 

Investors can gain exposure to cryptocurrencies without the need to understand blockchain technology or worry about the risks of losing access to their funds.

One of the major advantages of crypto ETFs is their ability to diversify an investor’s exposure. Instead of purchasing a single cryptocurrency, an ETF might include multiple digital assets, such as Bitcoin, Ethereum, and other altcoins, and stock companies operating in the blockchain ecosystem. This diversification helps spread risk across a broader set of assets, mitigating the impact of significant price swings in any cryptocurrency.

Major Types of Crypto ETFs

Crypto ETFs come in various forms, each designed to cater to different investment preferences and risk appetites. These types are distinguished by the assets they track, their underlying mechanisms, and their investment strategies. Below are the main types of crypto ETFs:

Spot-Based Crypto ETFs

Spot-based crypto ETFs hold actual cryptocurrencies as their underlying assets. These funds directly invest in digital currencies like Bitcoin or Ethereum, with the ETF’s value reflecting the real-time price movements of these assets. 

Investors gain exposure to the cryptocurrency market without having to manage or store the digital assets themselves. Spot-based ETFs are highly sought after because they closely mirror the performance of the cryptocurrency they track.

Futures-Based Crypto ETFs

Futures-based crypto ETFs do not directly hold cryptocurrencies. Instead, they use futures contracts to track the underlying asset’s price. A futures contract is an agreement to buy or sell an asset at a predetermined price and date in the future. These ETFs are regulated by commodity futures exchanges, making them accessible to investors wary of the unregulated nature of cryptocurrency markets. However, futures-based ETFs may experience tracking errors due to the cost of rolling contracts forward.

Equity-Based Crypto ETFs

Equity-based crypto ETFs invest in companies involved in the cryptocurrency and blockchain space rather than cryptocurrencies themselves. These funds include stocks of cryptocurrency miners, blockchain technology developers, payment processors, or crypto exchanges. They provide indirect exposure to the crypto industry and are less volatile than ETFs that hold or track cryptocurrencies directly.

Diversified Crypto ETFs

Diversified crypto ETFs hold a mix of cryptocurrencies and blockchain-related equities. These funds aim to reduce risk by spreading investments across various digital assets and companies. Diversified ETFs offer broader exposure to the crypto ecosystem, making them appealing to investors seeking a balance between risk and reward.

Thematic Crypto ETFs

Thematic crypto ETFs focus on specific themes within the cryptocurrency and blockchain industry. For example, a thematic ETF might target decentralised finance (DeFi), non-fungible tokens (NFTs), or green cryptocurrencies that prioritise energy efficiency. These funds cater to investors who want targeted exposure to particular areas of innovation in the crypto space.

Actively Managed Crypto ETFs

Actively managed crypto ETFs involve professional fund managers who decide the portfolio’s composition based on market conditions and trends. Unlike passive ETFs that follow a fixed index, these funds seek to outperform the market by actively buying and selling assets. They offer flexibility and potential for higher returns but typically have higher management fees.

Inverse Crypto ETFs

Inverse crypto ETFs aim to profit from declines in cryptocurrency prices. These funds use derivatives to generate returns when the price of the underlying cryptocurrency falls. Investors commonly use them to hedge against market downturns or capitalise on bearish sentiment. Inverse ETFs are typically more suitable for short-term trading rather than long-term investment.

Leveraged Crypto ETFs

Leveraged crypto ETFs amplify the underlying asset’s returns, often by a factor of 2x or 3x. They achieve this by using financial instruments like derivatives. While leveraged ETFs can offer higher potential returns, they also carry significantly increased risk, making them suitable only for experienced investors with a high tolerance for volatility.

Top 7 Crypto ETFs to Consider Buying in 2024

Investing in cryptocurrency exchange-traded funds offers a convenient way to attain greater access to the digital asset market without directly holding individual cryptocurrencies. 

As of December 2024, several crypto ETFs have emerged as top choices for investors seeking diversified and regulated access to this dynamic sector. Here are seven notable cryptocurrency ETFs to consider:

iShares Bitcoin Trust ETF (IBIT)

The iShares Bitcoin Trust, managed by BlackRock, is a spot-based ETF that directly holds Bitcoin. This allows investors to gain exposure to Bitcoin’s price movements without the need for managing digital wallets. As of November 2024, the fund boasts assets under management (AUM) of approximately $33.1 billion, surpassing BlackRock’s iShares Gold Trust.

The ETF has an expense ratio of 0.25%, making it a cost-effective option for investors. IBIT’s performance has been boosted by Bitcoin’s price surge to over $93,000 in November 2024, reflecting strong investor demand.

Fidelity Wise Origin Bitcoin Trust (FBTC)

The Fidelity Wise Origin Bitcoin Trust is a spot Bitcoin ETF offered by Fidelity. It directly exposes Bitcoin’s performance and is one of the most significant Bitcoin funds launched in January 2024.

The fund’s AUM has grown significantly, driven by favourable regulatory developments and bullish market conditions. With an expense ratio of 0.25%, it aligns with industry standards. The ETF has attracted substantial inflows, showcasing its appeal among investors.

ARK 21Shares Bitcoin ETF (ARKB)

The ARK 21Shares Bitcoin is a collaboration between ARK Invest and 21Shares, offering direct exposure to Bitcoin’s price movements. With an AUM of approximately $637 million as of early 2024, ARKB has seen notable investor interest.

The ETF has an expense ratio of 0.21%, which includes a fee waiver until July 2024 or until assets reach $1 billion. Its performance has been supported by Bitcoin’s bullish trend, drawing the attention of retail and institutional investors alike.

Invesco Galaxy Bitcoin ETF (BTCO)

The Invesco Galaxy Bitcoin is managed by Invesco and provides exposure to Bitcoin through direct holdings. As of early 2024, the fund’s AUM is approximately $295 million. The expense ratio is competitive within the industry, making it an appealing option for cost-conscious investors. 

BTCO has experienced growth in AUM due to favourable market sentiment and increased regulatory clarity, further solidifying its position in the market.

ProShares Bitcoin Strategy ETF (BITO)

The ProShares Bitcoin Strategy is notable for being the first Bitcoin futures ETF approved in the United States. It tracks BTC futures contracts instead of holding the asset directly. BITO has seen significant growth in AUM since its launch, reflecting robust demand from investors. 

With an expense ratio of 0.95%, the ETF’s higher fees account for the complexities of managing futures contracts. Its performance correlates with Bitcoin’s price movements, albeit with the added dynamics of the futures market.

Valkyrie Bitcoin Miners ETF (WGMI)

The Valkyrie Bitcoin Miners focuses on companies involved in Bitcoin mining, offering indirect exposure to Bitcoin’s performance. The fund has seen growing interest as Bitcoin mining gains prominence. 

With a competitive expense ratio, WGMI provides a thematic investment option tied to the profitability of mining operations, which are heavily influenced by Bitcoin’s price fluctuations.

Bitwise Crypto Industry Innovators ETF (BITQ)

The Bitwise Crypto Industry Innovators invests in companies operating within the cryptocurrency and blockchain sectors, offering diversified exposure to the industry’s growth. Its AUM reflects the increasing interest in blockchain technology and crypto-related businesses. 

The ETF aligns with other thematic funds with an expense ratio of 0.85%. The performance of BITQ is driven by the bottom-line companies, which benefit from the broader adoption of cryptocurrencies and blockchain technologies.

Conclusion

Crypto ETFs offer a streamlined and regulated way for investors to be granted broad access to the dynamic world of cryptos. They combine the accessibility and diversification of traditional ETFs with the growth potential of the cryptocurrency market, making them an attractive option for both new and seasoned investors.

As 2024 unfolds, the continued growth of the cryptocurrency market and advancements in regulatory clarity are likely to drive further innovation in crypto ETFs. However, investors must consider factors such as expense ratios, fund structure, and market volatility before committing capital.