The bitcoin hype train came roaring out of the gates in January 2024 with the launch of multiple spot bitcoin ETFs, marking a transformative moment for cryptocurrency investing.
Unlike older exchange-traded funds that only held bitcoin futures or operated as closed-end trusts, these new funds were true open-ended ETFs holding actual bitcoin with custodians – and giving investors direct exposure to the digital currency.
Momentum carried throughout 2024, sending bitcoin past the coveted $100,000 milestone, a price it maintained into January 2025, bolstered by President Donald Trump's pro-bitcoin stance.
Among many developments, his administration has proposed a federal regulatory framework for a digital assets reserve, creating optimism for broader adoption.
Additionally, the Securities and Exchange Commission (SEC), now under Acting Chair Mark Uyeda, made a significant policy shift by eliminating SAB 121 guidance. This rule had required banks to classify customer-owned crypto as liabilities, which made it challenging for them to custody crypto assets.
Its removal has paved the way for more institutions to engage with bitcoin and has further legitimized the popularity of bitcoin-linked assets like ETFs.
Bitcoin ETFs lower the barriers to investing
Despite the crypto community's mantra of "not your keys, not your coins," which emphasizes the importance of self-custody for digital assets, there are many reasons why the average investor might prefer a bitcoin ETF over holding bitcoin directly.
The first is accessibility. Outside of niche solutions like a bitcoin IRA, it's difficult to hold crypto assets in tax-sheltered accounts like a traditional or Roth IRA.
Spot bitcoin ETFs, however, are eligible investments at most major brokerage platforms, making them an easy choice for investors looking to integrate bitcoin into their retirement or taxable portfolios.
Simplicity is another key selling point. With a bitcoin ETF, there's no need to navigate the complexities of self-custody, such as safeguarding a seed phrase or using a hardware wallet like a Ledger or Trezor.
These devices, while secure, require significant technical knowledge to operate and manage. By contrast, the ETF issuer and its custodian handle the safekeeping of the underlying bitcoin.
Speaking of security, the bitcoin held by these exchange-traded funds is predominantly stored in cold storage – a secure, offline environment where it's virtually immune to hacking.
Only a small portion of the bitcoin is kept in a hot wallet – an internet-connected wallet – for the operational needs of ETF creation and redemption.
This cold storage strategy ensures the safety of the ETF's assets, addressing concerns that arose after high-profile failures of crypto exchanges like FTX, Voyager and Celsius in 2022.
That said, bitcoin ETFs aren't perfect. They only trade during regular stock market hours, unlike bitcoin itself, which trades 24/7. They also charge management fees, and unlike holding bitcoin directly, you can't exchange an ETF share for actual bitcoin.
Still, for retail investors, these funds represent a straightforward, economical, and secure way to gain exposure to bitcoin without the headaches of self-custody or the risks of crypto exchange failures.
How we chose the best bitcoin ETFs to buy
We limited our scope to spot bitcoin ETFs – avoiding futures-based, leveraged, inverse, or covered-call funds. To further narrow down the options, we focused on three key factors: fees, liquidity and reputability.
Fees are straightforward: the less you pay, the more you keep. While many bitcoin ETFs initially offered fee waivers to attract investors, these waivers have largely expired, making it easier to compare funds on a level playing field.
Liquidity measures how easily and cost-effectively you can trade the ETF. We prioritized funds with low 30-day median bid-ask spreads, as a lower spread means you pay less in implicit costs when buying or selling shares.
Reputability focuses on funds that have attracted significant assets under management (AUM), typically above $1 billion, as this reflects strong investor confidence. We also prioritized ETFs offered by well-established digital asset managers or legacy asset management firms.
Data is as of February 6.
iShares Bitcoin Trust ETF
- Assets under management: $57.1 billion
- Expenses: 0.25%
- 30-day median bid-ask spread: 0.02%
The iShares Bitcoin Trust ETF (IBIT) is now the largest spot bitcoin ETF, making it one of the most successful ETF launches in history. In comparison, it took the SPDR Gold Shares (GLD) over 20 years to reach a similar AUM level.
The fund tracks the CME CF Bitcoin Reference Rate – New York Variant Index and uses Coinbase Prime as its custodian. Its recent approval for options trading further enhances its appeal.
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Grayscale Bitcoin Mini Trust ETF
- Assets under management: $4.1 billion
- Expenses: 0.15%
- 30-day median bid-ask spread: 0.05%
The Grayscale Bitcoin Mini Trust ETF (BTC) was launched as a more affordable alternative to Grayscale's flagship exchange-traded fund, the Grayscale Bitcoin Trust (GBTC). GBTC saw steady outflows due to a high 1.5% expense ratio as investors flocked to newly launched, cheaper competitors.
To address this, Grayscale spun off 10% of GBTC's assets into BTC, offering a dramatically reduced expense ratio of 0.15%. BTC holds the same underlying assets as GBTC, tracking the value of bitcoin through institutional-grade custody and cold storage solutions.
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Bitwise Bitcoin ETF
- Assets under management: $4.0 billion
- Expenses: 0.20%
- 30-day median bid-ask spread: 0.02%
The Bitwise Bitcoin ETF (BITB) stands out as a direct competitor to Grayscale, backed by Bitwise, a dedicated digital asset manager with an emphasis on transparency.
BITB not only discloses the number of bitcoin held in trust and the amount corresponding to each share, but also uniquely publishes all its public bitcoin holding addresses.
This allows investors to independently verify proof of reserves and track transactions, providing an added layer of trust and accountability.
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Fidelity Wise Origin Bitcoin Fund
- Assets under management: $20.7 billion
- Expenses: 0.25%
- 30-day median bid-ask spread: 0.07%
The Fidelity Wise Origin Bitcoin Fund (FBTC) marks Fidelity's entry into the spot bitcoin ETF market, building on its reputation for mutual funds and brokerage services.
Like many other bitcoin ETFs, it is structured as a grantor trust and tracks Fidelity's proprietary bitcoin benchmark total return index. It is as no-frills and vanilla as bitcoin ETFs come.
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ARK 21Shares Bitcoin ETF
- Assets under management: $5.0 billion
- Expenses: 0.21%
- 30-day median bid-ask spread: 0.05%
The ARK 21Shares Bitcoin ETF (ARKB) is a collaboration between Ark Invest, led by Cathie Wood and known for thematic innovation ETFs, and digital asset manager 21Shares.
ARKB tracks the same benchmark as iShares' IBIT – the CME CF Bitcoin Reference Rate – New York Variant – and employs the widely used grantor trust structure for holding bitcoin.
Learn more about ARKB at the ARK Invest provider site.
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