The Best Bitcoin ETFs to Buy

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.