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Bitcoin (BTC USD) ETFs have been in the spotlight lately. Even if their performance doesn’t quite live up to crypto enthusiasts’ expectations, there is still potential for growth. I expect an increase in investments in these funds as asset managers and financial advisors invest even small portions of client capital in the best Bitcoin ETFs for diversification.
The halving event came and went with a strong recovery in Bitcoin price. It briefly fell below $60,000 and has since retreated to $67,000 at the time of writing.
This rally highlights Bitcoin’s resilience and ability to bounce back from market fluctuations. This bullish momentum is likely to reassure investors and further increase interest in Bitcoin and related investment vehicles such as ETFs.
Here are three of the best Bitcoin ETFs for investors to consider.
Valkyrie Bitcoin and Ether Strategy ETF (BTF)
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Valkyrie Bitcoin Strategy ETF (NYSE:BTF) aims to track Bitcoins and Ethereum (ETH-USD) Perfomance.
This ETF offers investors a convenient way to participate in Bitcoin’s price movements without directly holding the cryptocurrency. The strategy to achieve this includes future contracts and other instruments.
It holds a roughly equal mix of Bitcoin and Ethereum through its futures contracts, which can provide some degree of diversification despite their correlated nature.
BTF holds assets worth $50.84 million with an expense ratio of 1.24%. The company has 2.70 million shares outstanding and offers a dividend yield of 11.53%, with a trailing 12-month dividend of $2.23. BTF has a 1-year return of +81.22% and a beta of 0.74.
The high dividend is atypical over long periods of time and is a symptom of significant market volatility.
Bitcoin Strategy ETF (BITO)
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Bitcoin strategy ETF (NYSE:BITO) seeks to replicate the performance of Bitcoin by investing in Bitcoin futures contracts traded on regulated exchanges.
Like the other best Bitcoin ETFs, BITO offers investors a regulated and transparent way to participate in Bitcoin’s price movements without directly holding the cryptocurrency.
BITO has assets totaling $2.38 billion, with an expense ratio of 0.95%. The company has 85.22 million shares outstanding and offers a dividend yield of 15.91%, with a trailing 12-month dividend of $4.62. BITO has a 1-year return of +78.19% and a beta of 0.68.
BITO was one of the original Bitcoin ETFs based on futures contracts. This is in stark contrast to the spot ETFs that own the underlying asset.
The advantages of using futures are that they offer high return potential, but do not reflect the underlying asset as accurately. Additionally, the dividend means that the total return potential could be lower than simply owning Bitcoin due to price adjustment in the stock market after the dividend is issued and capital erosion seen with other ETFs that pay high dividends.
Valkyrie Bitcoin Fund (BRRR)
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With cold storage of its Bitcoin holdings and the expertise of investment firms focused on digital assets, Valkyrie Bitcoin Fund (NASDAQ:BRRR) aims to replicate the performance of Bitcoin as represented by the CME CF Bitcoin Reference Rate.
BRRR has assets of $509.34 million with a low expense ratio of 0.25%. With 40,000 shares outstanding and a beta of 0.92, BRRR offers investors a regulated and accessible way to participate in Bitcoin’s performance.
In theory, spot ETFs like BRRR should track the underlying price more closely than futures-based ETFs like BITO. Some analysts also believe ETFs like BRRR could outperform them on a total return basis because they have lower expense ratios and are a less complex tool to manage.
If holding Bitcoin in a wallet isn’t suitable for you, BRRR might be worth considering. Especially if you don’t benefit from the high dividend of the other ETFs, which might perform less well in the long run.
At the time of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the author and are subject to InvestorPlace.com’s publication guidelines.