On January 10, 2024, the SEC approved 11 Bitcoin spot ETFs for listing in the US, with trading commencing on January 11. This milestone offers investors a safer way to invest in Bitcoin without navigating European ETPs or Canadian ETFs, while avoiding premiums/discounts (prevalent in closed-end funds) or futures contango (common in Bitcoin futures ETFs).
This article compares the features, advantages, and drawbacks of these US-listed Bitcoin spot ETFs.
Important Note: Cryptocurrencies are not essential for asset allocation. They are highly volatile, high-risk assets with no guaranteed long-term returns like global equities or bonds. Allocate only a small portion of your portfolio if you choose to invest.
1. Overview of the 11 Bitcoin Spot ETFs
All ETFs track Bitcoin, so we focus on their issuance history and key details:
IBIT: iShares Bitcoin Trust
- New issuance.
ARKB: ARK 21Shares Bitcoin ETF
- New issuance.
BTCW: WisdomTree Bitcoin Fund
- New issuance.
BTCO: Invesco Galaxy Bitcoin ETF
- New issuance.
BITB: Bitwise Bitcoin ETF
- New issuance.
HODL: VanEck Bitcoin Trust
- New issuance.
EZBC: Franklin Bitcoin ETF
- New issuance.
FBTC: Fidelity Wise Origin Bitcoin Trust
- New issuance.
BRRR: Valkyrie Bitcoin Fund
- New issuance.
GBTC: Grayscale Bitcoin Trust
- Converted from a closed-end fund; currently the largest Bitcoin ETF.
DEFI: Hashdex Bitcoin ETF
- Transitioned from a Bitcoin futures ETF.
2. Storage, Security, and Custodians
Cryptocurrency storage risks are critical. ETFs mitigate these risks by delegating custody to professional firms.
Custody Arrangements:
Most ETFs use Coinbase Custody Trust Company (a subsidiary of Coinbase) for cold wallet storage, with a small portion in hot wallets for liquidity. FBTC uses Fidelity Digital Asset Services.
| ETF | Custodian |
|---|---|
| IBIT | Coinbase Custody Trust Company |
| ARKB | Coinbase Custody Trust Company |
| BTCW | Coinbase Custody Trust Company |
| BTCO | Coinbase Custody Trust Company |
| BITB | Coinbase Custody Trust Company |
| HODL | Coinbase Custody Trust Company |
| EZBC | Coinbase Custody Trust Company |
| FBTC | Fidelity Digital Asset Services |
| BRRR | Coinbase Custody Trust Company |
| GBTC | Coinbase Custody Trust Company |
| DEFI | None (still holds futures) |
Security Notes:
- Cold wallets store 98%+ of assets (FBTC specifies this target).
- Insurance covers losses (e.g., Coinbase has $320M coverage).
- Risks remain (e.g., operational failures or breaches).
3. Expense Ratios
To attract investors, many ETFs offer temporary fee waivers.
| ETF | Current Fee | Post-Waiver Fee (Conditions) |
|---|---|---|
| IBIT | 0.12% | 0.25% after 1 year or >$5B AUM |
| ARKB | 0% | 0.21% after 6 months or >$1B AUM |
| BTCW | 0% | 0.3% after 6 months or >$1B AUM |
| BTCO | 0% | 0.39% after 6 months |
| BITB | 0% | 0.2% after 6 months or >$1B AUM |
| HODL | 0.25% | None |
| EZBC | 0.29% | None |
| FBTC | 0% | 0.25% after July 31, 2024 |
| BRRR | 0% | 0.25% after 3 months |
| GBTC | 1.5% | None |
| DEFI | 0.9% | None |
👉 Compare the latest Bitcoin ETF fees here
4. Assets Under Management (AUM)
As of January 20, 2024:
| ETF | AUM |
|---|---|
| IBIT | $1B |
| ARKB | $310M |
| BTCW | $4.5M |
| BTCO | $190M |
| BITB | $420M |
| HODL | $140M |
| EZBC | $47M |
| FBTC | $500M |
| BRRR | $60M |
| GBTC | $23.5B |
| DEFI | $16M |
Note: GBTC’s AUM declined due to high fees, prompting outflows.
5. Liquidity and Bid-Ask Spreads
Key metrics from early trading:
| ETF | Daily Volume | Bid-Ask Spread |
|---|---|---|
| IBIT | $1.05B | 0.02%–0.36% |
| ARKB | $28M | 0.02%–0.43% |
| BTCW | $65K | 0.12%–2.00% |
| BTCO | $44M | 0.02%–0.6% |
| BITB | $120M | 0.16%–0.57% |
| HODL | $25M | 0.4%–1.32% |
| EZBC | $65M | 0.22%–1.66% |
| FBTC | $680M | 0.07%–0.68% |
| BRRR | $9M | 0.15%–1.96% |
| GBTC | $2.3B | 0.02%–0.2% |
| DEFI | $440K | 0.09%–2.6% |
👉 Track real-time ETF liquidity
6. Key Takeaways
- Risk Awareness: Bitcoin is highly volatile. ETFs reduce but don’t eliminate custody risks.
- Short-Term Traders: GBTC offers liquidity but charges 1.5% fees.
Long-Term Investors:
- IBIT: Best liquidity; 0.25% long-term fee.
- ARKB: Low fee (0.21%); decent liquidity.
- BITB: Cheapest (0.2%); higher spreads.
- FBTC: Unique custodian; 0.25% fee post-waiver.
- Caution: Watch for premiums/discounts to NAV during high-demand periods.
FAQs
Q1: Which Bitcoin ETF has the lowest fees?
A: BITB (0.2% post-waiver) and ARKB (0.21%) are among the cheapest.
Q2: Is GBTC still a good option despite high fees?
A: Only for short-term traders prioritizing liquidity; long-term investors should avoid it.
Q3: How do Bitcoin ETFs mitigate custody risks?
A: They use insured cold wallets (e.g., Coinbase) with 98%+ of assets offline.
Q4: Should I diversify across multiple Bitcoin ETFs?
A: Consider FBTC for custodian diversification if holding large amounts.
Q5: When do fee waivers end?
A: Most expire in 3–12 months or after hitting AUM thresholds (e.g., $1B for ARKB).
Q6: What’s the safest way to invest in Bitcoin?
A: ETFs are safer than exchanges or self-custody but still carry risks.
Disclaimer: This analysis is for informational purposes only. Conduct your own research before investing.