1. Easy and Convenient

Investing in a bitcoin ETF provides leverage to the price of bitcoin without a need to know about how bitcoin works, having to sign up for a cryptocurrency exchange, and taking on the risks of owning bitcoin directly. For example, bitcoins are purchased and held in a wallet, and if an investor loses the password to the wallet, their bitcoin is lost forever. A bitcoin ETF simplifies the process of investing in bitcoin.

2. Safe

 Since they’re traded to traditional exchanges, all ETFs are highly regulated. This means regulators can monitor and analyse their performance and protect against price manipulation within the ETF markets. However, the Bitcoin price can still be manipulated through unregulated crypto exchanges. Crypto exchanges and wallets are also susceptible to hacking attacks and theft. Bitcoin ETFs protect against these risks as you don’t own any actual Bitcoin.

3. Diversification in the investment

An ETF can hold more than just one asset. A Bitcoin ETF could include bitcoin, Apple stocks, Facebook stocks, and more—providing investors with the opportunity to mitigate risk and diversify their portfolio. Similarly, by trading on a regulated market exchange, a bitcoin ETF would provide investors with the chance to diversify their existing equity portfolios.

4. Cheaper 

ETF fees are also generally lower than those of traditional managed funds.

5. Tax efficiency

As the bitcoin is unregulated and decentralized, the majority of the world’s tax havens and pension funds do not allow for purchases of bitcoin. On the other hand, a bitcoin ETF trading on traditional exchanges would likely be regulated by the SEC and eligible for tax efficiency.

1. Fees

Usually ETFs charge management fees for the convenience they provide for. Hence owning a significant amount of shares in a bitcoin ETF can lead to high management fees over time.

2. Lacks ownership

Cryptocurrency ETFs do not make the shareholder owner of a cryptocurrency. This imposes some limitations on cryptocurrency use. i.e benefit from the decentralized financial system provided by cryptocurrencies

3. Inaccuracy of the ETFs

ETFs track the price of an underlying asset, they can also have multiple holdings in a bid to diversify the portfolio. But this suggests that a 50% rise in the price of bitcoin may not be accurately reflected in the value of the exchange-traded fund due to its other holdings. Therefore, while an ETF provides leverage to bitcoin’s price, it may or may not be an accurate tracker of its price.

4. Limits to cryptocurrency trading

Bitcoin can be used to trade other cryptocurrencies like Ethereum, Litecoin, XRP, and more. But a bitcoin ETF cannot be used to trade other cryptos, as it is not a cryptocurrency but just an investment fund that tracks the price of bitcoin.

ARK Next Generation Internet ETF

ARKW is an actively managed ETF that seeks long-term growth of capital by investing under normal circumstances primarily (at least 80% of its assets) in domestic and U.S. exchange traded foreign equity securities of companies that are relevant to the Fund’s investment theme of next generation internet.

ProShares Bitcoin Strategy ETF

ProShares Bitcoin Strategy ETF (BITO) is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way. The Fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts.

• The fund does not invest directly in bitcoin
• The price and performance of bitcoin futures should be expected to differ from the current “spot” price of bitcoin

Simplify US Equity PLUS GBTC ETF

The Simplify US Equity PLUS GBTC ETF seeks to provide an efficient way for asset allocators to add Bitcoin exposure to portfolios. T­he fund targets a 100% investment in the US equities while simultaneously providing a 10% exposure to Bitcoin via the Grayscale Bitcoin Trust (GBTC).

Bitwise Crypto Industry Innovators ETF

BITQ is a traditional, regulated exchange-traded fund, giving you simplicity and ease-of-use. It is widely available today. Bitwise is one of the largest cryptoasset managers, with over $1.5B in AUM*. The index leverages Bitwise’s industry expertise to identify what they believe are the right companies in the space.

Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF

The Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF is an actively managed exchange-traded fund that is focused on investments within the cryptocurrency mining and mining infrastructure industries. RIGZ was created by Viridi to align profit with purpose – a growing number of investors are keen to gain exposure to the cryptocurrency sector through regulated investment vehicles, but also want to see active leadership and commitment to environmental sustainability.