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IBTC, BITO, FBTC are good Bitcoin ETFs but there are 2 better alternatives

By:
on Feb 14, 2024
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  • The IBIT and FBTC have become the fastest-growing spot Bitcoin ETFs.
  • BITO is the biggest futures ETF but it has a big expense ratio.
  • Investing in MicroStrategy and Bitcoin seems like a better alternative.

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The iShares Bitcoin ETF (IBTC), ProShares Bitcoin Strategy ETF (BITO), and Fidelity Wise Origin Bitcoin Fund (FBTC) are some of the biggest Bitcoin ETFs in the industry. Most recently, data shows that the IBTC and FBTC are the fastest-growing funds in the world with over $4.2 billion and $2.3 billion in assets, respectively. So, which is a better fund to invest in?

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Which is the best Bitcoin ETF to buy?

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American investors now have access to eleven Bitcoin ETFs to invest in. 10 of these funds are similar in that they hold Bitcoin in their portfolios. BITO, on the other hand, does not hold Bitcoin directly. Instead, it invests in Bitcoin futures, which are issued by CME and Cboe.

Therefore, when comparing the three, I believe that BITO has a core problem, making it not ideal to most people. It has an expense ratio of 0.95%, making it a highly expensive fund to invest in. For one, if you invest $100k in the fund, you will pay at least $950 in fees. 

In ten years, the total fees will be at least $9,500. Of course, this assumes that Bitcoin remains intact, meaning that it will waver over time since BTC is usually cyclical.

Fidelity Wise Bitcoin ETF, on the other hand, is offered by one of the biggest private companies in the US. It has an expense ratio of 0.25%, meaning that a similar investment would cost about $250 in a year. 

The iShares Bitcoin Trust (IBIT) is provided by the biggest asset manager in the world with over $10 trillion in assets. It has a close similarity to FBTC in that Coinbase is still the custody. It also has an initial expense ratio of 0.12% before assets reach $5 billion followed by 0.25% after that. 

IBIT and FBTC are also popular because of their high liquidity scores. This means that they will likely continue tracking each other in the future. In this case, because of the smaller fees, analysts believe that IBIT is a better fund.

There are other cheap spot Bitcoin ETFs like the Ark 21Shares Bitcoin ETF (ARKB), Bitwise Bitcoin ETF, and Invesco Galaxy Bitcoin ETF (BITCO).

But there are two better alternatives to Bitcoin ETFs

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Bitcoin vs MSTR stock

MSTR vs Bitcoin price

Bitcoin ETFs are often seen as better investment vehicles for large institutional investors. However, I believe that investing purely in Bitcoin is a better alternative since you will not have to deal with these expense ratios.

In this case, the option is to buy Bitcoin and possibly store it in a hot or cold wallet. A cold wallet is not connected to the internet, meaning that the coins are significantly safer than those in cold wallets.

The other benefit of owning Bitcoin instead of ETFs is the spending factor. With real coins, you can send them to other people or even use them to purchase products.

The other better alternative to Bitcoin ETFs is MicroStrategy, a company that has accumulated thousands of Bitcoins. In addition to not having a fee, MSTR stock tends to do much better than Bitcoin during an uptrend, as shown above.

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