How to Choose the Best Spot Bitcoin ETF
- Choosing the best spot Bitcoin ETF involves several factors related to the fund’s expenses, assets under management, liquidity and issuer.
- See our guide for selecting and investing in spot Bitcoin ETFs.
Which spot Bitcoin ETF is best? Are Bitcoin investments right for your portfolio? While all the new Bitcoin funds track the same benchmark asset, there are several key aspects, such as expense ratios and liquidity, for investors to know and understand before buying shares.
What Is a Spot Bitcoin ETF?
Spot Bitcoin ETFs, which first began trading on U.S. exchanges Jan. 11, 2024, are exchange-traded funds that track the price of Bitcoin by directly holding the cryptocurrency itself, unlike the futures-based Bitcoin ETFs that have traded on exchanges since 2021.
When an investor buys shares of a spot Bitcoin ETF, they are buying a portion of the Bitcoin held by the fund. Thus, a spot Bitcoin fund works in a similar way as a physically backed gold ETF.
How to Choose the Best Spot Bitcoin ETF
Choosing the best spot Bitcoin ETF involves several factors related to the fund’s expenses, assets under management, liquidity and issuer.
Expense Ratio
Compare the expense ratios of different spot Bitcoin ETFs. Lower expenses are generally more favorable for investors, as they directly affect the overall return, and they are especially relevant for comparing ETFs that track the same benchmark asset.
Size of the Fund (AUM)
Higher assets under management, or AUM, may indicate greater investor confidence and acceptance of the ETF, and higher assets generally translate to greater liquidity and higher trading volume.
Liquidity
Higher liquidity, which can be simply defined as how quickly and easily and investment security can be bought and sold, typically results in narrower bid-ask spreads, reducing trading costs for investors.
Issuer Reputation
Choose a spot Bitcoin ETF from a reputable issuer with a track record of managing exchange-traded funds, specifically crypto-related ETFs and spot commodity funds. Well-established issuers often have the expertise and infrastructure to manage assets effectively and have demonstrated their ability to track benchmark assets and indexes tightly.
Top Spot Bitcoin ETFs by AUM
Ticker | Fund | AUM | Fee | YTD Return |
$87.3B | 0.25% | 25.1% | ||
$24.2B | 0.25% | 24.9% | ||
$21.6B | 1.5% | 24.1% | ||
$5.8B | 0.21% | 24.9% | ||
$5.4B | 0.15% | 24.6% | ||
$4.8B | 0.2% | 25% | ||
$1.9B | 0% | 25.1% | ||
$702.8M | 0.25% | 24.9% | ||
$647.5M | 0.25% | 24.9% | ||
$627.4M | 0.29% | 25.1% | ||
$186.3M | 0.25% | 25.5% |
Source: etf.com & FactSet Data as of July 24, 2025. Past performance is no guarantee of future results.
How Can Investors Buy Spot Bitcoin ETFs?
Like buying other types of ETFs, investors need an investment account to buy spot Bitcoin ETFs. However, unlike traditional ETFs, spot Bitcoin funds are not available at all brokerage firms, so you’ll need to verify that your broker offers these funds on their platform.
Like investing in stocks or mutual funds, the investment account may be an individual brokerage account, a joint brokerage account or any variety of individual retirement account (IRA).
Once you have the investment account open, you will need to fund it with cash, and you’ll be ready to invest in a spot Bitcoin ETFs.
The Basic Steps to Invest in ETFs
- Open an investment account.
- Fund the investment account with cash.
- Select the ETF(s) to purchase.
- Execute the trade(s) to buy shares.
Are Spot Bitcoin ETFs Better Than Futures-Based Bitcoin ETFs?
Spot Bitcoin ETFs generally provide tighter tracking of Bitcoin's price with potentially less volatility compared to futures-based funds. This is because spot Bitcoin ETFs hold actual Bitcoin, whereas futures-based ETFs incur costs and tracking errors from rolling contracts and contango.
For reference, through July 24, 2025, the largest Bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (BITO) provided a 21% year-to-date gain while the largest spot Bitcoin fund, IBIT, rose 25%.
It’s possible that neither fund type is suitable for an investor’s portfolio, as both types have significant inherent risks. As always, choosing an investment depends on an investor’s individual goals and risk tolerance.
Note: For more details, see our article, Spot Bitcoin ETFs vs. Bitcoin Futures ETFs.
Is a Spot Bitcoin ETF a Good Investment?
Whether a spot Bitcoin ETF is a good investment depends heavily on an individual's financial situation, risk tolerance and investment goals. For example, the volatile nature of Bitcoin’s price generally makes a spot Bitcoin fund unsuitable for a risk-averse investor with short-term investment goals, whereas an aggressive investor with high risk tolerance and a long-term investment horizon may choose to add a spot Bitcoin ETF to their portfolio.
No matter the investor’s degree of risk tolerance, financial advisors generally recommend no more than 5% portfolio allocation to high-risk investment types, such as crypto-related securities and technology-sector funds.
Always conduct thorough research and, if needed, consult with a financial advisor to ensure that the chosen spot Bitcoin ETF aligns with your investment goals and risk tolerance. Additionally, stay updated on market conditions and the performance of the ETF over time.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risks, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions.
At the time of publication, Kent Thune held a position in IBIT.
