Who Will Win the Spot Bitcoin ETF Derby?

Issuers line up in high-stakes spot “coinderby” event.

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Reviewed by: Kent Thune
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Edited by: James Rubin

I am a big fan of horse racing. The gracefulness, the atmosphere, the outdoors and the speed. As for the betting/gambling aspect, let’s just say I’m a lightweight. A few dollars here and there, but never lose more than it cost you to buy lunch at the track!

Spot Bitcoin ETF Horse Race 

But as much time as I tend to spend at the track or watching races on television, there is something about the launch and expected fierce competition between the 11 new spot Bitcoin ETFs just approved by the SEC this week that reminds me of horse racing. SEC Chairman Gary Gensler, who is thought be more critical of the new spot coin ETFs than his younger staff (imagine that! – sarcasm intended), probably prefers to have investors avoid thinking of cryptocurrency ETF products as horses lining up for a race.  

However, that isn’t stopping the public and the ETF industry from treating it like the Kentucky Derby, or at least a “stakes” race, which is the upper echelon of racing contests. All 11 of these are worthy competitors, and I’m not going to try to pick a “winner” because there’s no such thing in this case. There may be survivors and bigger asset gatherers, but each issuer has its own objectives. Investors in any of them could end up happy or disappointed.  

Frankly, it will have everything to do with the future price trend in spot Bitcoin. There does not appear to be nearly as much of a performance edge as there is a marketing edge here. They are all based on the same underlying asset. The future will reveal the ultimate outcome.

Spot Bitcoin ETF Derby

So, as they are lining up at the starting gate, let’s take a very quick look at handicapping the spot bitcoin ETF derby, beginning with the favorites (the best known as of now).

The iShares Bitcoin Trust (IBIT) 

The iShares Bitcoin Trust (IBIT) has the biggest name in ETFs is behind it, so it is hard to imagine it not being among the leading asset-gatherers.  

The Fidelity Wise Origin Bitcoin Trust (FBTC) 

If iShares is the champion breeder of ETFs, Fidelity has that same title when it comes to mutual funds. That, and the firm’s large retail and advisor client roster puts the Fidelity Wise Origin Bitcoin Trust (FBTC) on the “favorites” list. 

The Grayscale Bitcoin Trust (GBTC) 

The first prominent Bitcoin ETF, and the first to have its own TV commercials, has converted to a spot Bitcoin ETF. Familiarity counts, as does the $27 billion assets under management base it already has as a former closed-end trust structure. That previous structure had a high expense ratio, so assuming that comes down now, the Grayscale Bitcoin Trust (GBTC) is in the mix. It is clearly the leader the moment the starting gate opens. But will it finish as well as it starts? 

Include in Your “Exotics” 

That’s horse racing lingo for exotic bets that are beyond picking one horse to finish first (win), second (place) or show (third). Exacta, trifectas, superfectas, high fives, quinellas and whatever else the pari-mutual establishment comes up with to create entertainment and losing wagering tickets. So, here are some that may not be the most accomplished in this space when it is all said and done, but they stand a good chance of being a noticeable part of the Bitcoin ETF asset pie. 

The Invesco Galaxy Bitcoin ETF (BTCO) 

The Invesco Galaxy Bitcoin ETF (BTCO) is a product of a leading investment manager and ETF provider and is right in the mix, understandably. 

The ARK 21Shares Bitcoin ETF (ARKB) 

One of the ETF world’s most-debated issuers and managers will factor into this race with the ARK 21Shares Bitcoin ETF (ARKB). Cathie Wood has been publishing research and buying Bitcoin ETFs since their early days. 

The VanEck Bitcoin Trust (HODL) 

This crafty, creative firm which already boasts some interesting niche ETFs is a player here with the VanEck Bitcoin Trust (HODL) , even if they don’t command the flood of assets that the favorites do. 

The Hashdex Bitcoin ETF (DEFI) 

Some ETF investors may know Hashdex, but many more likely know ETF provider and research firm Tidal, which is also involved in an actively managed ETF that targets companies in the blockchain industry. They are a clear fit in this group alongside the others here. The Hashdex Bitcoin ETF (DEFI) It has one of the cheekier tickers, too. 

The WisdomTree Bitcoin Trust (BTCW) 

Another niche ETF provider of size, the WisdomTree Bitcoin Trust (BTCW) should get its fair share. 

The Bitwise Bitcoin ETF Trust (BITB) 

The Bitwise Bitcoin ETF Trust (BITB) is expected to have the lowest expense ratio. Need we say more? 

Longshots 

This is similar in investing and horse racing. A horse that the public decides has a slim chance to win the race might have odds of 30-1. But that doesn’t mean that the horse can’t cross the finish line first. It just doesn’t happen as often as those favorites that might go off at 1-1 odds, or “even money” or even lower odds. 

The Franklin Bitcoin ETF (EZBC) 

Franklin and its Templeton merger partner of years ago are a prominent manager for institutions and in the mutual fund space, but the company’s ETF business has not become a leader. That makes them a longshot here with the Franklin Bitcoin ETF (EZBC).

The Valkyrie Bitcoin ETF (BRRR) 

This issuer has some tenure in the Bitcoin futures ETF space but has not been a leader. So as with all of these new ETFs, there’s a chance for success, but relatively speaking, the Valkyrie Bitcoin ETF (BRRR) has a lot of ground to make up as this race begins. 

At etf.com, we’ll all enjoy watching to see how this “Derby” plays out, and we’ll be covering it like the “tack” or equipment worn by racehorses. Unlike the Kentucky Derby, which is run in under 2 minutes, this “horse race” among spot Bitcoin ETFs will clearly evolve over a much, much longer time frame.  

Rob Isbitts was an investment advisor for 27 years before selling his practice to focus on ETF research and education. He is based in Weston, Florida. Contact him at  [email protected] and follow him on LinkedIn.