Crypto ETFs in 2025

Many investors struggle with understanding the differences between Bitcoin, Ethereum, and blockchain ETFs, figuring out which platforms are reliable, and determining how to evaluate an ETF’s performance. On top of that, regulatory uncertainties and market volatility create even more confusion.

This article is your one-stop guide to Crypto ETFs. We’ll break down the types of ETFs, compare top-performing options, explain how to invest step-by-step, and highlight key metrics to evaluate your choices.

What is a crypto ETF?

A crypto ETF (Exchange-Traded Fund) is an investment fund traded on traditional stock exchanges that tracks the price of cryptocurrencies or a basket of digital assets. It allows investors to gain exposure to crypto markets without directly buying or managing cryptocurrencies.

How does a crypto ETF work?

First, an asset management company—usually a well-known financial institution like BlackRock or Fidelity—decides to launch a Crypto ETF. Their goal is to create a fund that mirrors the price movements of one or more cryptocurrencies, such as Bitcoin or Ethereum. To do this, they either buy and hold the actual cryptocurrency or use futures contracts (agreements to buy or sell assets at a set price on a specific date) that represent these assets.

Example: In a Bitcoin ETF, the company might purchase large amounts of Bitcoin and store them securely with an institutional-grade custodian service to ensure they’re safe from theft or hacking.

Next, the company packages these assets into a fund and divides ownership of the fund into shares. Each share represents a tiny fraction of the total value of the assets held in the ETF. These shares are then listed on a traditional stock exchange—like the New York Stock Exchange (NYSE) or NASDAQ—so that regular investors can buy and sell them, just like they would with stocks or other ETFs.

Behind the scenes, a fund manager actively or passively manages the ETF to ensure it closely tracks the price of the underlying crypto assets.

If it’s an actively managed ETF, professionals might adjust the fund's holdings based on market trends.

A prime example of actively managed ETF is the ARK Next Generation Internet ETF (ARKW), which dynamically adjusts holdings to seize market opportunities.

In a passively managed ETF, the fund simply mirrors the performance of an index or a pre-defined set of rules.

A notable example is the Grayscale Bitcoin Trust (GBTC), which tracks Bitcoin's price and offers exposure to its performance without requiring direct ownership.

Additionally, transparency is a key aspect of ETFs. Investors can typically see the daily holdings of the ETF and understand exactly what assets the fund owns.

For example, if the ETF tracks Bitcoin, investors can verify that the fund holds the expected amount of Bitcoin, often through on-chain transparency tools.

Finally, the ETF generates revenue in two ways: capital appreciation (the value of the assets increasing over time) and management fees charged by the asset management company for operating the fund. These fees are usually expressed as an Expense Ratio and deducted from the fund's overall returns.

Why are crypto ETFs gaining popularity?

Crypto ETFs are gaining popularity because of

• Accessibility: Easy entry into crypto markets via familiar investment platforms.

Example: Invesco Galaxy Bitcoin ETF (BTCO) – Allows investors to gain direct exposure to Bitcoin through a traditional brokerage account, avoiding the complexity of crypto wallets or exchanges

• Diversification: Exposure to multiple cryptocurrencies or blockchain projects in one investment.

Example: Bitwise 10 Crypto Index Fund (BITW) – Provides exposure to the top 10 cryptocurrencies by market capitalization, spreading risk across multiple assets.

• Security: Assets are managed and stored by regulated institutions, reducing risks like hacking.

Example: Fidelity Digital Assets Custody Service – Ensures Bitcoin and other crypto assets in ETFs are securely stored with institutional-grade protection.

• Convenience: No need for wallets, private keys, or technical knowledge.

Example: VanEck Bitcoin Strategy ETF (XBTF) – Provides exposure to Bitcoin futures on regulated exchanges, enabling investors to trade easily without dealing with digital wallets or private keys.

Types of crypto ETFs

Here’s a breakdown of the most common types:

Major Players in the Crypto ETF Market

The Crypto ETF market is dominated by a few key financial giants that bring credibility, experience, and institutional trust to this emerging sector. These players offer products tailored to different investor needs, from long-term growth strategies to yield-focused opportunities.

1. BlackRock Crypto ETF

BlackRock, the world’s largest asset manager, has made significant strides in the Crypto ETF market with products aimed at institutional and retail investors.

Key features

• Focuses on Bitcoin and blockchain-related assets.
• Managed with strict regulatory compliance.
• Known for high liquidity and transparency.

Why it stands out

BlackRock’s ETFs has institutional trust and vast financial resources, ensuring reliability and stability even in volatile markets.

Example ETF

iShares Bitcoin Trust ETF (IBIT)

ISIN: US46438F1012

2. Fidelity Cryptocurrency ETF

Fidelity is a pioneer in blending traditional finance with digital assets, offering Crypto ETFs designed for long-term investors who value security and transparency.

Key features

• Exposure to leading cryptocurrencies and blockchain firms.
• Managed with institutional-grade custody solutions.
• Competitive expense ratios for cost-efficient investing.

Why it stands out

Fidelity’s focus on risk management and cutting-edge technology, ensuring assets are securely managed and transparently tracked.

Example ETF

Fidelity Crypto Industry and Digital Payments ETF (FDIG)

ISIN: US3160928409

3. Schwab Crypto ETF 📊

Charles Schwab, a trusted name in global finance, has entered the crypto ETF market with products focusing on diversified blockchain and crypto exposure.

Key features

• Exposure to a diversified portfolio of digital assets and blockchain tech.
• Emphasis on transparent pricing and low costs.
• Access through user-friendly trading platforms.

Why it stands out

Schwab focuses on making crypto ETFs accessible to everyday investors, combining ease of use with robust financial tools.

Example ETF

Schwab Crypto Thematic ETF

ISIN: US8085248701

Key metrics to evaluate a crypto ETF

When investing in Crypto ETFs, understanding the key metrics below is crucial for assessing the performance, risk, and cost-effectiveness of an ETF:

1. Return on investment (ROI)

Return on investment (ROI) measures the profitability of a Crypto ETF relative to the initial investment. It indicates how well an ETF has performed over a specific period.

Why ROI Matters:

• Shows the actual performance of your investment.
• Helps compare returns with other ETFs or investment options.
• Provides a clear picture of historical and projected growth.

How to use ROI effectively:

Look at both short-term and long-term ROI trends to understand the ETF's performance across different market conditions.

Example: An ETF with an ROI of 15% annually outperforms one with a 5% annual return.

2. Sharpe ratio

The Sharpe Ratio measures an ETF's risk-adjusted returns. It evaluates whether the returns justify the risks taken by the fund.

Why Sharpe ratio matters:

• Helps determine if the ETF's returns are worth the risk.
• Higher Sharpe Ratios indicate better risk-adjusted performance.
• Useful for comparing ETFs with similar strategies.

How to interpret Sharpe ratio:

• A Sharpe ratio above 1 is considered good.
• Ratios below 1 suggest that the ETF’s returns may not sufficiently compensate for the risk.

Example: An ETF with a Sharpe ratio of 1.5 is generally considered a safer bet than one with 0.7.

3. Expense ratios

The expense ratio represents the annual fee percentage charged by the ETF provider to manage the fund. It directly impacts your net returns over time.

Why expense ratios Matter:

• Lower ratios mean higher returns for investors.
• Helps compare cost-effectiveness between ETFs.
• Reflects how efficiently the fund is managed.

What to look for:

• ETFs with Expense ratios below 0.5% are generally considered cost-efficient.
• Avoid ETFs with excessively high ratios unless they deliver exceptional performance.

Example: An ETF with a 0.3% expense ratio is more cost-effective than one charging 1.5% annually.

4. Liquidity

Liquidity refers to how easily an ETF can be bought or sold on an exchange without significantly affecting its price.

Why Liquidity matters:

• Ensures easy entry and exit from the investment.
• Reduces the risk of price slippage during trades.
• Indicates the popularity and demand of the ETF.

How to evaluate liquidity:

• Check the daily trading volume—higher volumes mean better liquidity.
• Look at the bid-ask spread—narrower spreads indicate higher liquidity.

Example: An ETF with a daily trading volume of $100 million is far more liquid than one with $1 million.

Step-by-step guide to buying a crypto ETF

To buy a crypto ETF, you can do it through your bank, through a stock exchange trader account, or through a retail broker:

1. Via your bank

Step 1: Research available crypto ETFs

• Identify the ETF you want to invest in and note its ISIN.
• Confirm that your bank supports ETF investments and can process crypto-related ETFs.

Step 2: Contact your bank

• Provide the ISIN to your bank representative or use your online banking platform (if available).
• Verify that the bank is authorized to approve and sign the ETF purchase.

Step 3: Approve and sign the order

• Review the ETF’s details, including fees and structure, through your bank.
• Approve the order with your bank, either in-person or through their online system.

Step 4: Monitor your investment

• Use your bank’s portfolio dashboard to track performance and receive updates.
• Request periodic statements or set up alerts for market changes.

Step 5: Plan your exit strategy

• Contact your bank when you wish to sell or set up a predefined exit strategy, such as stop-loss or target price instructions.

2. Via a stock exchange trader account

Step 1: Research available crypto ETFs

• Use public resources or trading tools to evaluate ETFs by their ticker symbol, ISIN, performance history, and expense ratio.

Step 2: Open a trader account

• Sign up with a platform offering direct access to global stock exchanges.
• Complete the KYC process and link your bank account or payment method.

Step 3: Search for your chosen crypto ETF

• Use the platform’s search tools to locate the ETF by ticker or ISIN.
• Review the prospectus for details on its performance and risks.

Step 4: Place an order

• Decide on an order type:
  • Market Order: Buy at the current market price.
  • Limit Order: Set a specific price point for your purchase.
• Enter the quantity or investment amount and execute the trade.

Step 5: Monitor your investment

• Use the platform’s dashboard to track your holdings and access real-time market data.
• Set up notifications for price changes or performance milestones.

💡 With MC² Finance, you can track assets directly on the platform and receive real-time performance alerts via Telegram for easy access.

Step 6: Plan your exit strategy

• Use platform tools to set stop-loss orders or target prices for selling.
• Consider portfolio rebalancing based on performance and goals.

3. Via a retail broker

Step 1: Research available crypto ETFs

• Use the broker’s educational resources or external tools to compare ETFs.
• Focus on key metrics like performance, expense ratio, and liquidity.

Step 2: Choose a retail broker

• Select a broker that supports crypto ETFs and offers low fees, a user-friendly interface, and access to global ETFs.
• Sign up and complete onboarding, including KYC and linking your payment method.

Step 3: Search for your chosen crypto ETF

• Enter the ETF’s name, ticker, or ISIN in the broker’s search tool.
• Review the ETF’s details, such as structure, fees, and underlying assets.

Step 4: Place an order

• Follow the platform’s guided steps to select the ETF and order type.
• Confirm your order amount and execute the trade.

Step 5: Monitor your investment

• Access your portfolio through the broker’s app or website to track performance.
• Set up alerts or notifications for market changes.

Step 6: Plan your exit strategy

• Use the broker’s built-in tools, like stop-loss orders or price alerts, to manage your exit.
• Review your financial goals periodically and adjust your strategy as needed.

Platforms and brokers for crypto ETFs

When choosing a platform or broker for investing in Crypto ETFs, look for the following key features:

1. Regulation & security: Ensure the platform complies with financial regulations and offers strong security measures.
2. Access to global ETFs: Look for platforms offering ETFs from international markets.
3. Fee structure: Compare transaction fees, management fees, and hidden costs.
4. User experience: A user-friendly interface with clear ETF data and analytics.
5. Research tools: Access to research reports, news updates, and performance analysis tools.
6. Liquidity: platforms with higher trading volumes ensure smoother transactions.

The future of crypto ETFs

MC² Finance, in beta version, will shape** the future of crypto ETFs via DeFi-powered Exchange-Traded Products (ETPs; “Daddy” of ETFs) for the European market in 2025.

It is designed to:

✅ Enable on-chain investment products with institutional-grade security.

✅ Automate yield optimization through advanced DeFi strategies.

✅ Provide transparent, on-chain performance tracking for investors.

📧 Interested in collaborating or learning more? Contact our team at team@mc2.fi to explore partnership opportunities or request our detailed product documentation.

FAQs

Is there an ETF for cryptocurrency?

Yes, there are ETFs specifically designed for cryptocurrency investments, offering investors a regulated and straightforward way to gain exposure to digital assets without directly managing private keys or wallets. These ETFs can track individual cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), focus on a basket of multiple crypto assets, or invest in blockchain-related companies. Examples include the ProShares Bitcoin Strategy ETF (BITO) and the Amplify Transformational Data Sharing ETF (BLOK), both widely traded on traditional stock exchanges.

Which is better: IBIT or FBTC?

When comparing IBIT (iShares Bitcoin Trust by BlackRock) and FBTC (Fidelity Bitcoin ETF), both stand out as strong contenders in the Bitcoin ETF space. IBIT, managed by BlackRock, offers institutional-grade exposure with excellent liquidity and widespread market acceptance. On the other hand, FBTC by Fidelity is known for its cost efficiency and secure custody solutions. The choice between them depends on individual priorities: IBIT excels in liquidity and market presence, while FBTC offers slightly lower fees and commendable asset management.

Does XRP have an ETF?

Currently, there is no direct XRP ETF available on major stock exchanges but the president has announced that such an ETF is imminent. For now (Jan 2025), regulatory uncertainties surrounding Ripple (XRP) have hindered the approval of XRP-focused ETFs. However, XRP can sometimes be included as part of broader crypto index ETFs or funds that track a diversified portfolio of digital assets.

What is the largest ETF in crypto?

The largest Crypto ETF in terms of Assets Under Management (AUM) and trading volume is typically the Grayscale Bitcoin Trust (GBTC). It’s one of the most established Bitcoin-focused funds, with billions in assets under management and deep market liquidity. Other notable mentions include the ProShares Bitcoin Strategy ETF (BITO) for futures-based Bitcoin exposure and Amplify Transformational Data Sharing ETF (BLOK) for blockchain technology investments.

Are crypto ETFs safe?

As for safety, Crypto ETFs are generally considered safer than directly holding cryptocurrencies, thanks to their regulatory oversight, institutional-grade custody, and risk management protocols. These ETFs eliminate the need for investors to manage private keys or wallets, reducing exposure to hacks or user errors. However, risks such as market volatility, regulatory changes, and counterparty dependency still exist. Platforms like MC² Finance aim to further enhance safety by offering transparent on-chain performance tracking, institutional-grade security, and automated yield optimization strategies, bridging the gap between traditional finance and DeFi innovation.

Does an ETF generate yields?

No, ETFs do not generate yields as they are primarily designed to track the performance of assets like cryptocurrencies or indexes. For yield generation, you would need an ETP (Exchange-Traded Product), which can include income-generating strategies like staking or lending. Learn more about ETPs and how they work here

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