These days the term cryptocurrency or digital money is on everybody’s minds. Many crypto prices have surged and made the digital currency the top-performing asset of the past decade.
Have you ever heard about cryptocurrency index funds? Of course many times.
Index funds are an excellent way for people looking for short or long term investments. Many investors are showing attention to investing in crypto index funds. But why? Because crypto index funds are affordable and easy to invest in. Most importantly, index funds can drive solid returns in no time. Considering these benefits, crypto index funds can be the best opportunity for all investors.
For all the crypto index fund beginners, here is a quick introduction to cryptocurrency index funds.
Page Contents
What is a cryptocurrency index fund?
The term cryptocurrency index fund is mostly considered as the financial product that is designed to provide investors incredible access to the diversified basket of virtual assets. Sad news for all the United States residents, the true cryptocurrency index funds have not yet existed.
For better understanding, let’s keep things simple.
A cryptocurrency index fund is an excellent investment product that is designed as a mutual fund or exchange-traded fund. Many benefits in a single package, an index fund is a one-time investment that has the ability to hold several digital assets.
A crypto index fund can track a specific index of digital assets. For example, a crypto index fund might track the price of the best 10 cryptos, 100 cryptos or the total market for the digital currency assets. As mentioned above, there are no true cryptocurrency index funds are available as of 2022.
Best cryptocurrency index funds
ProShares Bitcoin Strategy ETF (BITO)
BITO is the initial Bitcoin linked ETF, especially for U.S residents. ProShares allows users an excellent way to gain exposure to the Bitcoin token return in the most convenient, secured, liquid and transparent approach. Simply put, users will get a chance to add exposure to the Bitcoin, no need to worry about owning the Bitcoin. The ETF index is actively handled by Proshares. BITO will not get involved in investing in Bitcoin directly. Instead, the fund will probably aim to offer returns through huge exposure to the futures contracts of Bitcoin.
Keep in mind that investors might look for replacing BITO with other assets such as gold, traditional currency, commodities, etc. Currently, BITO is holding net virtual assets of around $1 billion.
Grayscale Bitcoin Trust (GBTC)
The Grayscale Bitcoin Trust (GBTC) is the first investment automobile to derive its value exclusively from the Bitcoin price or value. GBTC was introduced in the year 2013. Since then Grayscale Bitcoin Trust returned around 28,000% to its investors. Sounds amazing right? Yes! The platform has more than $25.6 billion in digital assets under its management. This huge value is making the GBTC the leading crypto index fund that existed on the market. As of now, it is using CoinDesk Bitcoin Price Index as its standard.
Grayscale Bitcoin Trust is an open platform for direct investment. Investors on GBTC can invest as low as $50,000 as their minimum investment. But, keep a note, that everybody can access GBTC shares through the secondary market via online brokers.
Grayscale Bitcoin Trust (GBTC) is only and passively funded in the Bitcoin (BTC). It allows investors to gain good exposure and opportunity to the Bitcoin in the form of security. On the other hand, GBTC is stretching its hand to avoid the challenges faced by investors i.e buying and storing the Bitcoin directly.
Grayscale Ethereum Trust (ETHE)
The Grayscale Ethereum Trust (ETHE) works almost similar to the Grayscale Bitcoin Trust (GBTC). The Grayscale platform is offering another excellent fund that is truly focused on the Ethereum crypto. Ethereum is the world’s second-largest crypto token. Within a short period of time, Grayscale Ethereum Trust has gained immense popularity. Grayscale Ethereum Trust (ETHE) derives its value factor using Ethereum’s digital currency price i.e Ether. Currently, ETHE is following another popular fund i.e CoinDesk Ether Price Index as its standard or benchmark. The brand Grayscale is passively investing in the second-largest crypto-token, Ether. It allows users to increase their exposure to popular digital currencies without any worrying. It means that investors don’t need to worry about buying their tokens directly, storing them in a digital wallet or securing their coins from hackers. Currently, Grayscale Ethereum Trust is having around $9.2 billion of digital assets under management.
Bitwise 10 Crypto Index Fund (BITW)
If you want to get exposure to the popular cryptocurrencies such as Bitcoin, Ethereum and more, the Bitwise 10 crypto index fund is the best choice for you. As the number 10 suggests, the fund can seek investors to track highly-valued cryptocurrencies, rebalance monthly, weighted by market cap, monitor risk and more.
The best thing about BITW is it ensures the safety, simplicity and security of investment vehicles and also shares the tradables for the investors in a brokerage account through the ticker “BITW”. This fund is weighted mostly towards the leading crypto tokens, Bitcoin has allocated around 62% and Ethereum has allocated around 26.7%. There are few leading altcoins in the mixture of crypto holding. It includes Polkadot (DOT), Cardano (ADA), Solana (SOL) and more. Bitwise 10 crypto index fund has around $877 million in digital assets under the management.
Global X Blockchain and Bitcoin Strategy ETF (BITS)
If you’re a Bitcoin enthusiast, Global X Blockchain and Bitcoin Strategy ETF can be another best fund for you. There are several reasons to choose the Global X platform, including Bitcoin future’s immense exposure, long-term growth, ETF efficiency and more. Just by investing your money in the Bitcoin futures, BITS provides a transparent and secure way of increasing exposure to the largest token, Bitcoin. BITS offers long-term growth just by collaborating Bitcoin token futures positions with immense exposure to the organization of leading blockchain technology. Another good thing about BITS is that it provides great access to blockchain technology and Bitcoin futures in one trade.
Wrapping up
It’s an open fact that crypto ETFs are new and trending in the crypto world. Hope the above article helped you to choose the best cryptocurrency index fund.
The crypto ETF is an excellent exchange-traded fund that aims to track the cryptocurrency price. They can track one, two or several digital tokens. Keep in mind that these crypto ETFs will never hold any cryptocurrency. They might hold derivatives – futures contracts. It allows the funds to increase exposure to the digital currency value without taking any control of the particular crypto token. There might be few ETF platforms that offer limited exposure or indirect to the crypto tokens by maintaining the equity roles in the blockchain miner. These types of ETFs are considered Blockchain ETFs. Since index funds are new to the crypto market, you need to spend time on research and pick the best cryptocurrency index fund as per your requirements.
