The spot Bitcoin and Ethereum ETFs have
been incredibly bullish for crypto since their launch. The spot Bitcoin ETFs have played
a key role in driving BTC to new all-time highs. And it looks like the spot Ethereum ETFs are now
having the same impact on ETH. As you watch this, both ETFs are seeing massive inflows, which could
take BTC and ETH even higher. Let me think about it. And this has everyone wondering which are
the best ETFs to get exposure to BTC and ETH. And that’s why today we’ll be covering everything you
need to know about the biggest spot crypto ETFs. My name is Nick and this is a video you cannot
afford to miss. Before we begin, you need to know that I am not a financial adviser and nothing
in this video should be considered financial or investment advice. This video is purely
educational and intended to inform you about the leading spot Bitcoin and spot Ethereum ETFs on
the market. Now, we’ve all heard spot Bitcoin ETF being thrown around as crypto’s biggest buzzword,
but it would probably be useful to understand what this actually means. ETF stands for exchangeraded
fund, and it works pretty similar to shares in a company. The difference is that instead of
representing part ownership of a business, an ETF share represents a portion of a fund that contains
assets like stocks, commodities, or in this case, cryptocurrencies. A spot ETF basically means that
it’s backed by actual crypto that’s held at a custodian rather than a derivative of the crypto
uh like its price, which is what futures ETFs do. Obviously, ETFs come with their own pros and cons.
On the one hand, they’re generally more regulated than the crypto market. Investors also don’t need
to worry about setting up an exchange account or dealing with self-custody. But of course, this
is a double-edged sword. If you’re not buying that crypto directly, then it technically doesn’t
belong to you. As the saying goes, not your keys, not your coins. In this case, the crypto in the
ETF technically belongs to the issuer, not to you. It’s also extremely important to note that ETFs
aren’t the only ways you can gain access to crypto in a regulated way. There are also similar
products that we’ll touch on in today’s video, namely ETPs. And ETP stands for exchange traded
product. And this is the umbrella term that includes spot ETFs among other things. If you’re
based in the US, spot ETFs will be the most accessible. You can typically buy them through
most major brokerage platforms like Interactive Brokers, Charles Schwab, etc., etc., just like
regular stocks. However, due to the differences in crypto regulation around the world, crypto ETFs
aren’t available to everyone. If you’re in the EU, you won’t be able to directly invest in crypto
ETFs listed on US exchanges. As such, some asset managers have created alternatives in the form of
ETPs, but we’ll point those out a bit later as we go along. And if you’re in the UK, uh the bad news
is that unless you’re a professional investor, you can’t buy crypto ETFs or even crypto ETPS.
Thankfully, the Financial Conduct Authority or FCA is currently considering lifting the retail
ban on another type of exchangeraded product called an exchangeraded note or ETN. An ETN
is a specific type of ETP that’s issued by a financial institution and is designed to track the
performance of an index. Similar to futures ETFs, ETNs don’t actually hold the underlying asset.
Instead, the issuer pays the return of an indexer minus any fees at maturity. Okay, with all of that
out of the way, let’s dive into the top three spot Bitcoin and Ethereum ETFs. But before we do,
fire up those like buttons if you’re enjoying spot Bitcoin ETF you need to know about is the
biggest and that’s Black Rockck’s iShares Bitcoin Trust or IBIT for short. As most of you will know,
Black Rockck is the world’s largest asset manager with total assets under management or AUM recently
hitting a record $12.5 trillion, which is frankly mindblowing. What you may not know though is that
Black Rockck’s CEO Larry Frink was once a Bitcoin skeptic. In 2017, he referred to Bitcoin as quote
an index of money laundering. His stance had changed by 2022 though when Frink said quote I was
a skeptic. I was a proud skeptic but I studied it, learned about it and realized my opinion 5 years
ago was wrong. Respect. In June 2023, Black Rockck filed with the SEC to convert its Eyesshares
Bitcoin Trust into an ETF using Coinbase as its custodian. Other asset managers like Gayscale
and Arc Invest already had pending applications, but the SEC hadn’t responded. Once Black Rockck
applied though, investor optimism surged because, well, it’s Black Rockck and what Black Rockck
wants, it usually gets. The SEC subsequently approved 11 different spot Bitcoin ETFs in January
2024 and Black Rockck’s IBIT quickly outpaced its competitors. In fact, IBIT became the fastest
growing ETF in history. According to data from Glass Node, when IBIT began trading on the 11th
of January 2024, it held just 227 Bitcoin. Within a single week, these holdings had grown by more
than 100 times to roughly 25,000 BTC. A month into IBIT’s launch, Black Rockck’s Bitcoin Stash had
reached over 82,000 BTC. And by 6 months, it was holding a staggering 313,000 BTC. Pretty crazy
stuff. And this momentum has stayed relatively consistent ever since, albeit with occasional
selling here and there. At the time of shooting, Black Rockck’s iBot controls over $85 billion in
AUM, holding over 717,000 BTC. Now, aside from Black Rockck’s stellar reputation and its status
as the world’s largest asset manager, a key factor behind IBIT’s early success was its temporary
fee reduction from 0.25% to 0.12% on the first $5 billion in assets during the first year. However,
that promotional period has ended and IBIT’s fees have now reverted to 0.25%. But where can you
actually invest in IBIT? Well, for US investors, you can access IBIT just like any other stock
on the NASDAQ stock exchange by using a regular brokerage platform just like the ones we mentioned
earlier. If you’re in Europe, though, things get a little bit trickier. IBET isn’t directly listed
for retail purchase, but BlackRock launched a spot Bitcoin ETP for European investors called
IB1T. In the UK, however, it’s only available to professional investors until the FCA lets retail
get access, protecting investors from accessing the world’s most successful ETF ever. Bravo,
chaps. Okay, the next ETF you need to know about is the Fidelity Wise Origin Bitcoin Fund or FBTC.
Fidelity is another one of the world’s leading asset managers with around $5.9 trillion in aumum.
And what’s crazy is that Fidelity actually started researching crypto way back in 2014. Fidelity
first applied for a spot Bitcoin ETF back in 2021, but the application was rejected by the SEC in
January 2022. The asset manager then reapplied for the ETF in June 2023 with a division
of Fidelity itself acting as the custodian, specifically Fidelity Digital Assets. Much
like IBIT, Fidelity’s FBTC has seen exponential growth since it launched on January 11th last
year. According to estimates from Glass Node, FBTC was holding roughly 25,000 BTC within its
first week of launch. Within a month from launch, these holdings had shot up to 60,000 BTC. And by 6
months, this had increased to roughly 161,000 BTC. Today, Fidelity’s FBTC controls over 2.16 billion
in AUM with over 206,000 BTC. Not too shabby. Now, like Black Rockcks IBIT, the Fidelity Wise
Origin Bitcoin Fund has a fee of 0.25%. US investors can buy FBTC through virtually
any brokerage or trading platform in the US that provides access to stock exchanges,
including directly through Fidelity. However, European and UK investors won’t be able to access
FBTC directly. Uh thankfully though, Fidelity also has an alternative Bitcoin ETP called FBTC which
trades on major European exchanges. For the UK, professional investors can access FBTC on the
London Stock Exchange. Oh, and um, by the way, ETF or GBTC. Grayscale’s ETF is much smaller than
either Black Rockck or Fidelities with just 33 billion in AUM. Unlike many of its peers though,
Gayscale has focused solely on cryptocurrency since its founding in 2013. In fact, Barry Silbert
created the firm to offer investors exposure to crypto without managing the underlying assets
themselves. Gayscale’s Bitcoin Trust was actually launched way back in 2013, originally as a private
placement available only to accredited investors. It became available to retail investors in early
2015. Without getting too technical, trusts are like spot ETFs in that they are backed by physical
assets. The difference is that the issuance and redemption of shares in trusts doesn’t happen as
frequently as with ETFs. And the result is that the price of the trust shares can trade above or
below the value of the underlying assets. Hence, the premiums and discounts on GBTC in the past.
Gayscale first applied for its GBTC trust to be converted into an ETF in 2017, but faced
rejection from the SEC, which cited fears about market manipulation and investor risk. And this
continued even after Bitcoin futures ETFs launched in 2021. But this was odd since the presence
of the Bitcoin futures ETFs meant that the SEC could trust the market’s pricing of BTC. So when
the SEC refused another ETF application in 2023, Gayscale responded by suing the regulator and then
they won the case. Without this major catalyst, it’s questionable whether any spot bitcoin ETFs
would have been approved in 2024. As with the other spot Bitcoin ETFs, the SEC finally approved
Gayscale to convert its Bitcoin trust into an ETF in January last year. And just like Black Rockck,
Gayscale is using Coinbase as the custodian for this BTC. But while IBIET and FBTC flew out
of the gates, Gayscale’s GBTC struggled early on. After converting GBTC into an ETF, major
outflows forced Gayscale to sell large volumes of Bitcoin from its reserves. Many believed this
created sell pressure that suppressed Bitcoin’s price. A few months later, it was revealed that
a large portion of those outflows came from FTX, which liquidated around $1 billion worth in GBTC
holdings as part of its bankruptcy proceedings. So, once that unique event wrapped up, many
expected GBTC to start seeing more and more days of net inflows. However, this wasn’t the
case. To put things into perspective, Grayscale’s Bitcoin Trust held over 620,000 BTC before being
converted from a trust to an ETF. As you can hopefully see on the chart provided, the holdings
of the ETF have been shrinking ever since. Today, GBTC only holds around 222,000 BTC, roughly
a third of what it started with. Naturally, then this begs the question of how GBTC has
remained as one of the biggest Bitcoin ETFs even with these consistent outflows. And the answer is
a combination of Grayscale charging a much higher fee than its competitors and a dedicated base of
investors that continue to show unwavering support for an asset manager that despite all odds refuses
to cave in. To put things into perspective, Grayscale charges a fee of 1.5% and that’s
six times more than Fidelity or Black Rockck. And this has helped Gayscale to draw in more
revenue than all of its competitors combined. US investors can buy Grayscale’s GBTC using most
major brokerage platforms and trading accounts. Unfortunately for European or UK residents, direct
exposure to GBTC is unavailable at this time and Gayscale has yet to create an alternative ETP
that’s more accessible to international investors. Okay, now that we’ve seen the top three spot
Bitcoin ETFs, let’s now shift our attention to the top three Ethereum ones. Unsurprisingly, the
biggest one comes from BlackRock, and that’s the EyesShares Ethereum Trust ETF or ETH. Black Rockck
first filed for the Ethereum ETF in November 2023. Again, choosing Coinbase as a custodian. The
SEC eventually approved smart Ethereum ETFs in May last year for several asset managers,
including BlackRock, Vanek, Fidelity, Gayscale, Franklin Templeton, Arc 21 shares, Invesco,
Galaxy, and Bitwise. Unlike the spot Bitcoin ETFs, the spot Ethereum ETFs didn’t immediately start
trading the day after they were approved. Instead, they began trading two whole months later on the
23rd of July, 2024. Now, it’s no secret that the spot Ethereum ETFs haven’t matched the success
of their Bitcoin counterparts. Institutional adoption has been slower than expected, leading
to a rocky start. In their first few months, they flip-fpped between net inflows and outflows,
ultimately failing to offer ETH the same price support that the Bitcoin ones gave to BTC. Spot
Ethereum ETFs didn’t see significant net inflows until last November. But these were short-lived,
often followed by outflows that essentially reset the playing field. As you can hopefully see on
this chart provided, this volatility subsided by February when activity flatlined in the negative.
The trend reversed though in April this year with a surge of record-breaking net inflows since.
So, how has Black Rockck’s ETH a performed? Well, despite challenges in attracting lasting
investment, its ETH holdings have nonetheless grown impressively. Glass node data shows that
just a month after trading began on July 23rd, ETH A held $332,000 ETH. By year’s end, that
number had ballooned to over 1 million ETH. Today, it controls more than $6.4 billion in AUM and
holds over 2.1 million ETH. Just like with its spot Bitcoin ETF, Black Rockck charges a 0.25%
fee for trading ETH. And it’s worth noting that the firm reportedly met with the SEC’s crypto task
force in May to discuss spot Ethereum ETPS with staking features, although the SEC has yet to give
this the green light. For what it’s worth though, the recent approval of the staked spot Salana
ETF suggests Ethereum is next in line. Now, while US investors will have no issue buying ETH,
European investors don’t have the same luxury. Unfortunately, at the time of shooting, Black
Rockck has yet to reveal any plans to create a spot Ethereum ETP in the same way it created
an ETP alternative for its IBIT fund. For what it’s worth, though, there are plenty of other
European ETPs available from other issuers in the UK and the EU. Now, the second Ethereum
ETF that you need to know about is Fidelity’s Ethereum Fund or F. Fidelity first filed with the
SEC for its spot Ethereum ETF in March last year. As with FBTC, Fidelity Digital Assets serves as
the custodian for the assets held in FE. Notably, Fidelity’s initial SEC filing was initially
amended to include a staking mechanism. A few months later though, Fidelity amended the
filing again to take the staking element back out. But as you may have guessed, Fidelity
is again seeking to add a staking mechanism for its spot Ethereum ETF. However, in April this
year, the SEC delayed its decision to allow these features to be implemented. Fidelity’s Ethereum
fund began trading on the 23rd of July last year, and by the end of the year, it had already amassed
over 462,000 ETH. Today, FET holds almost 570,000 ETH with over $1.2 2 billion in AUM. If you’re
wanting to trade FE, a Fidelity charges a fee of 0.25%. US investors can freely trade FE, but
Fidelity hasn’t yet announced any plans to create an ETP alternative to its spot Ethereum ETF for
international investors, at least at the time of shooting. Okay, the third spot Ethereum ETF you
need to know about is, you guessed it, Grayscale’s Ethereum Trust with the ticker ETH E. The Ethereum
Trust originally launched in 2017 with its primary purpose being to hold ETH and provide investors
with exposure to the second largest crypto through a regulated financial instrument rather than
direct cryptocurrency ownership. Initially, ETH E shares were only available through private
placement to accredited investors, but were made available to retail investors in the US in
mid209. So, yes, it’s literally the same playbook as Gayscale’s Bitcoin Trust. Gayscale first
filed with the SEC to convert ETH into an ETF in October 2023, just a few months after it beat
the regulator in court. It began trading as an ETF on the 23rd of July 2024 with Coinbase again
serving as custodian. Grayscale spot Ethereum ETF performance has mirrored its Bitcoin ETF with
significant outflows since launch and this has frustrated many investors as inflows into other
spot Ethereum ETFs were largely offset by heavy ETH E outflows. At conversion, the fund held over
2 million ETH. Today it holds just over 570,000 ETH, about a quarter of the original amount with
around 3.8 billion in AUM. Notably, Gayscale also created the Ethereum Mini Trust as a more
costefficient alternative to the larger Ethereum Trust ETF with fees of just 0.15%. And what’s
fascinating is that this actually means that the Ethereum mini trust has the lowest fees of
any Ethereum ETF. The exact opposite of Gayscale spot Bitcoin ETF. Like other asset managers,
Grayscale is also seeking SEC approval for a staking mechanism to be added to its Ethereum ETF
products. Now, surprise surprise, Grayscale also doesn’t have any spot crypto ETPS or any other
product suitable for EU or UK residents, which is undoubtedly very frustrating. But, as I mentioned
earlier, there are other spot crypto ETPs from different asset managers you can consider. Those
looking for spot bitcoin exposure can of course use Black Rockck’s IB1T that we mentioned earlier.
Alternatively, another example is Coin Shares physical Bitcoin ETP, which uses the ticker BITC.
At the time of shooting, it holds just under $2 billion in AUM and charges a fee of 0.25%. As for
exposure to Ethereum, one example is 21 shares, which actually offers an Ethereum staking ETP that
uses the ticker AE. It holds over $450 million in AUM, offers a staking yield of 1.52% and charges
a fee of 1.49%. And this is just the tip of the iceberg. Beyond the spot Bitcoin and Ethereum
ETFs covered here, several spot altcoin ETFs are also in development, some already active. These
could supercharge the prices of their respective cryptos. So, if you want to stay updated, uh, then
check out our altcoin ETF update video right over here. And if you’re not subscribed to the channel
yet, you can do that right over here. This is me, Nick. Thank you guys very much for
watching, and I will see you again soon.
