WGMI - The 3 Best Bitcoin ETFs for Aggressive Crypto Investors

2024-01-17 07:33:00 ET

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

The excitement and hype around Bitcoin spot ( BTC-USD ) ETFs is over. It was seven days ago that Bitcoin spot ETFs were approved, and since then, the coin has tumbled around 6% despite initially spiking.

Fears are swirling around social media, with contrarians pointing to Bitcoin ETFs as a detriment to the project or even a trojan horse. It is speculated that large institutions that are forced to buy large amounts of Bitcoin, could eventually lead to a split in the network or hard fork. One reflecting the original project and another reflecting institutional interests.

On the other hand, the majority view is that Bitcoin ETFs will bring an unprecedented amount of new liquidity into the market, indirectly increasing Bitcoin’s underlying value. Either case has had a muted effect on its price so far, but could soon change.

The new Bitcoin ETFs give investors great exposure to Bitcoin while offloading custody risk to a third party. In the long term, these instruments are expected to be accretive for the currency’s price.

So here are the best Bitcoin ETFs for investors to consider.

Bitwise Bitcoin ETF (BITB)

The Bitwise Bitcoin ETF (NYSEARCA: BITB ) is commonly cited as one of the best spot ETFs in Bitcoin investments. The reason is mostly due to its low management fee of 0.20% currently waived, while its assets under management remain under $1 billion.

Some other reasons investors have cited BITB as one of the best Bitcoin ETFs to watch. These reasons include the support of well-known service providers in the space, including Coinbase (NASDAQ: COIN ) as its custodian and KPMG as its auditor.

Furthermore, BITB has claimed that it will donate 10% of its profits to non-profit organizations focused on Bitcoin open-source development. This should help keep the coin’s ecosystem healthy and thriving. It gives a differentiated advantage from other ETFs in the same space.

Valkyrie Bitcoin Miners ETF (WGMI)

Valkyrie Bitcoin Miners ETF (NASDAQ: WGMI ) is one of the more aggressive options for growth-oriented Bitcoin investors.

As opposed to tracking the currency’s price by holding the underlying or via complicated financial derivatives such as futures, WGMI invests in companies directly involved in the mining process.

In my view, the approach of WGMI is more aggressive as investing in shares of Bitcoin mining companies has the potential to amplify gains and losses. There are more risks and moving parts to investing in a company than simply holding the underlying. If companies diversify their operating segments from purely mining Bitcoin, they can achieve greater capital appreciation.

Some of WGMI’s largest holdings include Iris Energy (NASDAQ: IREN ) and Riot Platforms (NASDAQ: RIOT ). Despite peaking near the end of the year, its share is up 67.03% over the past year, and its management fee is a reasonable 0.75%.

Simplify Bitcoin Strategy PLUS Income ETF (MAXI)

The Simplify Bitcoin Strategy PLUS Income ETF (NASDAQ: MAXI ) presents an intriguing investment case. It combines Bitcoin’s strong growth potential and capital appreciation and options strategies to generate income.

Unlike Bitcoin spot ETFs like BITB, MAXI achieves its beg through futures contracts. It then sells options to generate a premium, passing premium income on to investors via a dividend.

There are pros and cons to MAXI’s method. It has an annual dividend yield of 28.29%, which is convenient for investors who want to generate income and limit their exposure to Bitcoin. However, this also comes with a downside. Instead of buying Bitcoin and “letting your winners run,” the upside is capped partially through the options’ functions, such as covered call strategies. It also has an expense ratio of 11.18%, which is enormous.

Still, for exposure to Bitcoin’s price movement without owning the underlying, and a cash dividend over capital gains, MAXI could become a potent and aggressive vehicle to generate income this year. This is especially true as the theta options strategies that MAXI employs work best in volatile conditions and strong bull markets.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

More From InvestorPlace

• ChatGPT IPO Could Shock the World, Make This Move Before the Announcement
• Musk’s “Project Omega” May Be Set to Mint New Millionaires. Here’s How to Get In.

The post The 3 Best Bitcoin ETFs for Aggressive Crypto Investors appeared first on InvestorPlace .