For the first time in history, most American investors can buy and sell Bitcoin (CRYPTO: BTC) assets in their stock brokerage accounts. The emergence of exchange-traded funds (ETFs) that hold nothing but Bitcoin opens a plethora of new doors. Large-scale financial managers can trade these spot Bitcoin ETFs. They may be an option in your IRA or 401(k) retirement accounts. Many investors simply prefer a familiar ETF format over opening accounts in a separate crypto-trading service.
It's still early, less than five months after the launch of the first 11 spot Bitcoin ETFs. However, the iShares Bitcoin Trust (NASDAQ: IBIT) has emerged as an early leader with a dominant market value and torrential daily trading volume.
Is the iShares ETF a no-brainer buy for Bitcoin investors in 2024? Or should you look at other options before this market leader?
Why the iShares Bitcoin fund stands out in the crowd
The iShares fund family is a household name. Managed by the BlackRock financial services empire, investors find it easy to trust this brand. Check out the top 100 largest ETFs, sorted by the amount of assets under management (AUM), and you'll find 39 iShares funds on that list today. Runner-up Vanguard boasts 30 top-100 funds, followed by crickets and tumbleweeds until you reach State Street's SPDR fund family with 16 names.
The Bitcoin fund is no exception, found in the lower half of that top-100 list. That's no small feat in a market with more than 3,500 ETFs to choose from. With $21.2 billion of AUM, the fund recently passed former Bitcoin fund king Grayscale Bitcoin Trust (NYSEMKT: GBTC), swooning to $20.1 billion from an all-time high of $29.0 billion.
The fund is also heavily traded. About 38 million iShares Bitcoin ETF shares are changing hands on an average day. That works out to roughly $1.5 billion of daily trading value at today's prices. The Grayscale ETF stops at $713 million and Fidelity Wise Origin Bitcoin (NYSEMKT: FBTC) lands in third place with $593 million in daily dollar volume.
So, the iShares ETF has a comfortable lead over the largest contenders in terms of market scale, liquidity, and brand-name laurels.
Where other funds can challenge iShares
Liquidity and branding power may be enough for most investors, but other funds can put up a fight from a different angle.
For instance, the iShares fund's annual sponsor fee stands at a modest but unexceptional 0.25%. The fund breezed past the $5 billion asset value in February, so the launch-day fee reduction only applies to a small portion of the fund. Fidelity is waiving its fee until Aug. 1, when the rate will jump to the same 0.25% standard. The ARK 21Shares Bitcoin ETF (NYSEMKT: ARKB) comes with a lower 0.21% fee ratio (but no waivers anymore). The Bitwise Bitcoin ETF (NYSEMKT: BITB) offers the lowest of all annual fees at 0.20%, and its launch rebates will end on July 12.
So iShares isn't a slam-dunk winner if you're looking for the lowest possible fees. The differences may be small enough that you prefer the BlackRock fund family and its beefier market footprint, but the likes of Ark Invest and Bitwise are better choices for fee-sensitive investors.
Final thoughts on the iShares fund and Bitcoin ETFs in general
While the iShares Bitcoin Trust stands out for its muscular market presence and trading volume, it's not the only option worth considering. Depending on your investment priorities, other funds like the Ark 21Shares Bitcoin ETF and the Bitwise Bitcoin ETF might be more appealing -- especially if you focus on low fees.
And, of course, you're essentially buying Bitcoin when you invest in any of these funds. Buckle your seat belt because there will be bumps in the road and lots of market turbulence. The oldest and largest cryptocurrency seems destined for game-changing gains in the long run, including a halving-inspired surge over the next year or two, but nothing is guaranteed, and the crypto market can change in a heartbeat. Please make sure you're prepared for this volatility before buying shares of the iShares Bitcoin ETF or any other crypto-based fund. Cryptocurrencies aren't every investor's cup of tea.
The introduction of spot Bitcoin ETFs has undeniably expanded the toolkit for modern investors. So, is the iShares Bitcoin ETF a no-brainer buy? It might be, but only if it aligns with your specific investment strategy and goals. Even then, you should take a serious look at the other spot Bitcoin ETFs, too.