7 Best UK Bitcoin ETFs for UK Crypto Investors – 2024 Investing Guide

A relatively new financial instrument is the Bitcoin (BTC) ETF, and investing in one might be a way to develop your investment portfolio based on exposure to this sector.

Some of the top Bitcoin and related ETFs include:

• Amplify Transformational Data Sharing ETF (BLOK)
• Bitwise 10 Crypto Index Fund (BITW)
• First Trust Indxx Innovative Transaction & Process ETF (LEGR)
• Bitwise Crypto Industry Innovators ETF (BITQ)
• Global X Blockchain ETF (BKCH)
• VanEck Crypto and Blockchain Innovators (DAPP)
• ProShares Bitcoin Strategy ETF (BITO)

The Best UK Bitcoin ETFs

This is one of the largest funds, built using companies in the cryptocurrency and digital asset economy.

Launched in 2018, there are 50 stocks in this fund, with Assets Under Management worth around $400 million. For the investor, the current net asset value of $22.01, combined with a $5.75 per share distribution in 2021 (which it is expecting to replicate), makes this a potentially lucrative ETF to get involved in.

With stocks from companies like MicroStrategy, Coinbase and PayPal making up the asset basket, this ETF is diversified in both market size and type of company.

This was originally devised as a private placement fund back in 2017, but since 2020 it has become available OTC with your usual broker. The 2.5% expense ratio might seem steep in comparison to other BTC ETFs, but it is an actively managed fund that is rebalanced monthly, tracking the price performance of the top 10 cryptocurrencies by market cap.

As you might imagine, 90% of the fund comprises Bitcoin and Ethereum, and the Assets Under Management are worth about $557 million.

It is worth noting that while the low entry price of $18.38 and the previous 12 month returns of 41.7% might seem tempting, the volatility of the underlying crypto can make the value of this find less easy to predict.

This is an equity-based ETF that was launched in January 2018. First Trust is a well-known and trusted ETF provider, currently the 5th largest in the US by revenue, which will help investors feel more confident.

Net Asset Value is $37.06, and the fund has around $108 million in Assets Under Management, with a relatively small expense ratio of just 0.65%.

This fund tracks the performance of the Indxx Blockchain Index, which comprises more than 100 stocks in both developed and emerging markets, making it less volatile than other blockchain or cryptocurrency ETFs. The basket of assets includes stocks from companies like AT&T, Deutsche Telecom, Microsoft, AMD and Capgemini.

A relatively new addition to the Bitcoin-related ETF market, this ETF was launched in 2021 and is a collection of about 30 stocks from companies that are considered to be innovators and pioneers in the crypto market. The NAV is just $7.38, while the Assets Under Management (AUM) stands at about $122 million.

The Bitcoin ETF stocks are collated into two tiers. Tier 1 Bitcoin ETF stocks come from ‘crypto innovators’, who have more than 75% of their revenue from crypto assets. Tier 2 are from large-cap companies who are involved in at least one significant line of business in the crypto economy.

This includes Bitcoin miners and owners like Coinbase, MicroStrategy and Galaxy Digital, which has made this ETF grow by 4.21% in the last 12 months.

Another newer ETF, this one based on more than 20 stocks from companies concerned with technology and Bitcoin mining, was launched in July 2021.

While the AUM is smaller than some of the ETFs on this list (just $71 million), many investors are choosing this fund to invest in because so many of the stocks included have held or increased value over the long term – including companies like Coinbase, Riot Platforms, Hut 8 Mining Corp and Galaxy Digital.

Looking at past performance, the losses might make you think twice, but there is potential for massive growth and with an expense ratio of just 0.5% and a NAV of $26.17, this could be a good choice for those who enjoy a bit of speculation in their portfolio.

VanEck is a global wealth management company that offers many ETFs to investors, and this one is based around several of the biggest stocks related to both Bitcoin and blockchain.

Launched in April 2021, it might be new – but there is a lot of knowledge behind it which will satisfy the cautious investor, and despite it being a passively managed fund, it has already seen 125.45% returns year to date.

This ETF tracks the performance of the MVIS Global Digital Assets Equity Index, and companies are only eligible to be included if they have 50% or more of their revenue from digital assets. This includes companies like Coinbase, MicroStrategy, Block Inc and Riot Platforms.

Last on the list, but by no means least, is the Bitcoin ETF that started it all. This was the first Bitcoin ETF to be approved for trading in the US (the first Bitcoin ETF to list on NYSE), and it remains the largest fund.

This is an actively managed fund, with an expense ratio of just 0.95% and Assets Under Management of $1.093 billion – a much larger slice of the market than any of the other ETFs on this list.

The ProShares ETF closely tracks the performance of spot Bitcoin, which means that 2022 was a time of increased volatility, but despite this it has had a 12-month yield of 16.23% and is expecting to deliver dividend distributions this year.

What Is Bitcoin?

Bitcoin is the most popular and well-known example of a cryptocurrency. It is a digital currency that is not owned or controlled by a government or a financial institution, which is why it is recognised as being decentralised.

Bitcoin, like many other digital currencies, is built on a blockchain, a geographically disparate chain of computers that produce coins based on mathematical (cryptographical) algorithms.

Bitcoin and other altcoins can have several uses.

Some people buy and sell Bitcoin as a currency, using it to create short term trading profits on crypto trading platforms, while others use it to diversify their portfolio. With the growing value of Bitcoin, some people are getting involved in the digital currency to use it as a means of exchange, using it to pay for goods and services.

As the most popular digital currency, the market cap and value of Bitcoin has grown massively, which means that getting involved in investing in Bitcoin is not a cheap option, especially for new investors – and that is why a BTC ETF might be a better investment.

What Are ETFS?

An ETF (exchange-traded fund) is a basket of assets that track prices, allowing you exposure to the possible profits of the underlying assets without actually owning any.

Usually, ETFs will replicate the performance of an index, and these can be based on a specific index (like the S&P 500) or a group of stocks from a specific industry (such as technology or financial institutions, for example).

ETFs are traded on exchanges, which means that you just need to have a normal broker account, and you can even receive dividends (regular disbursements of profits), depending on the type of ETF that you have invested in.

For investors, choosing ETFs can help to diversify a portfolio and works as an excellent way to get started for a beginner investor, too.

What Are Bitcoin ETFs?

Bitcoin ETFs are a new investment opportunity that offers investors exposure to a basket of Bitcoin and related blockchain technology, without needing to own the digital currency.

Bitcoin is a highly volatile financial instrument, and this volatility can mean huge gains – but also huge losses, sometimes within just a 24-hour period.

Bitcoin ETFs track the price performance of BTC, but trade on the regular stock exchange which means that as an investor you wont need to have an account with a cryptocurrency exchange – you can use your usual brokerage account.

Spot Bitcoin ETFs, which are based on a holding of actual Bitcoin, are not currently approved. Most Bitcoin ETFs are based on Bitcoin Futures – where agreements are made to buy or sell Bitcoin at a predetermined price and date – and the ETFs track the prices of these as they are trading at the Chicago Mercantile Exchange.

Other Bitcoin ETFs are a collection of stocks from companies who are involved in the development of blockchain technology and other cryptocurrencies.

The first Bitcoin ETF was launched in 2021. The ProShares Bitcoin Strategy ETF (BITO), which is still available and trades on the NYSE, is the largest crypto ETF and deals in cash settled, front month BTC futures. It was also the first Bitcoin ETF to list on NYSE.

As a relatively new type of ETF, Bitcoin and cryptocurrency ETFs are continually being evaluated, and the Securities and Exchange Commission (SEC) are deciding whether ETFs that own Bitcoin directly will be approved.

Why Invest in UK Bitcoin ETFs

Increased Adoption

Getting into the Bitcoin craze without direct ownership can help protect investors, but it can also increase adoption in general – making Bitcoin ETFs seem like a more legitimate investing option for more conventional traders.

Professional investors as well as casual and retail investors might choose to invest in Bitcoin ETFs, because they can avoid the hassle that comes with ownership of underlying assets – they are avoiding custody charges and transaction fees, which are all included in the expense ratio of the ETF itself.

Liquidity and Price Impact

As Bitcoin and crypto ETFs are concerned with the performance of the blockchain and related technology industry, investors can get access to digital currencies without buying and selling the coins directly.

This interest in Bitcoin will ultimately affect the price – the more people that are buying into cryptocurrency, the higher the prices (and the better profit margins for investors who already hold the ETF).

Bitcoin ETFs have excellent availability, with multiple shares available to be purchased (and usually at a much smaller price than buying the underlying crypto, stocks or futures.

Regulatory Attention and Investor Protection

Bitcoin ETFs are regulated in the same way that ETFs based on other commodities and indices are – which means that they have clear rules and investor protection built in. This regulation makes Bitcoin ETFs considerably safer than investing in BTC itself, even without considering the volatility.

ETFs in Bitcoin and related industries might therefore be a long-term stability and growth investment.

Market Risk and Volatility

If you want to get involved in the emerging blockchain industry, then investing in Bitcoin ETFs is a way to avoid some of the market risk that might come with direct investing – but it is worth considering that the very nature of decentralised currency makes it volatile, and collapse can happen at any time.

When compared to other commodities and financial instruments, cryptocurrencies are considered to have extra risks – but investment in an ETF might feel like a safer option thanks to the layer of separation that comes from not directly owning the underlying assets.

Frequently Asked Questions – Best UK Bitcoin ETFs

Final Thoughts

If you want to get involved in cryptocurrency and Bitcoin but want to avoid some of the volatility and uncertainty (as well as the costs) of owning the asset, then a Bitcoin ETF might be a good start.

Essentially providing access to tracking a basket of assets, ETFs can provide an instantly diversified portfolio, which is great for long-term investors – and many are also offering regular dividend payments, which you can take in cash or use to compound your investment and grow your returns.

Above are some of the biggest and most popular Bitcoin, cryptocurrency and blockchain ETFs available, but as with all investments, your capital might be at risk, so make sure you do your research and never invest more than you can afford to lose.