The cryptocurrency market has surged in recent years, delivering impressive returns and capturing the attention of mainstream investors. Bitcoin climbed approximately 168%, Ethereum rose by around 66%, and Solana—despite being a newer entrant—soared over 100% in the past year. While these figures are enticing, direct investment in individual cryptocurrencies can be daunting due to high volatility, security concerns, and technical complexity. For many, a more accessible and structured alternative lies in cryptocurrency-based exchange-traded funds (ETFs).
Cryptocurrency ETFs offer diversified exposure to digital assets or blockchain-related companies without requiring investors to manage wallets, private keys, or exchanges. These funds combine professional portfolio management, regulatory oversight, and stock-like trading convenience, making them ideal for both novice and experienced investors seeking entry into the crypto space.
How Cryptocurrency ETFs Work
An exchange-traded fund (ETF) is an investment vehicle that holds a basket of assets—such as stocks, bonds, or commodities—and trades on major stock exchanges like individual shares. Cryptocurrency ETFs specifically focus on digital assets or companies involved in the blockchain ecosystem.
There are two primary types:
- Asset-backed ETFs: Track the price of cryptocurrencies like Bitcoin or Ethereum, either directly or through futures contracts.
- Equity-based ETFs: Invest in publicly traded companies engaged in crypto mining, exchanges, blockchain development, or fintech innovation.
Key benefits include:
- Diversification, reducing reliance on a single asset
- Liquidity, allowing easy buying and selling during market hours
- Transparency, with regular disclosure of fund holdings
- Professional management, especially in actively managed funds
These features make crypto ETFs a strategic tool for gaining exposure while mitigating some of the risks associated with direct crypto ownership.
5 High-Performing Cryptocurrency ETFs to Consider
First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT)
CRPT is an actively managed ETF sub-advised by SkyBridge Capital, targeting capital appreciation through investments in companies driving innovation in the digital economy. The fund focuses on high-growth sectors such as cryptocurrency mining, exchanges, and blockchain infrastructure.
Top holdings include:
- MicroStrategy (MSTR) – a major corporate Bitcoin holder
- Coinbase Global (COIN) – one of the largest U.S.-based crypto exchanges
- Marathon Digital Holdings (MARA) – a leading Bitcoin miner
With a one-year return of 191.91% and year-to-date gains of 45.50%, CRPT has outperformed many peers. Its expense ratio is 0.85%, which is competitive for an actively managed fund. Analysts rate it a "Moderate Buy" with a potential 14.30% upside based on current pricing.
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Valkyrie Bitcoin and Ether Strategy ETF (BTF)
BTF takes a unique approach by investing in futures contracts tied to Bitcoin and Ethereum rather than holding the actual assets. This allows the fund to gain leveraged exposure to price movements without direct custody challenges.
Despite its smaller size—$31.89 million in assets under management—BTF has delivered strong performance:
- 100% return over the past year
- 28% gain in the last six months
One standout feature is its 11.11% dividend yield, one of the highest in the crypto ETF space. This income stream comes from rolling futures positions and appeals to yield-focused investors.
However, futures-based strategies can amplify volatility and may not perfectly track spot prices. Additionally, lower liquidity means wider bid-ask spreads, so traders should exercise caution.
Grayscale Digital Large Cap Fund (GDLC)
GDLC offers passive exposure to the largest cryptocurrencies by market capitalization. Its portfolio is heavily weighted toward:
- Bitcoin (70%)
- Ethereum (23%)
- Solana, Ripple, and Avalanche (combined 7%)
This concentration reflects market dominance but also introduces significant Bitcoin dependency. GDLC returned 317% over the past year, showcasing strong momentum.
Still, investors should note:
- A relatively high 2.50% expense ratio
- Trading occurs on the OTC market, which may have lower liquidity and less regulatory transparency than NYSE or Nasdaq
While GDLC provides straightforward access to top-tier cryptos, its cost structure and exchange listing warrant careful evaluation.
Grayscale Bitcoin Trust ETF (GBTC)
GBTC is one of the most recognized Bitcoin-focused ETFs, designed to mirror Bitcoin’s price performance. As a passively managed fund listed on NYSEARCA, it offers high liquidity with average daily trading volume exceeding 13 million shares.
Key metrics:
- $20.41 billion in assets under management
- 345.78% one-year return
- 7.11% dividend yield
- 1.50% expense ratio
Institutional interest remains strong, with over 266 institutional buyers contributing nearly $689 million in inflows over the past year. GBTC's size and accessibility make it a go-to choice for investors seeking pure-play Bitcoin exposure without managing private keys.
👉 Learn how top traders analyze Bitcoin trends before making moves.
Bitwise Crypto Industry Innovators ETF (BITQ)
BITQ tracks the Bitwise Crypto Innovators 30 Index, which includes global companies actively involved in blockchain and decentralized technologies. With 36 holdings, it offers broad diversification across innovators like:
- MicroStrategy
- Coinbase
- Core Scientific
- Marathon Digital
The fund has posted:
- 105.89% return over one year
- Over 35% gain in six months
BITQ charges a net expense ratio of 0.85% and manages $235.79 million in assets. Though its average daily volume is modest (~167,000 shares), it remains liquid enough for most retail investors.
As a passively managed fund with a balanced sector mix, BITQ suits those looking for steady exposure to the broader crypto economy.
Strategic Allocation Tips for Crypto ETF Investors
Crypto ETFs should be treated as satellite holdings within a diversified portfolio—not core investments. Given their inherent volatility, allocation should align with individual risk tolerance:
- Conservative investors: Consider allocating 1–3%
- Moderate risk-takers: 3–7%
- Aggressive investors: Up to 10%, depending on overall portfolio strength
Additionally:
- Monitor macroeconomic factors like interest rates and regulatory developments
- Rebalance periodically to lock in gains and manage risk
- Combine different ETF types (e.g., asset-backed + equity-based) for balanced exposure
Regulatory clarity continues to improve, especially in the U.S., where SEC approvals for spot Bitcoin ETFs marked a turning point in 2024. This trend is expected to continue into 2025, potentially paving the way for more innovative products.
Frequently Asked Questions (FAQs)
Q: What’s the difference between a crypto ETF and buying cryptocurrency directly?
A: A crypto ETF trades like a stock and offers diversified or indirect exposure without requiring you to store digital assets. Direct ownership gives full control but involves managing wallets and security.
Q: Are cryptocurrency ETFs safe?
A: They are generally safer than holding crypto on exchanges due to regulatory oversight and custodial protections. However, they still carry market risk and can be volatile.
Q: Do crypto ETFs pay dividends?
A: Some do—especially those using futures contracts or holding dividend-paying stocks. For example, BTF offers an 11.11% yield, while GBTC yields 7.11%.
Q: Can I hold crypto ETFs in my IRA?
A: Yes—many brokerage platforms allow crypto ETFs in retirement accounts like IRAs, offering tax advantages.
Q: Which crypto ETF has the best historical performance?
A: GBTC leads with a 345.78% one-year return, followed closely by GDLC at 317%.
Q: Is now a good time to invest in crypto ETFs?
A: With growing institutional adoption and improving infrastructure, many analysts view this as a strategic entry point—especially for long-term investors.
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Cryptocurrency ETFs represent a bridge between traditional finance and the digital asset revolution. By offering regulated, liquid, and diversified access, they empower investors to participate in the crypto market with greater confidence. Whether you're drawn to pure-play Bitcoin exposure or broader blockchain innovation, these five high-performance ETFs provide compelling options for 2025 and beyond.