Bitcoin ETF Ranking

Symbol	Price	YTD Change	1 Month Change	Yest. Change	Avg Vol	Yest. Vol	$Vol	Fee	Custody	Inception Date	Tj Rank
BTCO	62.92	35.22%	-11.39%	-1.33%	0.61M	0.11M	6.96M	0.25	Coinbase	2024.01.11	6
EZBC	36.49	34.90%	-11.41%	-1.38%	0.35M	0.07M	2.54M	0.19	Coinbase	2024.01.11	7
BRRR	17.84	34.24%	-11.38%	-1.27%	0.59M	0.24M	4.20M	0.25	Coinbase	2024.01.10	8
BTCW	66.88	35.59%	-11.31%	-1.21%	0.42M	0.15M	9.83M	0.25	Coinbase	2024.01.11	9
GBTC	56.06	61.93%	-11.26%	-1.20%	14.96M	4.61M	258.67M	1.50	Coinbase	2024.01.11	5
FBTC	55.08	34.74%	-11.25%	-1.20%	11.40M	4.10M	225.84M	0.00	Fidelity	2024.01.11	1
IBIT	35.87	34.70%	-11.37%	-1.24%	39.88M	21.69M	778.20M	0.25	Coinbase	2024.01.05	2
HODL	71.21	34.56%	-11.36%	-1.28%	0.50M	0.09M	6.54M	0.20	Gemini	2024.01.11	10
BITB	34.34	34.46%	-11.29%	-1.18%	2.96M	1.25M	42.96M	0.20	Coinbase	2024.01.10	3
ARKB	62.97	34.67%	-11.28%	-1.18%	2.91M	1.29M	81.06M	0.21	Coinbase	2024.01.10	4

Updates daily at 2 AM EST.

ETF Fun Fact

The number of exchange-traded funds (ETFs) worldwide grew markedly during the period from 2003 to 2022. There were 8,754 ETFs globally in 2022, compared to 276 in 2003. As of 2022, ETFs worldwide managed assets up to almost 10 trillion U.S. dollars. (statista.com)

How Are Bitcoin ETF's Ranked From Best To Worst?

We have a TradeJournal (TJ) Rank for all of our bitcoin ETF's. Currently, we are ranking the top 10 from 1 to 10, 1 being the best. However, we'll be switching to a out of a 100 point system as we add more.

Factors we consider for our TJ Rank and when choosing to buy an ETF:

Expense ratio aka Management Fees
- Lower the better
- High expense ratio hurts gains
Custody
- Coinbase is main supplier
Avg Vol & Market Cap
- The liquidity of an ETF influences how easily you can buy and sell shares without affecting the price. High liquidity is associated with smaller bid-ask spreads, meaning lower costs for trading in and out of the ETF.
- Some ETF freeze trading during high volatility
- Assets Under Management (AUM), higher the better
Tracking Error
- This refers to how closely the ETF follows the index or asset it is supposed to replicate — in this case, the price of Bitcoin. A lower tracking error means the ETF more accurately mirrors the performance of Bitcoin, which is crucial for investors looking to replicate the movements of the cryptocurrency market.
Brand name and experience,
- Quality institution leading the ETF. The expertise and strategies employed by the management team can significantly impact the performance of an ETF.

Where to buy bitcoin ETF?

Buy it from any traditional online retail broker.

How Does The Bitcoin ETF Expense Ratio Work?

The expense ratio is expressed as a percentage of the fund's average assets under management (AUM) and is typically deducted daily from the fund's assets. This daily deduction impacts the net asset value (NAV) of the ETF. Thus, while investors do not pay this fee out of pocket when buying or selling the ETF, it indirectly affects their returns as it reduces the overall value of the ETF over time.

Example of Expense Ratio Calculation

Let's say a Bitcoin ETF has an expense ratio of 1% per year and you invest $10,000 in it. Here's how the expense ratio would affect your investment:

Expense Ratio: 1%
Annual Cost: 1% of $10,000 = $100

This $100 is not taken out all at once. Instead, it's divided by the number of days in the year, and a proportionate part of it is deducted from the fund's assets daily. Therefore, each day, approximately $0.274 ($100 / 365 days) is deducted from the fund's assets, affecting its daily NAV.

Impact Over Time

If you hold the ETF for one year, your total cost due to the expense ratio would be approximately $100, assuming the total assets and the ETF's value remain constant (which in reality would vary due to market movements and additional investments or redemptions). This means that if the ETF's underlying assets (Bitcoin in this case) did not increase in value over the year, the value of your investment would decrease from $10,000 to $9,900 over the year solely due to the expense ratio.

In summary, the expense ratio is a critical factor to consider when investing in ETFs because it diminishes your returns, especially significant in the case of higher ratios or over long investment periods.

For BTC ETF's Is Expense Ratio The Most Important Factor?

While the expense ratio is a crucial factor to consider when evaluating Bitcoin ETFs (or any ETFs), it's not the only important aspect. Several other factors are equally significant depending on your investment goals, risk tolerance, and the specific attributes of the ETF.

The expense ratio of a Bitcoin ETF, like other exchange-traded funds, is an annual fee that covers the fund's operational costs, including management, administration, marketing, and other expenses. It's not directly charged when buying or selling shares; instead, it's incorporated into the ETF's performance and reflects in the daily price of the ETF shares.

Usually, price volatility/variance between Bitcoin ETF's settles after the initial start of the ETF's as the initial surge in the allocation has happened. Lots of people have been switching between lower-expense ETF's. There won't be a major outperformance between them all. We'll be showing our formula once the new ranking system is updated. Expected mid-May 2024.

Other Bitcoin ETF considerations listed above.

Example Scenario

Imagine you are comparing two Bitcoin ETFs:

ETF A has a lower expense ratio of 0.5% but suffers from higher tracking errors and lower liquidity.
ETF B has a higher expense ratio of 1% but closely tracks Bitcoin and has high liquidity and excellent fund management.

In such a case, if your priority is to have an investment that closely mirrors the performance of Bitcoin with the flexibility to enter and exit positions easily, you might lean towards ETF B despite its higher expense ratio. This decision would be based on prioritizing tracking accuracy and liquidity over lower fees.

Therefore, while the expense ratio is important because it directly erodes returns, it should be balanced with other critical factors to align with your overall investment strategy and objectives.

How do we know an ETF's Tracking Error?

Tracking error is a critical metric used to evaluate the performance of an ETF relative to its benchmark or the asset it is designed to track. Here's how you can find out about an ETF's tracking error and understand its implications:

Understanding Tracking Error

Tracking error is the standard deviation of the difference between the returns of the ETF and its target benchmark over a given period. It measures the consistency with which the ETF follows its benchmark. A lower tracking error indicates that the ETF does a better job of mirroring the benchmark's performance.

Finding Tracking Error

ETF Fact Sheets and Prospectuses: ETF issuers typically disclose tracking error in their regular fact sheets or prospectuses. These documents provide a wealth of information about the ETF’s performance, strategy, and other operational details.
Financial News Websites and Data Services: Websites like Bloomberg, Morningstar, and Yahoo Finance often provide data on ETFs, including historical performance comparisons with benchmarks. These platforms might list tracking error explicitly or provide enough data for you to calculate it yourself.
ETF Annual and Semi-Annual Reports: These reports may include performance comparisons and tracking error data, helping investors see how well the ETF has tracked its benchmark historically.
Investment Research Reports and Tools: Some investment research firms and tools offer analyses of ETFs that include tracking error, among other metrics. These might be subscription-based or available through financial advisors.

Calculating Tracking Error

If tracking error data isn't readily available, you can calculate it by following these steps:

Collect Return Data: Gather historical return data for both the ETF and its benchmark over a given period.
Calculate the Difference in Returns: Subtract the benchmark’s returns from the ETF’s returns for each period.
Standard Deviation: Calculate the standard deviation of these differences. This standard deviation is the tracking error.

Example Calculation

Suppose you have monthly return data for a Bitcoin ETF and its benchmark index for one year:

ETF Returns: [0.5%, 1.2%, -0.7%, 1.1%, 0.9%, -0.2%, 0.4%, 1.3%, -1.2%, 0.7%, -0.4%, 0.8%]
Benchmark Returns: [0.4%, 1.0%, -0.5%, 1.2%, 0.8%, -0.1%, 0.5%, 1.5%, -1.0%, 0.8%, -0.3%, 1.0%]

You would first calculate the monthly differences between these returns, then find the standard deviation of these differences. This standard deviation represents the tracking error, which tells you how consistently the ETF has tracked its benchmark.

In conclusion, tracking error is a valuable metric for assessing an ETF's performance relative to its intended benchmark. Investors should consider it alongside other factors, such as expense ratio and liquidity, to make well-informed investment decisions.

Where are most Bitcoin ETF's storing their crypto?

Coinbase is the major custody provider for Bitcoin ETF's.

Which ETF to trust?

Fidelity holds its own crypto and gov might bail them out as they are not regulated institution. While coinbase doesn't but coinbase has more experience holding crypto.

Better than buying bitcoin?

- Pros: less risk of holding it, simple process, regulated (investor protection)

- Cons: higher cost through fees, don't trade 24/7, buy/sell holds in times of volatility, tracking errors, not a medium of exchange, no custody over coins so risk of issuer.

How does it impact price of bitcoin?

The Bitcoin ETF effect on Bitcoin price can be summed up with:

Issuers of ETFs are required to buy bitcoin
Gateway for institutional investors
2024 halving even, cuts supply

Futures ETF vs SPOT ETF

One tracks the current price (spot) of the asset while the other tracks future contracts on the asset.

Why do bitcoin ETF's all have different prices?

All based on the formula of:

# of shares * ETF price = Bitcoin price * # of bitcoin in the fund

$IBIT bitcoin ETF example for April 11, 2024:

ETF Price $37.80
Bitcoin price: $65,550
IBIT outstanding shares: 442 Million
$IBIT Bitcoin's under management: 254,403

442,000,000 * $37.80 ≅ 65,550 * 254,403

16,707,600,000 ≅ 16,676,116,650

Solve for X if X = ETF Price:

442,000,000 * X ≅ 65,550 * 254,403

65,550 * 254,403 / 442,000,000 = $37.73 ETF Price

More Approaches:

$65,550 BTC Price / 254,403 BTC Under Management = $16.7 Billion Fund

$16.7 Billion / 442 Million = $37.73 ETF Price