Investors looking for regulated exposure to cryptocurrency have two prominent options: the iShares Bitcoin Trust ETF (IBIT) and the iShares Ethereum Trust ETF (ETHA). Both funds offer an entry point into the digital asset space through a familiar exchange-traded fund (ETF) structure, but they exhibit notable differences in various aspects that could influence investment decisions.
One of the main similarities between IBIT and ETHA is their expense ratio, set at 0.25% for each fund. This means that from a cost standpoint, investors won’t see significant differences when choosing between them. However, the disparities in their asset sizes are glaring. IBIT boasts assets under management (AUM) totaling approximately $70.84 billion, while ETHA significantly trails at around $11.13 billion. This substantial difference in AUM may appeal to investors prioritizing liquidity and scalability in their investment choices.
When assessing historical performance and risk, the differences become even clearer. Over the past year, IBIT has delivered a return of -16.1%, while ETHA has seen a decline of -24.9%. Looking into the long term, IBIT also has a better max drawdown figure, experiencing a peak-to-trough decline of 32.73% over five years, compared to ETHA’s 64.02%. Moreover, a $1,000 investment in IBIT would have grown to about $1,801, while the same amount would have dropped to $800 in ETHA.
In terms of underlying assets, IBIT exclusively invests in Bitcoin, the first and most recognized cryptocurrency. This single-asset trust structure means that IBIT’s returns and volatilities closely mirror the performance of Bitcoin itself. In contrast, ETHA focuses solely on Ether, the cryptocurrency native to the Ethereum platform. Its performance reflects fluctuations in ether’s price, closely tied to network activities and overall market risk appetite.
Both funds avoid complex structures that often come with options like leverage, ESG considerations, or currency hedging. Instead, they directly hold the underlying cryptocurrencies via custody arrangements, meaning their performance is fully dictated by market movements and management fees.
When considering which ETF fits better into an investment strategy, it comes down to how each crypto asset is perceived in the market. IBIT acts as a more stable option for those wanting to maintain a foundation in the world of cryptocurrency, given Bitcoin’s positioning as a market anchor. Conversely, ETHA might appeal to investors looking for higher volatility and potential returns, given that Ethereum often experiences sharper price movements.
In summary, both IBIT and ETHA provide straightforward avenues to invest in major cryptocurrencies through regulated ETF structures. However, the choice between them should reflect individual risk tolerance and investment goals. Investors must decide whether they prefer the steadiness of Bitcoin or the more aggressive nature of Ethereum in their portfolios, keeping in mind that neither fund mitigates the inherent volatility of the cryptocurrency market.
