Top Ethereum ETFs in 2024
Traders interested in buying and selling Ethereum can now utilize exchange-traded funds (ETFs) for a simpler trading experience. The top Ethereum ETFs offer an easy way to trade the second-most-popular cryptocurrency through a traditional broker, bypassing the complexities of cryptocurrency exchanges.
In May 2024, the Securities and Exchange Commission (SEC) approved spot Ethereum ETFs, following the earlier approval of Bitcoin ETFs in January. Ethereum ETFs began trading in July, allowing traders to invest in the cryptocurrency without needing to manage the coin directly or deal with the security concerns of cryptocurrency exchanges.
Below are some of the leading Ethereum ETFs, along with details on their performance and annual fees.
Top Ethereum ETFs
| Fund (ticker) | YTD performance | Expense ratio |
|---|---|---|
| iShares Ethereum Trust (ETHA) | -32.3% | 0.12% |
| Fidelity Ethereum ETF (FETH) | -32.3% | 0%* |
| Bitwise Ethereum ETF (ETHW) | -32.4% | 0.20% |
| VanEck Ethereum ETF (ETHV) | -32.5% | 0.20% |
| Franklin Ethereum ETF (EZET) | -32.4% | 0%** |
| Invesco Galaxy Ethereum ETF (QETH) | -32.5% | 0.25% |
Spot Ethereum ETFs track the price of the cryptocurrency with a high degree of accuracy, even if the fund prices differ. For instance, if Ethereum increases by 2 percent, these ETFs should generally rise by a similar percentage. Since their approval, these ETFs have shown comparable performance.
So, how do you choose the best fund for your needs? Given that their performance is largely similar and they invest in the same underlying asset, the optimal choice is the ETF with the lowest expense ratio. This is similar to selecting index funds that track major indexes like the S&P 500—when funds track the same index, the one with lower costs is typically the better option.
As with the launch of new Bitcoin funds, some of the new Ethereum ETFs are currently offering no expense ratio for a limited time. This strategy may be used by fund managers to attract investors and build assets quickly, but expect fees to revert after this introductory period.
Overall, the fees associated with these ETFs are competitive compared to trading Ethereum directly on most brokerages and crypto exchanges. Using an ETF allows you to trade Ethereum through your existing broker without the need to set up a new cryptocurrency account.
Should you invest in Ethereum ETFs?
The introduction of Ethereum ETFs simplifies and reduces the cost of investing in the cryptocurrency, but it doesn’t automatically make Ethereum a worthwhile investment. These funds provide an accessible way for traders to gain exposure to Ethereum while avoiding some of the security challenges associated with holding cryptocurrency directly.
Before diving into Ethereum ETFs, consider the cautionary advice from SEC Chair Gary Gensler, who, when approving Bitcoin ETFs in January, warned: “Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”
Ethereum, like Bitcoin, has been highly volatile since its inception, making it appealing to experienced traders. It has also proven profitable for those who have held onto their investments. However, volatility can be challenging for inexperienced traders, leading them to make poor timing decisions—buying high and selling low as they react to market fluctuations.
Ethereum, like other cryptocurrencies, lacks backing from tangible assets or cash flow. Its value is driven solely by market sentiment, relying on the belief that it can be sold at a higher price in the future. This speculative approach aligns with what experts refer to as the “greater fool theory,” where profits are made by selling an asset to someone who is more optimistic about its future value.
Due to these factors, renowned investor Warren Buffett has avoided cryptocurrency investments and criticized them, famously calling Bitcoin “probably rat poison squared.”
Where can you buy the best Ethereum ETFs?
Ethereum ETFs are generally accessible through any broker that offers trading on major U.S. exchanges. Leading brokers for stock trading often allow investors to buy and sell ETFs without commission, making it affordable to enter and exit positions.
In Conclusion
Trading spot Ethereum ETFs simplifies and reduces the cost of investing in the digital currency, allowing you to use your regular brokerage account rather than needing a specialized crypto exchange account. This ease of access could make Ethereum a more appealing option for traders, potentially increasing its liquidity and broader acceptance as a legitimate investment.
