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September 13, 2022

6 Best Crypto ETFs To Buy in 2022

The crypto investing world has been buzzing with a lot of news and noise recently.

Bitcoin and Ethereum are still swinging wildly. Some of the leading crypto hedge funds and lenders have gone belly up. As a result, both novice and experienced cryptocurrency investors are watching their digital assets with an abundance of caution.

But just like with the traditional stock market, volatile bear markets are often the best time to invest in this asset class if you know where, when, and how to do it.

That’s where crypto “exchange traded funds”, or ETFs, come in. Compared to buying and selling individual cryptocurrencies through a digital wallet on exchanges like Coinbase, crypto ETFs bundle multiple cryptocurrencies, indexes, and futures positions into a single portfolio.

For investors, that means more diversification, less risk, and broader upside exposure than putting all of your eggs into one or two crypto coin baskets.

So, are you thinking about finally getting into the crypto investing game? Here are the best crypto ETFs to buy in 2022.

The Best Crypto ETFs in 2022

#1: Ember Fund’s The Originals

The Originals portfolio by Ember Fund is built for crypto investors who are looking for a smarter way to invest in Bitcoin (BTC) and Ethereum (ETH) — the two largest cryptocurrencies by market cap — which automatically rebalance quarterly fee-free. You own and control the assets due to Ember Fund’s self custody feature. 

The Originals portfolio maintains an allocation of 50% Bitcoin and 50% Ethereum and generates additional yield by lending and staking Bitcoin and Ethereum. This allows investors to maintain a direct position in crypto’s two largest, most established currencies 

Management Fee: 0%

Minimum investment: $5

Investing Strategy: Bitcoin and Ethereum asset fund

Custody: Self

#2: Ember Fund Bitcoin Defense

This quantitative index analyzes long-term cryptocurrency market trends and their short-term effects on Bitcoin’s trading price, offering investors a way to participate in the upside of crypto’s bull markets while minimizing exposure during the downturns by strategically trading into yield-bearing stablecoins as needed. 

Ember Fund’s Bitcoin Defense model improves risk versus long positions by 30-35% by exiting positions in downward trending markets.

For investors who are interested in hedging their bitcoin holdings, Ember’s Bitcoin Defense provides downside protection in a bear market. In the 2018, crypto winter, Bitcoin was down 73% while Ember’s Bitcoin Defense was up 3%. 

Management Fee: 3%

Minimum Investment: $5

Investing Strategy: Algorithmic trading fund

#3: Ember DeFi Index

Ember’s DeFi fund is an index of the leading tokens within the broader decentralized finance space a.k.a. “DeFi”, including decentralized exchanges (DEX), yield products, and lending protocols that are weighted by market cap and rebalanced monthly.

The DeFi fund is a simple way for new and experienced crypto investors to gain exposure to the wider DeFi, Web3 financial revolution through an expertly managed portfolio of 13 defi tokens versus investing in single coins. Avoid paying multiple transaction fees on multiple tokens when you purchase Ember’s DeFi’s Index. 

Included in Ember Fund’s DeFi index are:

  • AAVE

  • Compound

  • Loopring

  • Maker DAO

  • Sushi

  • Uniswap

  • Yearn

  • Synthetix

  • USD Coin

  • Sushi Token 

  • Balancer

  • Kyber Network

  • Republic

  • Badger DAO

Management Fee: 3%

Minimum Investment: $5

Investing Strategy: Thematic index fund focused on DeFi

Custody: Self

#4: The Metaverse Index

Ember Fund’s Metaverse Index (MVI) is designed to capitalize on the fast-growing trend of entertainment, sports and other businesses shifting to virtual environments.

For those looking to get in on the leading edge of Web3, the MVI fund gives investors a strategically diversified and professionally managed way to invest through direct positions in the top 16 Metaverse projects whose allocations are weighted by market cap and rebalanced monthly, including:

  • Audius

  • Axie Infinity

  • Decentraland (MANA)

  • Enjin

  • Illuvium

  • Sandbox

  • Rally

  • WAXE

  • Yield Guild Games

  • Merit Circle

  • Decentral Games 

  • Looks Rare

  • Eternity Chain

  • Terra Virtua Kolect

  • Rarible Token 

  • NFTX Token

  • Whale

  • Revv Token

Management Fee: 3%

Minimum Investment : $5

Investing Strategy: Thematic index fund focused on Metaverse assets

Custody: Self

#5: ProShares Bitcoin Strategy ETF (BITO)

The ProShares Bitcoin Strategy ETF was one of the first SEC-approved futures crypto ETFs in 2021 and offers investors an actively-managed opportunity to invest in Bitcoin through a portfolio of “futures” contracts. 

In layman’s terms, this means investors are betting on the future price of Bitcoin based on the fund’s ability to analyze and track cryptocurrency market trends. The upside of Bitcoin futures ETFs is that investors aren’t investing in Bitcoin directly.

The downside is that no futures-based ETF can anticipate the future price of Bitcoin (or any cryptocurrency for that matter) with 100% certainty. So there are still risks that investors need to be aware of, especially after Bitcoin’s recent 58% drop which few investors saw coming.

Expense Ratio: 0.95%

Assets Under Management: $815 million

Investing Strategy: Bitcoin futures

#6: Valkyrie Bitcoin Strategy ETF

Why It’s One Of The Best: The Valkyrie Bitcoin Strategy ETF is similar to the Proshares Bitcoin Strategy ETF in that it’s an actively managed fund that gambles on the ability to predict Bitcoin’s future price—regardless of which direction it moves.

The primary difference between these two Bitcoin futures funds is that the Valkyrie Bitcoin Strategy fund spends up to 100% of its investors’ assets on Bitcoin futures contracts, while the Proshares Bitcoin Futures ETF also holds Treasury securities and cash as collateral. 

Expense ratio: 0.95%

Assets under management: $22 million

Investing strategy: Bitcoin futures

Ember’s Methodology

Most investors thinking about crypto portfolio diversification are concerned about trading on their own and making inexperienced decisions as well as the volatility of crypto markets in general.

Our crypto investing methodology is rooted in a professionally managed approach instead of “leaving it up to the markets” — and an investment strategy that’s diversified rather than solely based on trading individual coins on an exchange (think hedge fund vs. day trading). Our indexes include thoughtful analysis and auto-rebalancing so that your exposure to certain assets rebalance through extremely volatile market conditions. 

We’ve analyzed the leading blockchain and crypto ETFs that are currently approved for trading by the SEC based on expense ratio, assets under management, market cap, all-time return, investing strategy, and risk exposure to determine the best ETFs for 2022.

Crypto FAQs

What Is Blockchain Technology?

Blockchain is to crypto what the internet is to search — a.k.a. the technological and data rails behind the scenes that make it all work.

Unlike a typical database like a bank statement or an accounting spreadsheet, however, blockchain isn’t linear, structured into tables, or controlled by a single entity.

Blockchain is an electronically and decentralized database (or “ledger) that collects and stores information about any given transaction into distinct boxes, or “blocks”, that are shared, verified, strung together, and time stamped when they’re added to the “chain”.

This means that every blockchain transaction is innately immutable: once a block is filled it’s closed permanently and linked to the one before and after it, creating an irreversible timeline.

As a result, blockchain technology ensures the fidelity and security of every transaction on it without the need for a third party to verify it i.e., a bank, CPA, notary, etc.

What Are Blockchain ETFs?

Exchange-traded funds, or ETFs, pool direct investments in several companies, track indexes, or take positions in certain sectors like commodities (or all of the above) just like a traditional mutual fund.

But unlike mutual funds they can also be bought and sold on an exchange like a typical stock so they are more liquid and dynamic.

Blockchain ETFs are SEC-approved and regulated funds that hold positions in companies or track indexes that are based on blockchain technology, while crypto ETFs buy and sell individual cryptocurrencies, hold positions on crypto futures, or short them.

The first crypto futures ETF was approved by the SEC in October 2021. There are only a half dozen of blockchain and crypto ETFs currently approved and trading. To date, the SEC has not approved a Bitcoin Spot ETF, which would have direct exposure to the price of Bitcoin. 

Why Invest in Blockchain ETFs?

Blockchain ETFs and crypto index funds give investors a lower risk, professionally managed way to get into the Web3 investing game without owning cryptocurrencies like Bitcoin directly or making their own trading decisions on a coin-based exchange like Coinbase.

Since DeFi and crypto investing is new to many investors, this hands-off managed approach takes uncertainties like lost passcodes, market swings, crypto wallet security, and legal and tax implications out of the equation.

This makes blockchain and crypto ETFs a good way for new investors to begin building their digital wealth while simultaneously diversifying their investment portfolio allocation.

Since blockchain and crypto ETFs are SEC-approved and regulated, they also offer investors a way to include DeFi investing into their retirement planning through their IRA or 401(k) accounts without opening a crypto exchange or Bitcoin IRA account.

Conclusion

Despite the current volatility in cryptocurrency markets and Bitcoin’s recent price swings, it’s still a great time to invest in the DeFi, MetaversE, and other asset classes in the Web3 space if you take a diversified, professionally managed approach.

Investing in blockchain and crypto ETFs is one of the best ways to do this compared with buying and selling individual crypto coins on an exchange like Coinbase.

Crypto ETFs including blockchain index funds reduce risk, broaden exposure to emerging sectors in web3, and offer both new and experienced investors a proven strategy to diversify their portfolio allocations.

So, if you’re looking to learn more about cryptocurrency crypto investing explore the Ember Fund blog here, or Download the Ember Fund App here and invest in a crypto portfolio of your choice with just $10.

Sources

Exchange-Traded Funds | FINRA.org

Bitcoin posts its worst quarter in more than a decade

Best Bitcoin ETFs Of September 2022 – Forbes Advisor

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