A Complete Guide to Bitcoin ETFs: Spot, Futures, and More

Investing in Bitcoin doesn’t have to mean buying the cryptocurrency directly. Bitcoin ETFs (Exchange-Traded Funds) and ETPs (Exchange-Traded Products) let investors gain exposure to Bitcoin through regulated stock exchanges. But not all Bitcoin ETFs are the same. Here’s a clear breakdown of the different types.

Types of Bitcoin ETFs

1. Spot Bitcoin ETFs

• How they work: Hold actual Bitcoin in custody.
• Price tracking: The fund’s net asset value (NAV) moves closely with the real-time Bitcoin price.
• Best for: Long-term investors who want direct exposure to Bitcoin without managing wallets.

Example: CI Galaxy Bitcoin ETF (BTCX / BTCX.B) on the Toronto Stock Exchange holds real Bitcoin in cold storage, tracking the spot price.

2. Bitcoin Futures ETFs

• How they work: Invest in Bitcoin futures contracts (typically on CME), not actual Bitcoin.
• Price tracking: Value depends on futures prices, which may differ slightly from spot price due to market dynamics.
• Considerations: Futures ETFs can incur roll costs and tracking errors.

Example: ProShares Bitcoin Strategy ETF (BITO) – NYSE uses CME-traded Bitcoin futures to simulate price exposure.

3. Leveraged Bitcoin ETFs

• How they work: Use derivatives and leverage to target amplified daily returns, e.g., 2× or –2× Bitcoin’s daily movement.
• Best for: Short-term traders, not long-term investors.
• Risk level: Very high; leverage can magnify losses and decay over time.

4. Inverse Bitcoin ETFs

• How they work: Aim for the opposite of Bitcoin’s daily return (–1×).
• Use cases: Hedging or speculative trading when expecting Bitcoin’s price to drop.
• Risk level: High; only suitable for experienced traders.

5. Covered-Call Bitcoin ETFs

• How they work: Hold Bitcoin or Bitcoin futures and sell covered call options.
• Benefit: Generate monthly income.
• Trade-off: Caps potential upside if Bitcoin’s price rises sharply.

6. Synthetic Bitcoin ETFs

• How they work: Use swaps or derivatives to mimic Bitcoin exposure without holding the asset.
• Common in: European markets and some U.S. ETFs.
• Considerations: Performance depends on the derivative contracts, not the actual Bitcoin price.

Understanding Spot vs Futures-Based ETFs

Spot Bitcoin ETF:

“A spot ETF holds Bitcoin directly, so its value moves with the market price,” explains Michael Zagari, investment advisor at Wellington-Altus Private Wealth. This direct exposure makes them ideal for investors who want a performance that mirrors Bitcoin itself.

Futures / Synthetic Bitcoin ETF:

Instead of holding Bitcoin, these ETFs invest in futures contracts or derivatives. Performance is tied to the futures market and can differ from the actual Bitcoin price.

Notable Bitcoin ETFs and ETPs

Canada (TSX)

U.S. (NYSE / NASDAQ)

Europe (LSE & other exchanges)

Key ETF Structures Explained

• Spot / Physical ETF: Holds actual Bitcoin in custody; shareholders indirectly own BTC.
• ETP (Exchange-Traded Product): General term covering ETFs and ETNs; can be spot-backed or synthetic.
• ETN (Exchange-Traded Note): Debt instrument tracking Bitcoin’s price; may or may not be backed by physical Bitcoin.
• Futures / Synthetic ETF: Gains exposure via derivative contracts instead of holding actual Bitcoin.

Important Notes for Investors

1. AUM Fluctuates: Fund sizes can change rapidly depending on Bitcoin price and inflows/outflows.
2. Fees May Vary: Some ETFs offer temporary fee waivers, which may increase over time.
3. Spot vs Futures: Spot ETFs track Bitcoin directly; futures ETFs track futures contracts and may differ from spot price.
4. Custody Matters: Spot ETFs store actual Bitcoin in cold storage; futures ETFs don’t hold Bitcoin.
5. Market Updates: New funds launch frequently, so always check the latest fund prospectus.

Whether you’re looking for long-term exposure or short-term trading tools, knowing the difference between spot, futures, leveraged, and other Bitcoin ETFs is essential before investing.