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Introduction
Ethereum is the second-largest cryptocurrency by market capitalization, and with the approval of spot Ethereum ETFs, investors have a simpler way to gain exposure to it. Instead of dealing with the complexities of buying and storing Ethereum, ETFs offer a regulated and accessible way to invest through traditional brokerage accounts.
This guide breaks down the best Ethereum ETFs, how they work, and what to consider before investing.
What is an Ethereum ETF?
An Ethereum ETF is a financial product that tracks the price of Ethereum (ETH), allowing investors to gain exposure to the cryptocurrency without holding it directly. ETFs trade on stock exchanges, making them easy to buy and sell like any other stock.
There are two main types of Ethereum ETFs:
Spot Ethereum ETFs – These funds hold actual Ethereum, giving investors direct exposure to ETH’s price.
Ethereum Strategy ETFs – These funds invest in Ethereum futures contracts, which attempt to predict ETH’s future price movements rather than holding the asset itself.
Types of Ethereum ETFs
Spot Ethereum ETFs
Spot Ethereum ETFs directly invest in Ethereum, making them the best option for investors who want exposure to ETH's actual market price. Here are some of the most notable spot Ethereum ETFs:
Grayscale Ethereum Mini Trust (ETH) offers a competitive 0.15% expense ratio, with fees waived for the first 6 months or until reaching $2B in assets.
Franklin Ethereum Trust (EZET) maintains a straightforward 0.19% expense ratio with no fee waivers.
VanEck Ethereum Trust (ETHV) charges 0.20%, waiving fees for the first 12 months or until reaching $1.5B in assets.
Bitwise Ethereum ETF (ETHW) sets a 0.20% expense ratio, with fees waived for the first $500M in assets.
21Shares Core Ethereum ETF (CETH) has a 0.21% expense ratio, waiving fees until January 2025 or the first $500M in assets.
Fidelity Ethereum Fund (FETH) and Invesco Galaxy Ethereum ETF (QETH) both charge 0.25% with no fee waivers.
iShares Ethereum Trust (ETHA) starts at 0.25% but reduces fees to 0.12% until July 2025 or the first $2.5B in assets.
These funds offer a straightforward way to invest in Ethereum, with some providing temporary fee waivers to attract early investors.
Ethereum Strategy ETFs
Ethereum strategy ETFs invest in Ethereum futures contracts rather than holding the cryptocurrency itself. While they provide exposure to ETH's price movements, they may not track it as closely as spot ETFs due to market fluctuations and futures contract roll costs. The leading Ethereum strategy ETFs include:
ARK 21Shares Active Ethereum Futures Strategy ETF (ARKZ) focuses solely on Ether futures with a 0.70% expense ratio.
Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP) provides balanced exposure to both Bitcoin and Ether futures at a 0.90% expense ratio.
Bitwise Ethereum Strategy ETF (AETH) specializes in Ether futures with a 0.92% expense ratio.
ProShares Ether Strategy ETF (EETH) offers Ether futures exposure at a 1.00% expense ratio.
Valkyrie Bitcoin and Ether Strategy ETF (BTF) provides dual cryptocurrency futures exposure with the highest expense ratio at 1.24%.
How to Choose the Best Ethereum ETF
When selecting an Ethereum ETF, consider the following factors:
Expense Ratio – Lower fees improve long-term returns. Spot ETFs generally have lower costs than futures-based ETFs.
Liquidity and Trading Volume – ETFs with high trading volume tend to have lower trading costs and better price stability.
Promotional Fee Waivers – Some ETFs offer temporary discounts to attract investors. These waivers can lower costs in the short term but should not be the only deciding factor
Investment Goals – Spot Ethereum ETFs are better suited for long-term investors seeking direct exposure to ETH, while futures ETFs may appeal to traders looking for short-term gains.
Ethereum ETFs vs. Buying Ethereum Directly
Both options have their advantages and disadvantages. Here’s a quick comparison:
Pros of Ethereum ETFs:
Convenience – Available through traditional brokerage accounts.
No Digital Wallet Needed – Eliminates the need for crypto security measures.
Lower Transaction Costs – ETFs often have lower trading fees than crypto exchanges.
Cons of Ethereum ETFs:
No Staking Rewards – Unlike holding Ethereum, ETF investors do not earn staking rewards.
Limited Lending Options – Direct ETH holders can access crypto lending platforms like Arch for a seamless way to access to funds, while ETF shares typically have more restricted borrowing options through traditional brokers.
Dependence on Financial Institutions – Subject to market regulations and fund management.
Tracking Errors – Some ETFs, especially futures-based ones, may not mirror ETH’s exact price.
Should You Invest in an Ethereum ETF?
Ethereum ETFs provide a regulated and accessible way to invest in ETH without handling cryptocurrency directly. However, investors should be aware of the risks, including price volatility and potential regulatory changes.
If you believe in Ethereum’s long-term potential but prefer a traditional investment approach, a spot Ethereum ETF may be a good choice. Traders looking for short-term price speculation might consider Ethereum strategy ETFs.
Where to Buy Ethereum ETFs
Most major brokerage platforms offer Ethereum ETFs, including:
Fidelity
Charles Schwab
TD Ameritrade
E-Trade
Interactive Brokers
Many of these platforms offer commission-free ETF trading, making it cost-effective to invest.
Conclusion: Is an Ethereum ETF Right for You?
Ethereum ETFs are a practical investment vehicle for those who want exposure to Ethereum without the technical barriers of buying and storing cryptocurrency. They offer a balance between accessibility and regulation, making them a compelling option for investors.
Before investing, evaluate fees, liquidity, and market conditions. As the cryptocurrency landscape evolves, Ethereum ETFs could play an essential role in bridging the gap between digital assets and traditional finance.
About Arch
Arch is building a next-gen wealth management platform for individuals holding alternative assets. Our flagship product is the crypto-backed loan, which allows you to securely and affordably borrow against your crypto. We also offer access to bank-grade custody, trading and staking services, powered by BitGo.