Digital Asset & Crypto ETFs

Crypto ETFs are designed to give investors exposure to cryptocurrencies, without the complexities and risks of owning actual digital assets. Instead of having to navigate digital wallets and security protocols, these funds track the price movements of digital currencies and, in turn, offer a simpler way to access the crypto asset class.

In essence, investing in cryptocurrency ETFs allows you to add the value of popular currencies, like Bitcoin or Ethereum, to your investment portfolio without worrying about handling the underlying assets yourself.

Global X Crypto ETF Lineup

Global X offers two digital asset ETFs tailored to Australian investors, each aim to provide exposure to the price movements of the respective cryptocurrency they hold.

• Global X 21Shares Bitcoin ETF (EBTC)
• Global X 21Shares Ethereum ETF (EETH)

Over the past year, cryptocurrency ETFs have experienced varying levels of success, with performance largely tied to the underlying market conditions. Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalisation, with a share of 56.7% (Bitcoin) and 13.9% (Ethereum), have remained at the forefront of the digital asset space.

Below, you will find a breakdown of these top two performers, each of which you can invest in with Global X.

Global X 21Shares Bitcoin ETF (EBTC)

The Global X 21Shares Bitcoin ETF is designed to track the performance of the price of Bitcoin in Australian Dollars. This ETF enables investors to gain exposure to the largest and most famous cryptocurrency in the world, without actually having to hold it directly. Instead, by investing in the Global X 21Shares Bitcoin ETF, you can participate in Bitcoin's price movements while benefitting from the structure and regulation that comes with an ETF.

Why Invest in EBTC? Bitcoin continues to be a dominant force in crypto markets and is often seen as "digital gold" in this new asset class. Its decentralised nature, limited supply, and growing adoption make it attractive to investors looking for an alternative store of value, particularly during times of inflation or economic uncertainty.

Another reason to invest in the Global X 21Shares Bitcoin ETF is the security and regulation that comes with an ETF structure. You won't have to worry about storing your Bitcoin securely, avoiding concerns about lost passwords or hacking attempts. The ETF also provides you with access to Bitcoin in a way that adheres to regulatory frameworks established for traditional investment strategies, which adds an extra layer of security for cautious investors.

Global X 21Shares Ethereum ETF (EETH)

Ethereum has gained a huge amount of attention for its role in decentralised finance (DeFi) and smart contracts, and with the Global X 21Shares Ethereum ETF, investors can gain exposure to Ethereum's price movements without owning or managing the cryptocurrency themselves. The Ethereum ETF is designed to follow the price of Ethereum in Australian Dollars, too, offering a convenient way of investing in one of the most innovative blockchain technologies available today.

Why Invest in EETH? Ethereum is not just a currency. It is a platform that supports a range of decentralised applications, including DeFi platforms, non-fungible tokens, and smart contracts. So, for investors who believe in the future of blockchain technology and expanding use cases of decentralised applications, Ethereum is one to watch!

Also, much like Bitcoin ETFs, Ethereum ETFs provide you with a regulated and secure way to gain exposure to crypto without the need to handle wallets or manage the technical aspects of owning Ethereum directly. This makes it one of the most favourable cryptocurrency ETF options for an investor who wants to participate in the growth of blockchain technology without the hands-on management.

Crypto ETFs work in a similar way to traditional ETFs but focus on tracking the price of digital assets like Bitcoin or Ethereum. A spot crypto ETF holds the actual cryptocurrency in a secure facility called cold storage, and investor assets are pooled together to provide direct exposure to the coins. The fund is then traded just like stocks or other ETFs on an exchange. This means you can buy and sell them during market hours through your regular brokerage accounts.

But where does the appeal lie? It's all in the simplicity!

Instead of dealing with cryptocurrency exchanges, digital wallets, and private keys, you can purchase an ETF that mirrors the performance of the crypto assets you are interested in. Taking this approach allows you to avoid many of the technical headaches that come with owning digital currency, while still gaining exposure to its price movements.

With cryptocurrency ETFs, you are also given a huge amount of transparency. Unlike regulated crypto exchanges, ETFs operate within traditional financial markets and are overseen by regulatory bodies. This makes crypto ETFs a potentially safer and more accessible option for people who are new to cryptocurrency investments.

You can start investing in crypto ETFs with Global X through an online trading account, or through a stockbroker or financial adviser. Simply log into your online trading platform, search for the ETF ticker (e.g. EBTC for the Global X 21Shares Bitcoin ETF or EETH for the Global X 21Shares Ethereum ETF), and place your buy order as you would for any other stock or ETF. Also, make sure you read the relevant PDS and TMD.

Get more information on how to invest with Global X here.

Are you interested in investing in crypto ETFs but are not 100% sure it's the right move? Let's explore the benefits, which include:

Regulation and Security

Crypto ETFs operate under the same regulatory framework as traditional ETFs, and this provides you with an extra layer of security that isn't available when you buy cryptocurrencies directly from an exchange, where there can sometimes be regulatory oversights.

Simplicity

Managing cryptocurrency on your own requires technical knowledge and security measures, such as safeguarding private keys. With a crypto ETF, these challenges are eliminated, as the technical aspects are handled for you.

Diversification

ETFs are very popular for offering a diversified approach to investing, and crypto ETFs are no different. Some crypto ETFs hold multiple cryptocurrencies or derivatives, which can provide broader exposure to the crypto markets rather than putting all your eggs in one digital basket.

Familiar Investment Mechanism

Many investors are already familiar with the ETF structure, and crypto ETFs make it possible to invest in digital currencies through your brokerage account. As a result, the process becomes more accessible to a wider range of investors, including those who might be wary of using cryptocurrency exchanges.

Are There Risks of Investing in Crypto ETFs?

While the benefits may be great, just like any other investment, there are also some potential risks you need to keep in mind when investing in a cryptocurrency ETF. These include:

Volatility

One of the things cryptocurrencies are known for is their significant price swings, and this volatility is reflected in the ETFs that track them, meaning your investment could experience pretty dramatic ups and downs over short periods. This can be a major concern, particularly for investors with a low tolerance for risk.

Limited Market Hours

Unlike cryptocurrencies, which can be traded 24/7 on global exchanges, ETFs are traded during regular market hours. The risk with this is that you could miss price movements that happen outside of these hours, particularly given the highly volatile nature of crypto assets.

Regulatory Uncertainty

While ETFs are regulated, the underlying asset (which in this case is cryptocurrencies) often face regulatory uncertainty. Governments around the world are still developing policies and frameworks for digital currencies, and this could impact the price and liquidity of the assets that these ETFs are tracking.

Tracking Error

Crypto ETFs may also not perfectly match the performance of their underlying asset due to fees, market inefficiencies, or how the fund is structured. This is known as a "tracking error", and it essentially means there is a discrepancy between the ETF's performance and the actual price of the cryptocurrency it tracks.