With interest rates falling, which cryptocurrency ETFs are worth considering?

Since the birth of Bitcoin, digital currencies have become a hotspot for technological innovation and investment. Their value is based on scarcity, demand, and the characteristics of blockchain technology, and their asset nature is similar to gold. It is expected that in the future environment of interest rate cuts, loose monetary policies may lead to a depreciation of the US dollar and an increase in inflation expectations, driving investors to turn to digital currencies such as Bitcoin as a hedging tool, thus boosting their prices in the short term.

So, how can we seize the trading opportunities of digital currency-related assets brought about by interest rate cuts?

From the beginning of this year, with the increasing acceptance of digital currency assets and the relaxation of trading channels, especially after the SEC approves first Bitcoin spot ETFs to start trading in January 2024, investors can indirectly participate in the digital currency market through this channel without directly holding Bitcoin.

Digital currency spot ETFs reduce security risks, make trading more convenient, and also have regulatory protection. Spot ETFs directly reflect real-time prices, avoiding the complexity and high leverage risks of futures and supporting flexible hedging. Therefore, digital currency spot ETFs are the preferred investment option for investors in related assets.

The platform provides many digital currency spot ETFs for users to trade, and these ETFs are distributed in multiple markets around the world. Investors can enter the digital currency spot ETF theme in the Hong Kong and US stock markets through the "market" - "ETF" section in the moomoo APP and conduct trading. The following is a brief description of some of these ETF products of some of the ETF products in these sections (in descending order of trading volume within the section):

Issued by BlackRock, one of the world's largest asset management companies, iShares Bitcoin Trust is the ETF with the highest trading volume and turnover in this type. As a product under a reputational and credible asset management company, iShares Bitcoin Trust can attract investors who trust the BlackRock brand. The fund has a net asset value of $19.26 billion.

Features: The operation of this fund strictly complies with the relevant requirements of the US Securities and Exchange Commission and basically does not face legal risks and reputation risks caused by illegal operations. Investors can buy and sell IBIT shares at any time during normal trading hours, with relatively high liquidity.

Risks: As the assets held are limited to digital currency, this ETF may have higher volatility and uncertainty. Due to cost and timeliness constraints, this ETF may not always accurately reflect the price trend of Bitcoin.

Issued by Fidelity Investments, this ETF has strong assets. As of March 31, 24, its net assets have reached 10.215 billion US dollars.

Features: According to its official website, Fidelity Investments is waiving the fee to invest in FBTC for now. Starting August 1, 2024, Fidelity will begin charging an expense ratio of 25 basis points.  Like IBIT, this ETF can be bought and sold at any time during normal trading hours. In addition, Fidelity has been exploring the digital currency field since 2014 and has extensive research background.

Risks: Similar to IBIT, it has volatility and possible errors.

This ETF is issued by Grayscale Investments and currently has the highest total market value in this category. Grayscale Investments is a company that focuses on investing in digital assets, and GBTC is one of the earliest products that allows investors to indirectly invest in Bitcoin through traditional financial accounts.

Features: The net asset value of GBTC is based on the value of Bitcoin it holds, but it does not track the price of Bitcoin in real-time nor does it trade on the exchange for instant trading. However, it can be traded on the OTC market.

Risks: Compared to other spot ETFs, the redemption mechanism of GBTC is limited, leading to liquidity problems and potential price deviations. In addition, its expense ratio is slightly higher, reducing investors' returns.

Managed by Harvest Global Investments Limited, this ETF directly invests in Bitcoin and aims to track the price performance of Bitcoin, net of fees and other expenses. Currently, this ETF has the highest trading volume and turnover in the section.

Features: 100% of this ETF's funds are invested in Bitcoin. This provides investors with an opportunity to directly access the Bitcoin market without holding or storing cryptocurrencies themselves. It is suitable for investors who have high requirements for security and convenience and focus on Bitcoin investment. In addition, according to data from April 2024, products under Harvest Global charge a management fee of 0.3%, and the management fee will be waived if the holding period is within 6 months. The fee is relatively low among similar products.

Risks: There may be tracking deviations, meaning that the performance of the ETF may not fully replicate the actual price movements of Bitcoin.

Managed by China Asset Management (Hong Kong) Limited, similar to the Harvest Bitcoin Spot ETF, the ChinaAMC Bitcoin ETF also aims to track the performance of Bitcoin prices.

Features: It also provides a channel for investing in Bitcoin through traditional financial markets, and holds the highest AUM in the same category until now.

Risks: Like all single Bitcoin ETFs, it may face potential tracking error issues. What's more, the fee rate of financial products managed by China Asset Management (Hong Kong) Limited is relatively high, reaching 0.99% in April. This reduces the profit margin for investors.

Also managed by China Asset Management (Hong Kong) Limited, but tracks the performance of Ethereum prices.

Features: This ETF focuses on Ethereum instead of Bitcoin, providing investors with an investment channel for the Ethereum ecosystem and its native tokens. This provides investors with an opportunity to diversify their cryptocurrency investment portfolio, especially for investors who are bullish on the multi-purpose blockchain platform Ethereum.

Risks: Similar to Bitcoin, the price of Ethereum is highly volatile. Since this ETF is also a product of China Asset Management (Hong Kong) Limited, it has a high fee rate of 0.99%.