The launch of spot Bitcoin ETFs in 2024 was a landmark event, unlocking a new asset class for institutional and retail portfolios. But with multiple funds from the world's largest asset managers launching simultaneously, how do you determine which bitcoin ETF is best?
Unlike thematic funds, these spot ETFs all hold the exact same asset: Bitcoin. Therefore, the competition is not over strategy. It is a "war" over three things: fees, liquidity, and fund flows.
For an investment professional, this is not a "set it and forget it" decision. It's a "dashboard" problem. You must track this data in real-time, and Excel is the perfect tool.
Building Your Bitcoin ETF Tracking Dashboard
The "best" Bitcoin ETF will likely be the one that wins the race for assets. High net assets lead to high liquidity, which leads to tighter spreads, creating a virtuous cycle.
Here are the key metrics to track in your model.
1. Net Assets: The Fund Flow War
This is the most important metric. Tracking the net assets of the new funds (like BlackRock's IBIT, Fidelity's FBTC, and others) against the incumbent (Grayscale's GBTC, which converted from a trust) tells you exactly where the market's money is flowing.
=ETFNetAssets("IBIT")
=ETFNetAssets("FBTC")
=ETFNetAssets("ARKB")
=ETFNetAssets("GBTC")
Graphing this data over time will give you a clear, visual winner.
Why Net Assets Matter:
Larger funds create a self-reinforcing advantage:
- Tighter spreads - More assets mean more liquidity and lower trading costs
- Lower tracking error - Larger funds can manage bitcoin custody more efficiently
- Institutional acceptance - Large institutions prefer funds with proven asset retention
- Survival probability - Larger funds are less likely to close, avoiding forced liquidation
Creating a Flow Tracker:
Set up a weekly tracking table:
| Date | IBIT | FBTC | ARKB | GBTC | Winner |
|---|---|---|---|---|---|
| Week 1 | =ETFNetAssets("IBIT") | =ETFNetAssets("FBTC") | ... | ... | Formula: MAX() |
| Week 2 | ... | ... | ... | ... | ... |
This shows you exactly which fund is winning the asset-gathering battle.
2. The Real Cost: Expense Ratios & Fee Waivers
This is the main battleground. Most funds launched with introductory "fee waivers" (e.g., 0% for the first $5B in assets or the first six months).
You need to track both the current fee and the future (non-waived) fee.
=MarketXLS_ExpenseRatio("IBIT")
=MarketXLS_ExpenseRatio("FBTC")
A fund may look cheapest now, but its long-term fee could be higher. This analysis is critical, as we detail in How to Analyze ETF Fees: What Is a Good Expense Ratio?
Bitcoin ETF Fee Comparison
Major Spot Bitcoin ETFs (2024 Launch):
| ETF | Sponsor | Initial Fee | Long-Term Fee | Fee Waiver Terms |
|---|---|---|---|---|
| IBIT | BlackRock/iShares | 0.12% | 0.25% | First $5B or 12 months |
| FBTC | Fidelity | 0.00% | 0.25% | First 6 months |
| ARKB | ARK/21Shares | 0.00% | 0.21% | First $1B or 6 months |
| BITB | Bitwise | 0.00% | 0.20% | First 6 months |
| GBTC | Grayscale | 1.50% | 1.50% | No waiver (converted from trust) |
Key Insight: GBTC's 1.50% fee is 6-7x higher than competitors. Unless there's a compelling reason (e.g., held in a specific account that can't trade other ETFs), it's impossible to justify the cost difference.
Long-Term Fee Impact: 10-Year Comparison
On a $100,000 Bitcoin investment held for 10 years (assuming 15% annual appreciation):
| Fund | Expense Ratio | Total Fees Paid | Final Value |
|---|---|---|---|
| IBIT/FBTC | 0.25% | $10,150 | $395,250 |
| ARKB/BITB | 0.20% | $8,120 | $397,280 |
| GBTC | 1.50% | $60,900 | $344,500 |
Cost of choosing GBTC over IBIT: $50,750 in lost value
This is why fee analysis is critical. As covered in our ETF expense ratio guide, small percentage differences compound into massive dollar differences over time.
3. Fund Family: Does Vanguard Have a Bitcoin ETF?
A direct answer to a common question is "No." Vanguard has publicly stated it will not offer a Bitcoin ETF, as it does not align with their investment philosophy.
Vanguard's stance is that Bitcoin:
- Lacks intrinsic value (no cash flows, dividends, or earnings)
- Is too speculative for their risk-averse client base
- Doesn't fit their long-term, buy-and-hold investment framework
Who ARE the Major Players?
Knowing who is behind a fund is a key part of due diligence. You can instantly check the manager of any ETF in your dashboard.
=ETFFundFamily("IBIT")
Returns "iShares/BlackRock"
=ETFFundFamily("FBTC")
Returns "Fidelity"
This confirms you are investing with a major, established institution with:
- Decades of ETF management experience
- Robust custody and security protocols
- Institutional-grade operational infrastructure
- Financial backing to weather regulatory changes
Understanding fund families is part of the foundational analysis we cover in What Is an ETF? A Professional's Guide to Analyzing Funds in Excel.
4. Inception Date: Comparing Performance
Since all funds (except the GBTC conversion) launched on the same day, you can use the ETFInceptionDate function to confirm this and to set the "start date" for a true, heads-up performance comparison.
=ETFInceptionDate("IBIT")
=ETFInceptionDate("FBTC")
Typical Result: January 11, 2024 (for most spot Bitcoin ETFs)
This allows you to create an apples-to-apples performance comparison since inception, eliminating any "first-mover advantage" bias.
Performance Tracking Framework
Fund Performance Since Inception
---------------------------------
Ticker: IBIT | FBTC | ARKB | Bitcoin Spot
Inception: =ETFInceptionDate("IBIT")
Mean Return: =ETFRiskMeanAnnualReturn("IBIT")
Std Deviation: =ETFRiskStandardDeviation("IBIT")
Sharpe Ratio: =ETFRiskSharpeRatio("IBIT")
Beta: =ETFRiskBeta("IBIT")
For a complete guide to these risk metrics, see Measuring ETF Risk: How to Use Alpha, Beta, and Sharpe Ratio in Excel.
5. Risk Analysis: Understanding Bitcoin Volatility
Bitcoin is an extremely volatile asset. While it has a low correlation to stocks and bonds initially, its own volatility can dominate a portfolio's risk profile.
Quantifying Bitcoin ETF Risk
Pull the standard deviation to measure volatility:
=ETFRiskStandardDeviation("IBIT")
Expected Results:
- Bitcoin ETF Standard Deviation: 60-80% annualized
- S&P 500 (SPY) Standard Deviation: 15-20% annualized
- Bond ETF (AGG) Standard Deviation: 3-5% annualized
Bitcoin is 4-5x more volatile than stocks and 15-20x more volatile than bonds.
Beta Analysis: Market Correlation
=ETFRiskBeta("IBIT")
Expected Beta: 0.3-0.5 (low correlation to S&P 500)
This low beta confirms Bitcoin's role as a portfolio diversifier—it moves somewhat independently of traditional markets.
Important Note: During extreme market stress (like March 2020 or FTX collapse in 2022), Bitcoin's correlation can temporarily spike as investors sell all risk assets simultaneously.
How to Use Bitcoin ETFs in a Portfolio
Bitcoin is not a core holding. It's a satellite position with specific portfolio roles.
Optimal Allocation Guidelines
Conservative Portfolio (Age 60+):
- 0-1% Bitcoin allocation (if any)
- Only in risk-tolerant situations
Moderate Portfolio (Age 40-60):
- 1-3% Bitcoin allocation
- Part of "alternatives" bucket
Aggressive Portfolio (Age under 40):
- 3-5% Bitcoin allocation
- Can increase to 10% for very aggressive, young investors
Why Small Allocations?
Even a 5% allocation to Bitcoin (with 70% volatility) can dominate your portfolio's risk:
| Portfolio | Bitcoin Allocation | Portfolio Volatility Impact |
|---|---|---|
| 100% Stocks (SPY) | 0% | 18% |
| 95% Stocks / 5% Bitcoin | 5% | 21% (+17% increase) |
| 90% Stocks / 10% Bitcoin | 10% | 24% (+33% increase) |
A small allocation has an outsized impact on risk due to Bitcoin's extreme volatility.
Diversification Benefits
Despite high volatility, Bitcoin provides genuine diversification:
=ETFHoldings("IBIT")
This returns Bitcoin—not stocks, not bonds. It's a pure, non-overlapping position. You don't need the ETF Overlap Calculator here because there's no equity overlap possible.
This is unlike the hidden overlap problem we solve in How to Build and Diversify an ETF Portfolio.
Bitcoin ETF vs. Other Alternative Assets
How does Bitcoin compare to gold and other hedges?
| Asset | ETF Example | Correlation to Stocks | Volatility | Primary Use |
|---|---|---|---|---|
| Bitcoin | IBIT | Low-Moderate (0.3-0.5) | Very High (60-80%) | Speculation, digital store of value |
| Gold | GLD | Low (0.1) | Moderate (15-20%) | Inflation hedge, crisis hedge |
| Bonds | AGG | Low-Moderate (0.3) | Low (3-5%) | Income, stability |
Key Differences:
- Track Record: Gold has 5,000 years of history; Bitcoin has 15 years
- Volatility: Bitcoin is 4x more volatile than gold
- Use Case: Gold is proven inflation hedge; Bitcoin is speculative "digital gold"
- Correlation: Both have low correlation to stocks, but Bitcoin's is less stable
For gold analysis, see How to Invest in Gold ETFs: A Data-Based Comparison.
Tax Treatment of Bitcoin ETFs
Unlike gold ETFs (which are taxed as collectibles at 28%), Bitcoin ETFs are treated as regular securities:
| Holding Period | Tax Rate |
|---|---|
| Short-term (less than 1 year) | Ordinary income (22-37%) |
| Long-term (more than 1 year) | Capital gains (15-20%) |
This is actually more favorable than gold's collectibles treatment. For tax comparison details, see:
Tax Strategy:
- Hold Bitcoin ETFs in taxable accounts (better tax treatment than gold)
- Use tax-loss harvesting during volatile periods
- For frequent trading, consider tax-deferred accounts
The GBTC Conversion: Why It Matters
Grayscale Bitcoin Trust (GBTC) was the original Bitcoin investment vehicle, operating as a closed-end trust since 2013. Its 2024 conversion to an ETF is significant:
Pre-Conversion Issues:
- Traded at 20-40% discount to NAV (Bitcoin value)
- 2.00% expense ratio (later reduced to 1.50%)
- No redemption mechanism
- Illiquid, premium/discount volatility
Post-Conversion Benefits:
- Trades at NAV (no discount)
- Redemption mechanism like other ETFs
- Still expensive (1.50% vs 0.20-0.25% competitors)
Should You Hold GBTC?
Only if:
- You're locked into it (tax reasons, restricted accounts)
- You have a very specific reason
Otherwise, the fee difference makes it impossible to justify. See How to Analyze ETF Fees for the math.
Creating Your Bitcoin ETF Dashboard
Here's the complete Excel framework:
======================================
Bitcoin ETF Comparison Dashboard
======================================
Fund Flows (Update Weekly)
--------------------------
=ETFNetAssets("IBIT") | =ETFNetAssets("FBTC") | =ETFNetAssets("ARKB") | =ETFNetAssets("GBTC")
Costs
--------------------------
=MarketXLS_ExpenseRatio("IBIT") | =MarketXLS_ExpenseRatio("FBTC") | etc.
Fund Details
--------------------------
Sponsor: =ETFFundFamily("IBIT")
Inception: =ETFInceptionDate("IBIT")
Category: =ETFCategory("IBIT")
Risk Metrics
--------------------------
Beta: =ETFRiskBeta("IBIT")
Standard Deviation: =ETFRiskStandardDeviation("IBIT")
Mean Return: =ETFRiskMeanAnnualReturn("IBIT")
Sharpe Ratio: =ETFRiskSharpeRatio("IBIT")
Alpha: =ETFRiskAlpha("IBIT")
Performance Comparison
--------------------------
[Create chart comparing IBIT, FBTC, ARKB returns since inception]
Advanced Strategy: Bitcoin + Gold Portfolio
Some professionals use Bitcoin and gold together as complementary "non-correlated" assets:
Example Allocation:
- 75% Traditional (60/40 stocks/bonds)
- 15% Gold (GLD or IAU)
- 10% Bitcoin (IBIT or FBTC)
Rationale:
- Gold: Proven inflation hedge, lower volatility
- Bitcoin: Higher risk/return, digital asset exposure
- Together: Diversified alternative asset exposure
Test this allocation using risk metrics:
Portfolio Risk Calculator
-------------------------
Gold Volatility: =ETFRiskStandardDeviation("GLD")
Bitcoin Volatility: =ETFRiskStandardDeviation("IBIT")
Correlation: [Calculate or estimate at 0.2-0.3]
Combined Portfolio Std Dev: [Portfolio theory calculation]
Conclusion: Which Bitcoin ETF Is Best?
Which Bitcoin ETF is best? The one that combines the lowest long-term fees with the highest asset inflows.
Current Winners (as of launch period):
- IBIT (BlackRock) - Dominant asset flows, institutional trust, competitive 0.25% fee
- FBTC (Fidelity) - Strong second place, established brand, 0.25% fee
- BITB/ARKB - Slightly lower fees (0.20-0.21%) but smaller asset base
Clear Loser:
- GBTC (Grayscale) - 1.50% fee is 6-7x higher than competitors with no added value
This is a live, evolving story. Unlike a static S&P 500 fund, this category requires active monitoring. By building a simple dashboard in Excel with MarketXLS, you can move beyond the media hype and track the data that matters, making an informed, professional decision for your clients.
The analysis framework starts with understanding What Is an ETF?, extends through measuring risk and analyzing fees, and culminates in proper portfolio construction using data-driven tools.
Ready to track Bitcoin ETFs with precision? Start your MarketXLS free trial and build your Bitcoin ETF dashboard in Excel today.
