Bitcoin ETF vs. Ethereum ETF: What’s the Difference?

Bitcoin ETF and Ethereum ETF are financial products that allow investors to gain exposure to BTC and ETH, respectively, without needing to hold cryptocurrencies themselves.

The debut of U.S. spot price ETFs was a big deal for the cryptocurrency market at large, so much so that it incited a major bull run in 2024. 

Looking back today, the bets on crypto ETFs were right. BTC and ETH ETFs have become a big part of the crypto market, controlling over $175 billion in assets in just one year. 

In this article, we will explain in detail why crypto ETFs are such a big deal and the difference between Bitcoin and Ethereum ETFs, among other things. 

Why Bitcoin and Ethereum ETFs Are in the Spotlight

The approval of Bitcoin and Ethereum ETFs was met with intense euphoria among crypto investors because it was believed they would essentially bridge crypto to Wall Street and bring about institutional and regulatory acceptance. 

How ETFs Bridge Traditional Finance and Crypto

First of all, an ETF or exchange-traded fund is not unique to the cryptocurrency space. It started from traditional finance and has been used for decades to invest in mutual funds and a basket of different assets.

Now, one of the roadblocks that decelerated the adoption of crypto by traditional investors is the complexity in managing cryptocurrencies. Not many investors know how or want to deal with the friction and risks of buying and storing BTC and other crypto assets. 

The listing of crypto ETFs basically waived off these concerns, bringing down crypto to an instrument that most TradFi investors are already familiar with. 

2024–2025 ETF Boom — Spot Approvals and Market Impact

The success of spot Bitcoin and Ethereum ETFs saw a rush in the applications for other crypto assets, including SOL, XRP, DOGE, and other major altcoins. 

The U.S. Securities and Exchange Commission (SEC) has even made it easier for more crypto assets to gain ETF approval, and much faster. In September, the regulator approved generic listing standards for spot crypto ETFs, removing the need for lengthy case-by-case approvals. 

That implies more crypto assets could make it to Wall Street, which would translate to more capital inflows from institutions, financial advisors, and retail investors in TradiFi. 

Institutional Demand for Regulated Crypto Exposure

Spot ETFs widen the door to institutional demand for underlying crypto assets. 

As stated earlier, financial institutions, wealth managers, hedge funds, and retail investors are more likely to engage with crypto through these ETFs because it is a familiar product. There are other benefits that come with it, such as ease of access and regulatory comfort attached to it. 

Institutions that wouldn’t dabble in the crypto market directly are now doing so through ETFs. In August, top universities Harvard and Brown revealed holding $116 million and $13 million in Bitcoin through ETFs. 

What Is a Bitcoin ETF?

A Bitcoin ETF is simply an investment fund that tracks the value of Bitcoin. It’s traded on traditional stock exchanges, similar to how Tesla (TSLA), Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), and shares of other companies are traded.

Investors who buy into Bitcoin ETFs indirectly gain exposure to the largest crypto without needing to worry about securing the asset. All that is handled by the fund issuer and the custodian firm designated for that particular ETF. 

How Bitcoin ETFs Work

There are two categories of Bitcoin ETFs: spot and futures, and each works differently. 

Spot Bitcoin ETFs are based on the real-time market price of BTC. That means the issuers like BlackRock, Fidelity, etc., would need to buy and hold the actual Bitcoin. So, in this sense, owning a share of a spot Bitcoin ETF is similar to holding a fraction of BTC, without needing to deal with the actual coin.

The Bitcoin backing the shares is usually held with a regulated third-party custodian, not the fund issuer itself. For instance, Coinbase and Anchorage are the custodians of BlackRock’s Bitcoins.

When there is high demand for the spot ETF shares on the stock exchange, the issuers like BlackRock buy more BTC to create new shares. And when investors want to sell the ETF shares back to the fund, the issuer will need to sell a corresponding amount of BTC to redeem the shares.

On the other hand, a futures-based ETF is based on futures contracts that bet on the future price of Bitcoin. They are usually traded on a regulated exchange like the Chicago Mercantile Exchange (CME).

Spot vs Futures Bitcoin ETFs

Spot Bitcoin ETFs offer the closest exposure to the largest cryptocurrency than the futures-based products because they directly invest and track spot BTC. 

With the futures ETFs, there may be price deviations due to market dynamics. And since issuers only hold futures contracts, there is usually no need for a custodian. 

Spot Bitcoin ETFs generally have a lower expense ratio, i.e., operating expenses, compared to futures ETFs. For instance, BlackRock’s IBIT, the largest spot Bitcoin ETF, has a 0.25% expense ratio, whereas ProShares’s BITO, the largest futures Bitcoin ETF, charges 0.95%. 

Key Issuers of Spot Bitcoin ETFs

Below are five of the biggest spot Bitcoin ETF issuers by assets under management, as of October 2025.

1. BlackRock

BlackRock is the largest spot Bitcoin ETF and also the world’s largest asset manager. The firm’s iShares Bitcoin Trust (IBIT) currently has $64.3 billion in cumulative total net flow and more than $89 billion in AUM.

2. Fidelity

Fidelity Wise Origin Bitcoin Fund (FBTC) is currently the second-largest, with $12.6 billion in cumulative total net flow and $22.84 billion in AUM. 

3. Grayscale

Grayscale Bitcoin Trust ETF (GBTC) comes third, with over $19 billion in AUM. It has a negative total net flow of -$24.6 billion.

4. Ark & 21Shares

ARK 21Shares Bitcoin ETF (ARKB) takes the fourth place, with $2.11 billion in net flow and $4.75 billion in assets under management.

5. Bitwise

Bitwise Bitcoin ETF (BITB) is the fifth-largest spot Bitcoin ETF, with up to $2.39 billion in net flow and $4.59 billion in AUM.

Underlying Asset Exposure — BTC Holdings and Custody

As mentioned earlier, spot Bitcoin ETFs are intended to closely reflect the price of the underlying BTC. As such, the issuers have to purchase or sell BTC from their treasury to issue or redeem ETF shares in response to demand.

The responsibility of managing or securing the holdings is usually outsourced to a third-party digital asset custodian. Interestingly, Coinbase happens to be the primary custodian for most of the spot Bitcoin ETFs trading in the U.S. market. 

Bitcoin ETF as “Digital Gold” Investment Vehicle

Bitcoin ETFs brought about another channel for investors to buy into BTC, a store of value, similar to how people are also trading gold ETFs. 

The “digital gold” narrative for Bitcoin is based on shared characteristics of scarcity with gold. The supply of gold is limited by the amount that can be mined from the earth.

Likewise, Bitcoin has a finite supply of 21 million coins. No more than that number of BTC will ever exist. 

What Is an Ethereum ETF?

An Ethereum ETF tracks the value of Ether, the second-largest cryptocurrency. Buying shares of an Ethereum ETF gives investors indirect exposure to ETH. 

How Ethereum ETFs Differ from Bitcoin ETFs

The first and obvious difference between Ethereum ETFs and Bitcoin ETFs is the underlying asset. The former is based on BTC, while the latter is based on ETH. 

BTC is primarily perceived as a store of value due to its fixed supply. ETH, meanwhile, functions as programmable money for smart contracts and DeFi. 

Also, BTC is based on the Proof-of-Work (PoW) consensus mechanism, while ETH is based on Proof-of-Stake (PoS). That means, Ethereum ETFs can passively earn investors staking rewards, but Bitcoin ETFs cannot. 

So, investors can only make a profit from capital appreciation with BTC ETFs, while ETH ETFs can offer both capital appreciation and staking rewards.

Spot vs Futures Ethereum ETFs

Ethereum spot and futures ETFs work the same way as their respective Bitcoin counterparts. The only difference is in the underlying asset. 

Spot Ethereum ETFs directly invest in the actual Ether, while the futures ETFs invest in Ether futures contracts. Holding the spot ETF shares gives you direct exposure to the price of ETH, while the futures allow you to speculate on the price.

Ethereum’s Unique Features — Smart Contracts and Staking

Unlike Bitcoin, Ethereum is a Turing-complete blockchain, which means it can, in theory, execute any arbitrary computational instruction or program. That is primarily the reason Ethereum is able to support smart contracts, DeFi, and dApp protocols.

However, Ethereum wasn’t initially designed to support staking. It started out as a PoW blockchain, before finally transitioning to PoS after a major upgrade in 2022 dubbed “The Merge.” 

That transition led to a chain split, birthing the current Ethereum network, which is secured by validators staking their coins, rather than miners.

ETH ETFs and Staking Yield — A Layer of Passive Income

Since Ethereum now allows staking, it means Ethereum ETF issuers like Grayscale and VanEck can stake their holdings to earn staking rewards. As of October, the annualized staking yield for Ethereum was 2.87%. 

The issuers can choose to distribute the yield to shareholders as a form of cash dividend or distribution, similar to how bond or stock ETFs distribute income. 

Another way they can manage the staking reward is by reinvesting it into the fund. When that happens, the funds are added back to holdings and so restaked to earn more returns. Also, putting back the reward to the funds could lead to a higher Net Asset Value (NAV) per share, which is good for investors.

Earlier in October, Grayscale rolled out staking for its spot Ethereum ETPs, covering Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF.

Approved and Pending ETH ETF Issuers

Here are the five biggest spot Ethereum issuers based on assets under management as of October.

1. BlackRock

BlackRock iShares Ethereum Trust ETF (ETHA) is currently the largest spot Ethereum ETF, with more than $1.2 billion in traded volume and $15.68 billion in AUM. 

2. Grayscale

Grayscale Ethereum Trust ETF (ETHE) comes second with $117.9 million in traded volume and $4 billion in AUM.

3. Fidelity

Fidelity Ethereum Fund (FETH) comes third with $110.5 million in traded volume and $2.97 billion in AUM.

4. Bitwise

Bitwise Ethereum ETF (ETHW) is in fourth place with $22.4 million in traded volume and $473 million in AUM.

5. VanEck

VanEck Ethereum ETF (ETHV) comes fifth with only $11 million in traded volume and $254 million in AUM.

Bitcoin ETF vs Ethereum ETF — Key Technical and Financial Differences

Performance and Market Behavior

Bitcoin and Ether prices have grown significantly since the spot ETF listing. Market data shows these ETFs now account for billions in daily trading volume. 

Bitcoin ETF Trading Volume and Liquidity

The listing of spot Bitcoin ETFs in the U.S. market has led to a substantial increase in overall Bitcoin trading volumes, especially concentrated around U.S. market hours.

Market data from SoSoValue shows that more than $4 billion in volume was traded in a single day (October 24th), with $90.60 million inflow.

The chart shows that the trading volume has been on a steady climb since the first batch was approved. More precisely, in just 18 months after launching, spot Bitcoin ETFs crossed $1 trillion in cumulative trading volume. As of October, the number sits at $1.14 trillion. 

All U.S. Bitcoin ETFs now account for $149.96 billion worth of BTC in assets under management, according to market data from SoSoValue. That is equivalent to about 6.78% of the BTC market cap.

Ethereum ETF Market Uptake Since Launch

Ethereum ETFs have also had a similar trajectory to Bitcoin ETFs. However, the volume is lower than that of Bitcoin. 

Data shows Ethereum ETFs have only amassed $271.7 billion in cumulative trading volume since their inception a year ago. Clearly, the volume for Ethereum ETFs is not as strong as Bitcoin’s, but they seem quite correlated. 

In the period that Bitcoin ETFs recorded $4 billion in daily traded volume, the Ethereum ETFs only brought in $1.82 billion in trading volume. 

So far, spot Ethereum ETFs account for $26.39 billion in assets under management, which is equivalent to 5.55% of ETH’s current market cap. 

Price Correlation — ETH Following BTC or Decoupling?

The price of BTC has gone from $46,600 to the current price of $113,911 since the ETFs launched. That represents a whopping 144% increase. 

Similarly, the ETH price increased from $3,439 to the current price of $4,124, but has seen a slight gain of 19% so far.

But despite the diverging returns, there has been, in fact, a strong price correlation between BTC and ETH. It didn’t just start. The correlation can be traced back a couple of years and has continued to persist even with the launch of the spot ETFs.

Institutional Allocation Trends 

There’s no question that Bitcoin is the darling digital asset of most institutions. This is already evident in the volume of ETFs traded, including spot coins accumulated by publicly traded companies and other institutional players alike. 

However, some are beginning to ease up on diversifying into Ether as an income-producing growth asset, so to speak. With Ether, institutions make gains from both price appreciation and staking rewards. That is giving firms more reason to diversify or hold Ether as well in their portfolio. 

Over the past months, more companies have come out to accumulate ETH as a digital asset treasury, a move that started with BTC back in 2020. 

Staking: The Game-Changer for Ethereum ETFs

Not just for the ETFs, staking is one feature that has given companies more reason to hold ETH. But it’s not all that rosy.

How ETH ETFs Integrate or Exclude Staking Rewards

Ethereum ETFs’ staking has yet to kick into high gear. In fact, most issuers are yet to enable staking, other than Grayscale, which only began supporting it in early October. 

According to the filing, Grayscale intends to stake its ETH through its custodian, Coinbase, and third-party staking providers. Grayscale said it will distribute Ether (or cash from the sale of Ether) received as yield to investors under certain conditions from time to time.

Each of Grayscale’s ETH-based ETFs, i.e., Grayscale Ethereum Mini Trust ETF (Ticker: ETH) and Grayscale Ethereum Trust ETF (Ticker: ETHE), uses a different reward approach. ETHE will pay distributions for those who like cash flow, while ETH will roll staking returns into NAV to compound the reward.

Other issuers are likely to use either of these approaches to integrate staking rewards into their funds.

SEC Considerations and Custodial Complexity

Staking has always been met with fierce resistance from the SEC. Many issuers had to tell the regulator they wouldn’t participate in staking as part of the conditions for approval. 

“Neither the trust, nor the sponsor, nor the custodian, nor any other person associated with the trust will, directly or indirectly, engage in action where any portion of the trust’s ETH becomes subject to the Ethereum proof-of-stake validation or is used to earn additional ETH or generate income or other earnings,” a 2024 Cboe filing reads.

However, more issuers began to push for it again after the SEC’s Division of Corporation Finance said in May that certain staking activities don’t constitute an offering of securities.

Besides, ETFs require daily liquidity for investor redemptions, but staked ETH is subject to an unbonding period. That could add an extra layer of complexity in the management of the assets.

Impact on ETF Yield, Taxation, and Total Return 

Staking can boost the total return of Ethereum ETFs, but it can also pose a big challenge with respect to taxation. 

Funds that allow staking will return approximately 3% annualized yield to investors, which is an added benefit to the price growth of the potential increase in the price of ETH, compared to funds that don’t support it. 

But staking could be treated as an income-making activity, and that can affect how Ethereum ETFs are classified and taxed. At any point, the issuer, like Grayscale, gains “dominion and control” over the staking rewards; that is, once they are able to sell or transfer the rewards, they become ordinary income and are taxable. 

Regulatory Landscape and Compliance

SEC Approval Timeline for BTC ETFs

• 2013: Winklevoss brothers filed the first-ever application for a spot Bitcoin ETF with the SEC.
• 2017: The SEC rejected the Winklevoss Bitcoin Trust proposal, citing concerns about market manipulation.
• 2018: The SEC rejected Winklevoss’s second application for similar reasons. 
• 2021: The first Bitcoin futures ETF, ProShares Bitcoin Strategy ETF (BITO), began trading.
• October 2021: Grayscale applied to convert its Bitcoin trust to a spot Bitcoin ETF.
• 2022: The SEC turned down Grayscale’s request and that of other issuers, including Fidelity.
• June 2022: Grayscale filed a lawsuit against the SEC for denying its application.
• May 2023: Cathie Wood’s ARK Investments filed for a spot Bitcoin ETF.
• June 2023: BlackRock followed suit, with other asset issuers like Fidelity.
• August 2023: U.S. Court of Appeals for the D.C. Circuit unanimously ruled in favor of Grayscale, stating the SEC’s denial was “arbitrary and capricious.”
• January 10, 2024: The SEC approved the applications to list and trade shares for 11 spot Bitcoin Exchange-Traded Products (ETPs).
• January 11: The approved spot Bitcoin ETFs officially began trading on U.S. exchanges.

Custody and Transparency Requirements

As we already know, traditional ETFs are heavily regulated, and so, crypto ETFs are not left out. They are subjected to similar requirements. 

The SEC requires that the underlying cryptocurrency of spot ETFs be held by a regulated and trusted custodian, which is why most of the issuers had to always state their designated primary custodian in their applications.

For transparency sake, the SEC also requires that crypto ETF issuers file annual audited financial statements on Form 10-K and quarterly financials on Form 10-Q, similar to a traditional public company.

Jurisdictional Differences (U.S., Canada, EU, Asia)

The regulatory approaches to BTC and ETH ETFs vary across global financial hubs, especially the U.S., Canada, the EU, and Asia.

The U.S. regulators were previously known to be hostile towards cryptocurrencies. It wasn’t until after the Trump administration stepped in that policies eased up for crypto and stablecoins, with the U.S. government even announcing a national Bitcoin reserve. 

Canada happened to be more friendly to crypto. Canada was reportedly the first country to approve a spot Bitcoin ETF under a clear regulatory environment. 

The EU has also begun to clear up regulatory hurdles for crypto, with the recent passing of the landmark Markets in Crypto Assets (MiCA) regulation, which provides a unified framework for crypto-asset markets across member states. 

Regions like Hong Kong also put Asia on the map. Hong Kong actually sped up approval of Bitcoin and Ether spot ETFs in a bid to beat the U.S. to it. However, places like China continue to maintain a strict stance with bans on cryptocurrency trading and mining.

Which ETF Fits Your Investment Strategy?

Investors buy BTC and ETH as a store of value or passive income, and that also influences their choices regarding investing in Bitcoin and Ethereum ETFs.

Bitcoin ETF — Conservative Store-of-Value Exposure

Bitcoin is perceived as a store of value due to its fixed supply, which creates a sense of scarcity. And based on the economics of scarcity, many people purchase Bitcoin and its related funds as a good long-term investment and even as a hedge against inflation. 

Ethereum ETF — Tech-Driven Growth and Yield

Ether would appeal more to people who believe in Ethereum’s future as a decentralized computing platform and the concept of Web3 at large. ETH and its funds are better assets to hold, especially for investors looking to earn passively from their idle stash.

Balanced Portfolio Approach — BTC/ETH Split Strategies

A general rule of thumb with investing is never to put all your eggs in one basket. Balancing your portfolio would mean having both BTC and ETH exposure.

Although BTC and ETH have a high correlation, some analyses suggest that a 70/30 or 50/50 allocation might offer a better risk-adjusted return profile than an exclusive holding of either.

Key Considerations: Risk, Liquidity, Time Horizon

Liquidity, risk, and time horizon, including fees, are some of the factors to consider when deciding which ETF to hold. 

BTC is often less volatile than ETH. Also, as we explained earlier, Bitcoin ETFs have more liquidity than Ethereum ETFs. Management fees can be higher or lower depending on the issuers and underlying assets. 

The Future of Crypto ETFs

Multi-Asset and Index Crypto ETFs

As the crypto ETF market matures, we could begin to see more entrants of multi-asset and index-based crypto ETFs. These funds offer investors exposure to a basket of cryptocurrencies, rather than a single asset. Something equivalent to the S&P 500.

Integration of DeFi and On-Chain Yield Products

The integration of on-chain activities like staking and DeFi lending into the ETF structure is another key trend that could play out in the future as a way to enhance income features of the funds. But that could be met with heavy regulation.

Institutional Entrants and Expanding Access

Bitcoin and Ethereum ETFs are only a year into the U.S. market. It’s not far-fetched to expect more institutional exposure to BTC and ETH through the funds, which means more capital flow and demand for the assets. 

Source: https://www.cryptopolitan.com/bitcoin-etf-vs-ethereum-etf/