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2 Bitcoin ETFs to Avoid—and 1 to Watch in 2026
Reported by Jordan Chussler. Article Posted: 1/31/2026.
In Brief
- Last year, Bitcoin spot exchange-traded products saw $9.9 billion in inflows despite Bitcoin’s lackluster performance.
- Given those losses, the ProShares Bitcoin ETF and Grayscale Bitcoin Trust are not justifying their elevated expense ratios.
- Meanwhile, the iShares Bitcoin Trust ETF—which has produced similar losses over the past year—offers a superior option with an expense ratio of just 0.25%.
One year ago, President Donald Trump was being hailed as the United States’ first crypto president. His deregulatory platform was expected to be a boon for stocks in the financials sector as well as the crypto industry.
But things did not go according to plan. In 2025, financials ranked second-to-last among the S&P 500’s 11 sectors, posting a gain of just over 5%. Crypto enthusiasts were even more disappointed.
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Get the full story on this opportunity now.After hitting its then-all-time high on Jan. 25 (five days after Trump began his second term), Bitcoin (BTC) has since fallen nearly 15% and is down more than 27% from its current record high on Oct. 4, 2025.
That pain wasn’t confined to decentralized finance, or DeFi. With the introduction of crypto spot exchange-traded funds (ETFs), equity markets have also suffered despite massive inflows into funds providing exposure to Bitcoin and Ethereum (ETH).
As the familiar disclaimer states, past performance is not indicative of future results. Shareholders of spot Bitcoin ETFs waiting for the next leg up should reconsider two funds whose expense ratios don't justify their performance, while keeping an eye on one with a much more attractive fee structure.
Despite Breaking Ground, Grayscale Is Eroding Shareholder Returns
According to blockchain data analytics firm TRM, Bitcoin exchange-traded products (ETPs) saw nearly $10 billion in inflows in 2025. That surge in demand followed the U.S. Securities and Exchange Commission’s approval of the first 11 spot Bitcoin ETPs on Jan. 10, 2024.
That landmark decision paved the way for funds—like the Grayscale Bitcoin Trust ETF (NYSEARCA: GBTC)—to offer indirect exposure to crypto markets by tracking the daily spot price of Bitcoin.
Investors uncomfortable with the DeFi landscape or seeking easier access have flocked to these ETFs. GBTC, for example, has attracted more than $20 billion in assets under management (AUM) and posts an average daily trading volume of just over 4 million shares.
Mirroring Bitcoin prices, the fund has stumbled recently, falling more than 29% since its all-time high on Oct. 6, 2025.
The ETF carries an expense ratio of 1.5%, well above the average for passively managed ETFs. In fact, it costs more than the typical actively managed ETF. For context, Vanguard often charges as little as 0.05% for some of its ETFs.
ProShares Offers Superior Liquidity, But Elevated Expense Ratios
Although its AUM is much lower—about $2.45 billion—the ProShares Bitcoin ETF (NYSEARCA: BITO) posts average daily trading volume near 60 million shares, higher than GBTC’s already solid liquidity.
The fund, which is actively managed, differentiates itself with a long-Bitcoin, short-U.S. dollar futures strategy.
But active management has not translated into attractive returns: over the past year, the fund has fallen nearly 50%.
Like GBTC, BITO carries an above-average expense ratio. These fees cover administrative, compliance, management and marketing costs, yet the industry average for actively managed ETFs is substantially lower.
According to Morningstar Direct, the average expense ratio for actively managed ETFs is 0.44%. ProShares charges 0.95% for its Bitcoin ETF.
Current short interest of 17.42% suggests shareholders could face additional downside risk in the near term.
iShares Is the Largest Bitcoin ETF With Lower-Than-Average Fees
The most compelling option may be the fund from BlackRock (NYSE: BLK). The iShares Bitcoin Trust ETF (NASDAQ: IBIT), a spot Bitcoin ETF, has performed similarly to GBTC and better than the actively managed BITO. Since its all-time high on Oct. 3, the fund is down roughly 27%.
With an AUM of $68.33 billion, it is the largest Bitcoin ETF on the market. Its average daily trading volume of more than 55 million shares makes it more liquid than GBTC and nearly as liquid as BITO.
Most importantly, the fund carries an expense ratio of just 0.25%, which has made it highly attractive to institutional investors. Over the past 12 months, institutional buyers have outnumbered institutional sellers 1,557 to 417, with inflows of more than $11 billion easily surpassing outflows of about $1.55 billion. Current short interest stands at just 1.43% of the float.
The fund may also benefit from a long-term catalyst: BlackRock announced on Jan. 21 that it has partnered with insurance company Delaware Life to offer a U.S. fixed index annuity with Bitcoin exposure. That exposure will use IBIT to provide the annuity’s crypto allocation.
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