Crypto ETFs Beyond Bitcoin: IBIT vs. Ethereum and Multi-Asset Funds in 2025
The Rise of Crypto ETFs Beyond Bitcoin
While the approval of spot Bitcoin ETFs in early 2024 was a watershed moment, 2025 has been defined by the proliferation of other crypto-related investment products. The U.S. has seen the launch of spot Ethereum ETFs, with major asset managers like BlackRock and Fidelity entering the market. This expansion is driven by growing institutional and retail demand for a more diversified exposure to the crypto market.
IBIT vs. Ethereum ETFs: Performance and Use Case in 2025
IBIT (iShares Bitcoin Trust): The "Digital Gold" Standard
IBIT, BlackRock's spot Bitcoin ETF, continues to be a dominant force in the market. As of September 2025, it remains one of the largest and most liquid Bitcoin ETFs. Its primary use case is to provide investors with direct exposure to Bitcoin's price performance without the complexities of self-custody.
Performance: IBIT's performance has been strong, particularly in the first half of 2025. While Bitcoin saw a temporary correction in late August, it has shown resilience and remains a core institutional holding. The fund's year-to-date return is around 14.54% as of early September 2025.
Role in a Portfolio: Bitcoin's established position as "digital gold" makes IBIT a staple for investors seeking a store of value and a potential hedge against traditional financial assets. Institutional investors, in particular, are using it as a legitimate allocation in their diversified portfolios.
Ethereum ETFs: The "Digital Oil" Engine
The launch of spot Ethereum ETFs in 2024 and their subsequent growth in 2025 has provided a new avenue for investors. Funds like the iShares Ethereum Trust (ETHA) are now attracting significant capital.
Performance: Ethereum has had a particularly strong year, with a significant rally that has outpaced Bitcoin's gains over the summer. This has led to a "rotational shift" of capital from Bitcoin to Ethereum ETFs. Its year-to-date return is around 29.93% as of early September 2025.
Role in a Portfolio: Ethereum is often seen as a "growth asset" due to its utility as the foundation for decentralized finance (DeFi), NFTs, and other dApps. An Ethereum ETF like ETHA is a way for investors to gain exposure to this ecosystem's growth without the technical complexities of holding Ether directly.
IBIT vs. Ethereum ETF Comparison
Investment Thesis: IBIT is for those who believe in Bitcoin as a store of value and a long-term asset. Ethereum ETFs are for those who want exposure to the growth of the decentralized application ecosystem.
Performance: While both have been positive, Ethereum ETFs have shown a period of outperformance, leading to a recent rebalancing of institutional portfolios.
Institutional Adoption: Both have a high degree of overlap in institutional holdings. Many firms that hold IBIT also hold Ethereum ETFs, demonstrating a move towards a multi-asset crypto strategy.
The Emergence of Multi-Asset Funds
Beyond single-asset funds, 2025 has seen the rise of multi-asset crypto ETFs and ETPs. These funds offer a more diversified approach, holding a basket of different cryptocurrencies or crypto-related assets.
Strategy: These funds may track an index of top cryptocurrencies (e.g., Bitcoin and Ethereum by market cap), or they may focus on specific sectors like DeFi or smart contract platforms. Some funds also employ "strategy" approaches, incorporating assets like Bitcoin mining company stocks or even a mix of crypto and traditional assets like treasuries.
Benefits: Multi-asset funds provide an all-in-one solution for diversification within the crypto space. They can help reduce the volatility associated with a single-asset holding and may be suitable for investors who want broad exposure to the crypto market's growth without having to pick individual assets.
Examples: Funds like the Invesco Galaxy Crypto Economy ETF (SATO) and the VanEck Crypto Monthly Recap for August 2025 report highlight the growing interest in funds that track a basket of digital assets, including altcoins like Solana and Chainlink.
Key Considerations for Investors
Fees and Liquidity: When choosing an ETF, it's crucial to consider the expense ratio and liquidity. While many funds initially offered fee waivers, these have largely expired. Funds with a low bid-ask spread and high trading volume are generally more cost-effective for investors.
Underlying Holdings: Understand what the fund actually holds. Spot ETFs hold the underlying cryptocurrency, while futures ETFs hold derivatives contracts, which can lead to different performance outcomes.
Risk Tolerance: Crypto ETFs, while operating in a regulated wrapper, are still subject to the inherent volatility of the underlying assets. Investors should be prepared for significant price swings and the possibility of losing their entire investment.
Regulatory Environment: The regulatory landscape continues to evolve. While the passage of legislation like the "Clarity Act" has provided some certainty, ongoing regulatory reviews and actions by agencies like the SEC can impact the market.
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