Owning Bitcoin Through an ETF: Scale or Lower Fees With IBIT and HODL

iShares Bitcoin Trust ETF (NASDAQ:IBIT) and VanEck Bitcoin ETF (NYSEMKT:HODL) both offer direct exposure to bitcoin’s price, but IBIT stands out for its much larger assets under management and trading footprint, while HODL edges ahead on cost.

Both IBIT and HODL are designed to track the performance of bitcoin, giving investors a way to access the cryptocurrency’s price movements via traditional brokerage accounts. This comparison looks at their key differences in cost, returns, risk, liquidity, and portfolio construction to help clarify which product may appeal more to different types of investors.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

HODL is slightly more affordable, with a 0.20% expense ratio compared to 0.25% for IBIT. This difference may appeal to fee-conscious investors, though IBIT’s much larger assets under management could translate to greater liquidity for larger trades.

Performance & risk comparison

What's inside

VanEck Bitcoin ETF is a single-asset trust that holds only bitcoin, aiming to reflect the cryptocurrency’s price as closely as possible. With just one holding and $1.2 billion in assets under management, it is a pure bitcoin play without any reported sector breakdown or additional securities.

IBIT also holds only bitcoin. However, its $56.6 billion in assets under management makes it one of the largest bitcoin ETFs available, which may help with liquidity for institutional and larger retail investors. Both funds offer direct exposure without leverage, derivatives, or extra features.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

Bitcoin exposure is easy to buy and hard to hold. When prices move fast, investors do not just question bitcoin; they often question whether they picked the right vehicle to own it. That is the decision to make when you are choosing between the iShares Bitcoin Trust ETF and the VanEck Bitcoin ETF. Both hold spot bitcoin, so the underlying risk is the same, but the ownership experience can feel very different once volatility shows up.

IBIT offers significant scale, with approximately $56.6 billion in assets, making it one of the largest bitcoin ETFs. This size can be advantageous for investors seeking efficient entry or exit. In contrast, HODL is smaller, at about $1.2 billion, but charges a lower fee of 0.20% compared to IBIT’s 0.25%. For long-term investors, this five-basis-point difference is the primary factor that will impact your annual returns.

Investors should first consider their intended approach during periods of bitcoin volatility. Those who plan to trade or gradually increase their position may benefit from IBIT’s larger scale. Conversely, investors seeking a long-term, buy-and-hold strategy may prefer HODL’s lower fee. The choice is less about the underlying asset than about the investment structure that best aligns with your strategy during market fluctuations.

Eric Trie has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends iShares Bitcoin Trust. The Motley Fool has a disclosure policy.