The Crypto ETF Showdown: BITQ's Diversification vs. IBIT's Bitcoin Bet
Key Points
BITQ comes with a higher expense ratio and deeper drawdowns compared to IBIT.
IBIT tracks the price of Bitcoin directly, while BITQ holds crypto-related companies, leading to different risk and sector exposures.
IBIT is far larger and more liquid, which could matter for larger trades or institutional investors.
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The iShares Bitcoin Trust ETF (NASDAQ:IBIT) tracks Bitcoin itself with a lower expense ratio and much larger assets under management, while the Bitwise Crypto Industry Innovators ETF (NYSEMKT:BITQ) offers exposure to crypto-related equities, higher volatility, and a more diversified portfolio of 33 holdings.
Both IBIT and BITQ target investors interested in the crypto economy, but their approaches are fundamentally different. IBIT provides direct Bitcoin price exposure, while BITQ invests in companies that operate in the crypto sector, such as exchanges and mining firms. This comparison highlights key differences in cost, performance, risk, and portfolio makeup to help clarify which may align better with specific investor goals.
Snapshot (cost & size)
| Metric | IBIT | BITQ |
|---|---|---|
| Issuer | IShares | Bitwise |
| Expense ratio | 0.25% | 0.85% |
| 1-yr return (as of 2026-01-09) | (5.0%) | 26.3% |
| AUM | $70.1 billion | $400.6 million |
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.
BITQ charges a higher management fee than IBIT, making it less affordable on cost alone, though its recent performance has outpaced IBIT over the past year.
Performance & risk comparison
| Metric | IBIT | BITQ |
|---|---|---|
| Max drawdown (2 y) | (32.73%) | (51.22%) |
| Growth of $1,000 over 2 years | $1,921 | $2,023 |
What's inside
BITQ focuses on the broader crypto economy by investing in 33 companies across financial services, technology, and consumer cyclical sectors. Its largest holdings include Iren (NASDAQ:IREN) at 14.68%, Coinbase Global(NASDAQ:COIN) at 8.39%, and Microstrategy (NASDAQ:MSTR) at 6.80%. The fund has operated for 4.7 years, offering indirect crypto exposure without the need to hold digital assets.
IBIT, by contrast, is a pure-play vehicle holding only Bitcoin and cash. This results in a single-asset exposure, tracking the digital currency’s price movements almost one-for-one. Unlike BITQ, IBIT does not hold equities or diversify across companies, so its performance is tied directly to Bitcoin’s price. There are no notable structural quirks or thematic tilts in IBIT, and its large size provides ample liquidity for most investors.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Cryptocurrency ETFs represent one of the newest investment categories, with spot Bitcoin ETFs like IBIT only launching in January 2024. These funds offer regulated exposure to crypto assets without the complexity of managing digital wallets or navigating exchanges.
BITQ invests in crypto-related companies like miners, exchanges, and service providers, holding around 30 stocks with a hefty 0.85% expense ratio -- meaning a $10,000 investment will cost you $85 in fees. Its $400 million in assets and beta above 4 signal extreme volatility, so this ETF is not for the faint of heart. In contrast, IBIT holds physical Bitcoin directly through institutional custody, tracking Bitcoin's price movements with a 0.25% expense ratio and massive $71 billion in assets from BlackRock's backing.
These ETFs suit investors who understand cryptocurrency's extreme volatility and want regulated exposure without direct coin ownership. If you're interested in pure Bitcoin price tracking at a lower cost, IBIT is the ETF for you. For diversified exposure to crypto industry growth, choose BITQ. But only allocate capital you can afford to lose entirely, as crypto remains highly speculative and prone to dramatic swings.
Glossary
ETF (Exchange-traded fund): A pooled investment that trades on an exchange like a stock.
Expense ratio: Annual fund operating costs, expressed as a percentage of the fund’s average assets.
Assets under management (AUM): The total market value of all assets managed by a fund.
Bitcoin ETF: An ETF designed to track the price of bitcoin, without investors holding bitcoin directly.
Crypto-related equities: Stocks of companies whose main business involves cryptocurrencies or blockchain technology.
Max drawdown: The largest peak-to-trough decline in an investment’s value over a specified period.
Beta: A measure of an investment’s volatility compared with the overall stock market, typically the S&P 500.
Liquidity (in ETFs): How easily ETF shares can be bought or sold without significantly affecting the price.
Management fee: The portion of the expense ratio paid to the fund manager for running the fund.
Diversified portfolio: A collection of different investments intended to reduce risk from any single holding.
Single-asset exposure: When a fund’s performance depends mainly on one underlying asset, such as bitcoin.
Total return: An investment’s overall gain or loss, including price changes and any income, over a given period.
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Sara Appino has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and iShares Bitcoin Trust. The Motley Fool recommends BlackRock and Coinbase Global. The Motley Fool has a disclosure policy.
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