As we are prepping to publish models based on Bitcoin (BITCOMP) and Ethereum (ETH-X) cryptocurrency assets, we are publishing preliminary research on trading assets that track Bitcoin and Ethereum on traditional U.S. based exchanges.

We exclude futures which can easily be traded via CME contracts. Using Interactive Brokers as a reference, these are the main available instruments (not including futures) for trading Bitcoin Funds (as of May 8, 2021).

Bitcoin Instruments

As expected, the most traded instrument is the Grayscale Bitcoin Trust (GBTC), followed by the Canadian Purpose Bitcoin ETF (BTCC.B at TSE). But how does GBTC compare to the actual Bitcoin price?

Although in the past GBTC may have been trading with a premium, recently GBTC has tracked BTC quite well. Around March 2021 it gained a premium (it fell less on the March correction and has stayed higher since then). After that, it seemed to track BTC fairly well.

Ethereum Instruments

Similarly, the most traded instrument is the Greyscale Ethereum Trust (ETHE). ETHE is a new product and has not tracked the Ethereum price in the past, so we believe ETHE will not provide reliable data for backtesting an Ethereum strategy.

In the past three months, it has tracked the Ethereum price decently. It can be used to provide signals, given a less than three-month lookback period.

Conclusion

Given the lack of an U.S. based ETF, Greyscale’s Bitcoin (GBTC) and Ethereum (ETHE) Trusts can be included in a portfolio that tracks the two major crypto assets. These instruments are currently available at major brokerages including Interactive Brokers and Schwab.