The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure

Key Points

• U.S. spot Bitcoin ETFs attracted nearly $1 billion in net inflows over about a week in mid-July, the strongest streak so far this year.
• The iShares Bitcoin Trust ETF and the Fidelity Wise Origin Bitcoin Fund are the primary beneficiaries of this renewed institutional demand for Bitcoin exposure.
• IBIT offers superior liquidity and asset size but carries higher custody risk through Coinbase, while FBTC provides comparable fees and self-custody through Fidelity Digital Assets.

After massive dips early in the year and again in late May 2026, Bitcoin's price has yet to recover. And yet, despite a difficult stretch in June, U.S. spot Bitcoin exchange-traded funds (ETFs) are seeing inflows pick up once again. This category of ETF recorded nearly $1 billion in net inflows over about a week in mid-July, marking the strongest streak so far this year.

Institutional investors appear to be making moves to build exposure to Bitcoin once again, and major funds like the iShares Bitcoin Trust ETF NASDAQ: IBIT and the Fidelity Wise Origin Bitcoin Fund BATS: FBTC are beneficiaries.

But what's driving this renewed demand? For one thing, institutions may be buying the dip following a particularly poor June, which saw billions in net outflows from spot Bitcoin funds. Further, if investors expect monetary policy to ease and anticipate a growing appetite for risk, crypto assets may be among the first places they turn to.

The Largest and Most Important Bitcoin ETF

It's difficult to talk about the Bitcoin ETF space without beginning with IBIT. With $47 billion in managed assets and similarly massive trading volumes, IBIT is the go-to ETF for spot Bitcoin exposure for many investors. As such, this fund often leads the industry when it comes to daily inflows, frequently attracting a majority of new money pouring into U.S. spot Bitcoin funds for itself.

Notably, in mid-July, IBIT experienced a modest outflow on the same day that other funds (including FBTC) saw inflows. While this is not an abnormal occurrence, it may suggest that some investors are not simply indiscriminately putting money into the largest or best-known Bitcoin funds, but are actually rotating among different issuers.

One reason for doing so is liquidity, and IBIT sits at the top of the Bitcoin ETF pile for this reason. On the other hand, however, among a pool of funds all ostensibly tracking the same price, expense ratio becomes a crucial factor—and IBIT's annual fee of 0.25% is higher than some of its competitors'. This could potentially erode some gains relative to other funds that are also aiming to generate the same returns based on the spot price of BTC.

Custody is also a consideration, and IBIT's use of Coinbase Global NASDAQ: COIN for its custody services sets it apart from other funds. Still, investors utilizing Bitcoin ETFs—as opposed to investing in Bitcoin directly through an exchange—are likely happy to hand over custody concerns to a fund provider in general.

A Liquid, Self-Custody Alternative

Putting these things together, it's clear why investors may be funneling money toward IBIT. Still, FBTC represents a strong alternative. The fund is directly comparable to IBIT based on expense ratio, as it has the same annual fee of 0.25%. It is also highly liquid, although with substantially lower assets ($11 billion) and trading volume than IBIT. In terms of performance, FBTC is unsurprisingly quite comparable to IBIT, although the funds do not always track each other perfectly in terms of returns.

With all these factors in mind, it may seem that FBTC has no way to distinguish itself from its larger, more popular rival. However, FBTC may have an advantage in that it stores its Bitcoin through Fidelity Digital Assets, its own institutional cryptocurrency custody business. Without having to rely on an outside company for custody, FBTC may be subject to lower counterparty risk.

FBTC's self-contained appeal may extend even further for investors already utilizing Fidelity for brokerage, retirement, or wealth management needs, as an investment in FBTC allows investors to keep more of their investment activity housed in the same place.

At the same time, Fidelity has established itself as an early entrant into the crypto space compared to many other traditional asset managers.

In exchange, investors may give up some benefits of bid-ask spreads during volatile periods relative to IBIT. However, buy-and-hold investors are unlikely to be bothered by this difference between these two funds. Ultimately, IBIT may appeal more to active traders, institutional investors with a tie to other iShares products, or those prioritizing liquidity, while FBTC appeals more to Fidelity customers and those looking for a simplified custodial structure.

For investors, however, the fact that inflows have picked up again across the Bitcoin ETF space may be enough to warrant considering either or both of these funds again.