Bitcoin and Dividends: A Winning Combo in These 3 ETFs

Key Points

• Cryptocurrency ETFs are not all the same and may in fact provide a range of risk profiles, distribution potential, and fees.
• Actively managed Bitcoin funds like BTCI can offer a high-yield option for investors not interested in holding Bitcoin directly.
• A fund like BITS provides risk mitigation by diversifying Bitcoin futures exposure with access to blockchain and digital asset stocks or ETFs.

With Bitcoin trading just below all-time highs, there is fresh attention on the world's first and largest cryptocurrency. Investors concerned about the future of the dollar may also be inclined to turn to crypto, though the space remains highly speculative. If the risk of investing directly in Bitcoin or another major token is too high, an alternative is a cryptocurrency-focused exchange-traded fund (ETF).

The most straightforward crypto funds are spot ETFs like the Fidelity Wise Origin Bitcoin Fund NYSEARCA: FBTC. These funds invest directly in Bitcoin and are thus highly risky, although they do provide a layer of protection for investors in that investors don't have to store and transfer crypto holdings by themselves.

An income-generating Bitcoin fund may be a better alternative for less risk-tolerant investors. These funds typically use crypto futures, covered calls, and other complex strategies to generate distributions that function similarly to dividend payments made by traditional stocks.

Of course, tax implications in these cases may be different, so it's up to the investor to keep track of the implications.

Call Options for a Fund Investing in Bitcoin-Focused ETPs

One way to generate income for investors is with call options on Bitcoin futures ETFs, and that's exactly the play that the NEOS Bitcoin High Income ETF NYSEARCA: BTCI aims for. This fund invests in exchange-traded products (ETPs) directly exposed to Bitcoin. BTCI is actively managed, meaning that the team from NEOS makes decisions about how and when to utilize call options to maximize distributions while also achieving upside potential.

BTCI is one of the newer ETFs in the Bitcoin and crypto space, having only launched late in 2024. However, its track record so far is highly successful; it has returned more than 26% in 2025 alone. This is in addition to monthly distributions, which have provided the fund with a dividend yield of 22.2%.

Investors should expect to pay for this fund's active management. BTCI, unsurprisingly, has a fairly high expense ratio of 0.98%. Far cheaper crypto funds are available, but many investors may find the fund's track record and history of distributions to more than make up for the comparably high cost.

A Combination of Bitcoin Futures and Blockchain Stocks Provides a Substantial Dividend

For a bit more diversification outside of the Bitcoin space, investors might look to the Global X Blockchain & Bitcoin Strategy ETF NASDAQ: BITS. BITS does include a focus on the Bitcoin futures market, but it also aims for exposure to stocks of companies in the blockchain technology and digital assets industries as well as other ETFs focused on blockchain.

BITS has traditionally offered investors a distribution twice per year, translating to an annual dividend yield of 24.5%. Considering the fund's substantial payouts and active strategy combining cryptocurrency with traditional stocks and ETFs, the fund's expense ratio of 0.65% is relatively low.

Its year-to-date (YTD) return of roughly 18% is likely quite compelling. Investors should be aware, though, that BITS has quite low assets under management (AUM) at just $35.4 million and low trading volume, which may make liquidity a concern for more active traders.

First-Ever Bitcoin Fund Still Dominates for Distributions, AUM, Volume

The first Bitcoin-related ETF to launch in the United States was the ProShares Bitcoin ETF NYSEARCA: BITO. However, BITO does not invest directly in Bitcoin; instead, it invests in futures and swaps. As might be expected for the first-ever Bitcoin fund, BITO has substantially higher AUM and trading volume than BITS above, with about $2.8 billion in invested assets.

Distributions are also a popular draw for BITO investors, as the fund makes monthly payments and has a dividend yield of 49.6%. With an expense ratio of 0.95%, BITO remains on the higher end of the expense ratio scale for Bitcoin funds, but the fund's strong history, its distributions, and recent performance likely make that a worthwhile fee for many investors. BITO has returned about 21% so far this year, far ahead of the broader market.