Summary The WisdomTree Bitcoin Fund ETF tracks the same Bitcoin Reference Rate index as IBIT, but suffers from illiquidity and higher bid/ask spreads, with an Average Spread of 0.09%. BTCW offers a 0% expense ratio until January 2026. However, IBIT counters with a six-month discounted fee of 0.12%, narrowing the effective savings. I see BTCW’s declining trading volume as a shift toward long-term holding, while IBIT continues to attract active traders and benefits from a virtuous liquidity cycle. Despite BTCW’s temporary fee advantage, IBIT remains the superior ETF due to lower transaction costs, higher liquidity, and additional features like options availability. This is my second article part of the “Bitcoin ETFs Showdown” series I am writing for Seeking Alpha, where I analyze different Bitcoin ETFs, comparing them against the iShares Bitcoin Trust ETF ( IBIT ), the largest and most liquid Bitcoin (BTC-USD) exchange-traded fund on the market. My last article concerned the ARK 21Shares Bitcoin ETF ( ARKB ), which I see as an overall slightly inferior choice than IBIT. This article focuses on the WisdomTree Bitcoin Fund ETF ( BTCW ). Once again, I will compare BTCW against IBIT to determine whether IBIT remains the best choice for investors. This series does not explore whether it’s the optimal time to invest in Bitcoin. I continue to see Bitcoin as a high-risk, asymmetric opportunity based on its potential to evolve into a global reserve asset. Investors unsure about Bitcoin should study its fundamentals and evaluate if it fits their risk tolerance and investment goals. If you are interested in learning more about Bitcoin, you can find my broader investment thesis and thoughts about Bitcoin on my Seeking Alpha profile . BTCW: ETF profile The first thing that I noticed when opening BTWC’s webpage is the relative chaos in terms of documentation for this ETF. WisdomTree released an initial 21 page ETF prospectus , followed by three prospectus supplements of 20+ pages each, the latest of which came in November of this year. Additionally, quarterly 10K reports are also available to download. While very generous in terms of documentation, the webpage of BTCW is surprisingly scarce in terms of information about the fund. There is no clear mention of custodians, nor of what exact Bitcoin index or index proxy the ETF tracks (if any). WisdomTree claims its BTCW fund will track the price of Bitcoin based on an “independently calculated value based on an aggregation of executed trade flow of major bitcoin spot exchanges”. Interestingly in my view, only one of the four available prospectus documents reveals what WisdomTree means with “independently calculated”: The Trust will hold bitcoin and will value its Shares daily based on the value of bitcoin as reflected by the CME CF Bitcoin Reference Rate – New York Variant (the “Reference Rate”), which is an independently calculated value based on an aggregation of executed trade flow of major bitcoin spot platforms. Which is to say, the BTCW ETF tracks the same index as IBIT and most other Bitcoin ETFs - the ME CF Bitcoin Reference Rate – New York Variant. This is an index that produces a once a day price for Bitcoin aggregating multiple trade data from different cryptocurrency exchanges. IBIT, while tracking the exact same index, makes it clear the fund uses this index from the very beginning in its website and marketing material. Further deep diving into available documentation also reveals how, exactly like IBIT, the BTCW fund uses Coinbase (COIN) as its custodian. I see custodian risk as one of the main elements to keep in mind when investing in Bitcoin via ETFs - something I covered in my very first article about IBIT, explaining the differences and risks between self custody and exposure to BTC via ETFs. While the BTCW ETF is in line with other Bitcoin ETFs for what concerns custodian and index tracking, the issues start when looking at key financial metrics and how they compare with those of IBIT. I will cover these elements in the next sections of this article. Key metrics at a glance The BTCW ETF has the following key metrics at the time of writing: Expense ratio of 0.25%, with the fee completely waived until January 10th, 2026 or until the fund reaches $ 2.5 Billion in Assets Under Management ( AUM ). Asset Under Management of $ 365 Million - which makes it seem likely the expense ratio will remain at 0% until January 2026. Average Bid/Ask Spread of 0.09%. Average Daily Trading Volume of $ 5.51 Million. The main issue of the BTCW ETF in my view is the fact it is a very illiquid fund, compared to major BTC ETFs such as IBIT. The Bid/Ask spread is very high, at 0.09%. The fund often trades at a somewhat significant difference with its Bitcoin holding, as outlined by WisdomTree itself in the chart below. BTCW's premium / discount trading levels, history (BTCW webpage) Except for its effectively 0% expense ratio (which I will cover in more detail in comparison to IBIT in the next section), I see this ETF is not competitive in the context of Bitcoin ETFs. Investors purchasing it are effectively giving up 0.09% of their fund in the form of Bid/Ask spread, with the added risk of purchasing a fund that trades at a discount from its holdings. The relative complexity of its documentation, which in my view signals a weak marketing support from its issuer, also does not help in making BTCW a decent choice for investors. BTCW vs. IBIT IBIT vs. BTCW, key metrics at a glance (Author's elaboration of Seeking Alpha and ETF.com data) The chart above compares key metrics of the BTCW ETF with IBIT, with "P3M" reflecting changes between August and November 2024. Similar to my observations about ARKB in my previous article, BTCW experienced a notable decline in Average Daily Trading Volume over the past three months, contributing to its relative illiquidity. I find this data point interesting, as I believe it indicates how BTCW investors are shifting from active trading to long-term holding, while active Bitcoin traders gravitate towards more liquid options like IBIT. This dynamic creates a virtuous cycle for IBIT, which becomes increasingly liquid over time, and a vicious cycle for less liquid funds like BTCW. The only positive element that would make me consider BTCW against IBIT is that - given the fact the fund has less than $ 500 Million in AUM - the expense ratio is likely to be 0% until January 10th, 2026. This could result in meaningful fee savings, potentially offsetting BTCW's illiquidity for investors holding until early 2026 before switching to a more liquid ETF like IBIT. However, a more careful analysis reveals how IBIT is still preferable to BTCW, even when accounting for its 0% effective expense ratio. First, IBIT also offers a discount for first time buyers in the form of a 6 month period where the issuer only charges 0.12% in fees. So the effective “saving” of buying BTCW instead of IBIT in the first year would only be of about 0.13%. Second, BTCW’s higher bid/ask spread of 0.18% outweighs the fee advantage when compared to IBIT's 0.02% spread and 0.13% expense ratio. Ultimately, IBIT’s liquidity and lower transaction costs make it the superior option despite BTCW’s temporary fee waiver. Conclusion: I cannot find a good reason to enter BTCW over IBIT IBIT vs. BTCW, qualitative assessment (Author's work) The above table summarizes the qualitative assessments I made across this article. Due to its illiquidity, I find it difficult to recommend investing in the BTCW ETF. Investors would face up to 0.18% in costs just to enter and exit their positions. Additionally, there’s a risk of the fund becoming even less liquid over time, as suggested by the declining trend in Average Daily Volumes observed in recent months. Even accounting for the fee waiver until January 2026 does not change the picture for BTCW. This is a trend that I have started observing in the world of Bitcoin ETFs: they are all seemingly losing their battle with IBIT, primarily due to the sheer size of the latter fund, which constantly improves its liquidity metrics. I believe many issuers, including WisdomTree, will need to rethink their Bitcoin ETF strategies in the coming years to ensure their products remain relevant in the market. Finally, a note about options: these are available for IBIT since November, while there are currently no options on offer for the BCW ETF. Risks to investing in Bitcoin ETFs and BTCW Investing in Bitcoin remains a highly speculative bet on its potential to mature into a global reserve asset. While I personally find this bet compelling, it represents the primary risk for anyone considering BTCW or any Bitcoin ETF and should be carefully evaluated. Another critical risk for Bitcoin ETFs is custodian reliance. Funds like BTCW depend on custodians such as Coinbase to safeguard their Bitcoin holdings. Any fraudulent activity or security breach by the custodian could lead to significant losses for investors. BTCW's reliance on a single custodian heightens this risk. Lastly, BTCW's potential illiquidity is a concern. If its bid/ask spread rises significantly above the current 0.09%, it could pose another challenge for investors.
