Best Cryptocurrency Funds UK – Top Bitcoin Funds in the UK
If you’re looking to invest in digital currencies but wish to do so in a passive and diversified manner – cryptocurrency funds could be the solution. However, you might need to think outside of the box in this respect – as cryptocurrency funds in the UK are still a work-in-progress. There are, however, several alternatives that might be worth considering – such as CryptoPortfolios or a DeFi Composite Index.
In this guide, we discuss top alternatives to the Best Cryptocurrency Funds UK so that you make an informed investment decision.
#1 Crypto Broker in the UK – eToro
Alternatives to the Best Cryptocurrency Funds UK – Choose a Broker
The brokers listed below offer top-rated alternatives to cryptocurrency funds in the UK.
- eToro – Invest in CryptoPortfolios
- Binance – DeFi Composite Index
- Capital.com – 0% Commission Crypto Index (Professional Clients Only)
For more information on each of the above brokers, scroll down to read our in-depth reviews.
How to Invest in the Best Cryptocurrency Fund UK – A Quick Guide For 2021
We found that the best cryptocurrency fund alternative in the UK comes in the shape of the eToro CryptoPortfolio. Through a single investment, you will gain exposure to a highly diversified basket of digital currencies.
Below you will find a quick step-by-step walkthrough of how to invest in this cryptocurrency fund.
- Step 1: Open a Professional Account with eToro – You will first need to register an account with eToro – which will require your name, home address, date of birth, and other personal details.
- Step 2: Upload Documents – The FCA regulates eToro – so you will need to provide the broker with a copy of your driver’s license or passport.
- Step 3: Deposit Funds – You can make a deposit into your newly created eToro account with a debit/credit card, Paypal, Skrill, or bank transfer.
- Step 4: Look for CryptoPortfolio – On the left-hand of the eToro dashboard, click on ‘Invest in CopyPortfolios. Next, look for and click on the ‘CryptoPortoflio’ option.
- Step 5: Complete Investment – The CryptoPortfolio comes with a minimum investment of $1,000 – which is about £730. As such, you can invest any amount of your choosing as long as it meets the stated minimum. Once you click on the ‘Invest’ button, eToro will allocate your funds to the CryptoPortfolio.
You can keep your CryptoPortfolio investment going for as long as you wish at no extra charge. When you are ready to cash out, you can do this from within your eToro portfolio.
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.
Best Cryptocurrency Fund UK – Alternative Markets to Consider
As cryptocurrency funds are yet to enter the UK marketplace, you will need to consider an alternative. The good news is that the alternatives that our research team has identified operate much the same as a traditional fund. This is because you will be able to invest in a basket of cryptocurrencies through a single trade – and the respective provider will rebalance the portfolio on a regular basis.
In the sections below, we review alternatives to the best cryptocurrency funds in the UK.
1. eToro – Overall Best Crypto Broker – Invest in CryptoPortfolios
After extensive research, we found that eToro offers the best cryptocurrency fund alternative in the UK market. In a nutshell, this comes in the form of the platform’s CryptoPortfolio – which is a passive investment service professionally managed by the eToro team. Through a single investment – you will gain exposure to a wide basket of digital assets. Each cryptocurrency is weighted based on various factors – such as its market capitalization and current performance.
Breaking the CryptoPortfolio down further, our research team found that Bitcoin and Cardano carry the largest weighting at just over 17% and 16% respectively. You then have the likes of Ethereum, IOTA, and Tron – each of which are weighted at just over 12%, 8%, and 7%. Other digital currencies held by the CryptoPortfolio include NEO, Stellar, Dash, Litecoin, Uniswap, Bitcoin Cash, and Zcash. There are also holdings in Ethereum Classic and Chainlink.
As you can see, the CryptoPortrfolio service offered by eToro is a superb alternative to a cryptocurrency fund – as you will be investing in a huge number of projects. Most importantly, you can invest in a 100% passive nature, as the eToro team will regularly add or remove digital currencies to ensure the portfolio aligns with the wider market sentiment. Plus, eToro will also adjust the weighting it gives to each CryptoPortfolio constituent – based on the performance of each token.
In terms of past performance, this is where the CryptoPortfolio really stands out. For instance, in the first 9 months of 2021, the CryptoPortfolio has generated gains of 174%. Annual gains in 2020 were also very impressive – with 12-month returns of 201%. Another popular attribute of the CryptoPortfolio is that there are no additional fees to invest. Unlike traditional funds, there is no requirement to pay eToro any commissions on the profits that the CryptoPortfolio service generates.
When it comes to the platform itself – eToro is a popular brokerage that is authorized and regulated by the FCA. It now serves over 20 million clients – many of which are UK-based. eToro allows you to buy, sell, and trade individual cryptocurrencies too – with the minimum starting at just $25 (about £18) per order. The CryptoPortfolio, on the other hand, does require a minimum investment of $1,000 (about £730). Nevertheless, eToro also offers thousands of commission-free stocks – which will allow you to diversify your crypto investments further.
- Professional client accounts
- Invest in cryptocurrencies on a spread-only basis
- Buy thousands of UK and international stocks at 0% commission
- Minimum investment per trade from just $25
- Supports debit/credit cards, e-wallets, and local bank transfers
- Regulated by the FCA, CySEC, and ASIC
- Used by over 20 million people
- Social and copy trading tools
- Perhaps too basic for technical traders
- No support for MT4 or MT5
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.
2. Binance – DeFi Composite Index
One of the best cryptocurrency funds UK that our team came across is that of the DeFi Composite Index offered by Binance. For those unaware, DeFi refers to decentralized finance and it is one of the fastest-growing sectors in the cryptocurrency industry. In fact, there are now hundreds of DeFi tokens active in the digital currency scene – with a collective market valuation worth billions of pounds. The key issue with the DeFi sector is that it is super-difficult to know which tokens to invest in – as success levels can and will vary quite considerably.
For example, while some DeFi tokens have witnessed gains of over 10,000% in 2021 alone – others have all but failed. Fortunately, this is where the Binance DeFi Composite Index can help – as the exchange gives you access to a highly diversified basket of decentralized finance tokens. In fact, the basket consists of dozens of top-performing Defi projects at various weights – which is based on market performance and valuation.
To give you an idea of which cryptocurrencies the Binance DeFi Composite Index holds, the largest holdings are given to Chainlink, Uniswap, Algorand, and Luna. Other holdings include the likes of Yearn.finance, Maker, Kava, AAVE, and dozens more. In terms of the provider itself, Binance is actually the largest cryptocurrency exchange globally – with trading volumes exceeding tens of billions of dollars on a daily basis. You will find low commissions at Binance – with the exchange charging just 0.10% per slide.
- Facilitates billions of dollars in daily trading volume
- Supports hundreds of digital asset pairs
- Near-instant deposits via debit/credit cards
- Trading commission starts at just 0.1% per slide
- Offers crypto savings accounts
- Ideal for both beginners and experienced traders alike
- Not all supported cryptocurrencies can be purchased with a debit/credit card
- No e-wallet deposits or withdrawals
at eToro, UK’s #1 Broker
Cryptoassets are highly volatile unregulated investment products. No EU investor protection
3. Capital.com – 0% Commission Crypto Index (Professional Clients Only)
Capital.com is an FCA-regulated brokerage site that offers spread betting markets and leveraged CFDs. As digital asset CFDs fall within the remit of cryptocurrency derivatives, Capital.com can only offer these financial instruments to UK residents that are classed as professional clients. This requires a stress test that includes a minimum of 1-year experience in the financial services industry. Nevertheless, if you are a professional client in the UK – then you might be interested in the Capital.com Crypto Index.
This comes in the shape of a CFD instrument that tracks the performance of five individual cryptocurrencies. This is inclusive of Bitcoin, Litecoin, XRP, Ethereum, and Bitcoin Cash. The Crypto Index is weighted based on daily trading volumes and market capitalization, so naturally – Bitcoin contributes the largest percentage. Unlike the other UK cryptocurrency fund alternatives we have discussed thus far, the Capital.com Crypto Index is more conducive for short-term trading strategies.
As a CFD instrument, you will have the option of going long or short on the Crypto Index – which means you can attempt to profit from both rising and falling prices. For example, if you are of the opinion that the wider cryptocurrency markets are likely to enter a bearish period, you can trade this viewpoint by placing a sell order on the Crypto Index. Additionally, this financial instrument can be traded with leverage – meaning that you can stake more on the Crypto Index than you have available in your Capital.com account.
We also like Capital.com because of its low-fee pricing structure. In a nutshell, the platform allows you to trade the Crypto Index at 0% commission alongside competitive spreads. If you are an experienced trader – which is likely to be the case if you are classed as a professional client, then you might decide to speculate on the Crypto Index via MetaTrader 4 (MT4). This will give you access to a wide range of analytical features – such as real-time pricing charts, technical indicators, and drawing tools.
- Top-rated spread betting and CFD broker
- Regulated by the FCA
- Minimum deposit just £20 (debit/credit cards and e-wallets)
- 0% commission on all markets
- Tight spread and no deposit/withdrawal fees
- Thousands of financial markets supported
- Advanced traders might find the native web platform too basic
- Minimum deposit of £250 on bank transfers
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.25% of retail investor accounts lose money when trading spread bets and/or CFDs with this provider.
How do the Best Cryptocurrency Funds UK Work?
As we have explained throughout this guide, UK-based cryptocurrency funds are yet to make an appearance. However, when you think about how traditional funds work, you will quickly learn that there are heaps of great alternatives to be considered. After all, the two main attractions of an investment fund is that you can trade passively and in a diversified manner.
These two metrics are certainly achieved with the eToro CryptoPortfolio – which we would argue is the best cryptocurrency fund alternative in the UK. To recap, you will place a single investment into the CryptoPortfolio – which is thereon managed by the eToro team. The portfolio consists of dozens of leading cryptocurrencies at various weights.
At any given time, the eToro team will readjust the weighting system of its CryptoPortfolio to ensure it aligns with the wider sentiment of the crypto asset scene. Furthermore, eToro will from time to time add or remove cryptocurrencies to the portfolio. Either way, you can sit back and let your money work for you when investing in the CryptoPortfolio. In fact, there is nothing for you to do until you are ready to cash out!
Is There a Cryptocurrency Fund UK?
There is no cryptocurrency fund available to UK residents in its truest form – as the FCA is yet to approve any of the applications it has since received. There are various cryptocurrency funds located overseas – however, these are not yet available to retail clients based in the UK.
You might, however, consider an alternative – such as the eToro CryptoPortfolio or Binance DeFi Index Composite. We review these two alternatives in great detail further up in this guide.
How to Choose the Best UK Cryptocurrency Fund Alternative?
This guide has reviewed the best UK cryptocurrency fund alternatives in the market right now. However, there are several others in this marketplace, so you need to do some research to find the best option for you and your financial goals.
To point you in the right direction – check out the core factors below before proceeding with an investment.
The Reputation of the Fund Provider
The first thing that you need to look for when searching for the best cryptocurrency funds in the UK is the reputation of the provider behind the financial instrument. For example, we have discussed the eToro CryptoPortfolio extensively in this guide for one core reason – the brokerage itself is authorized and regulated by the UK’s FCA.
This means that you can be 100% sure that you are using a credible provider when investing in cryptocurrencies. On the other hand, Binance – which offers an innovative DeFi Composite Index – is not regulated by the FCA. Sure, the exchange has over 100 million clients- but you do need to remember that you will be using an unlicensed platform.
Crypto Fund Constituents
The next thing to look for in your search for the best cryptocurrency funds in the UK is the number and type of digital assets within the provider’s portfolio. This is crucial, as this will determine which crypto-asset projects you are investing in.
For example, at the time of writing, the eToro CryptoPortfolio contains 16 cryptocurrencies of various shapes and sizes. This includes large-cap projects like Bitcoin, Ethereum, and Cardano – as well as several up-and-coming DeFi tokens like Uniswap, Chainlink, and Tezos.
If you have previously invested in traditional ETFs, then you might have a brief understanding of how fund managers ‘weigh’ their portfolios. For those unaware, this refers to the allocation that each individual asset within the portfolio is given.
- For instance, with the eToro CryptoPortfolio, the fund manager bases its weighting system on market capitalization and daily trading volume.
- Other factors are also taken into account – such as the recent performance of each token in terms of growth.
- These factors mean that well-performing cryptocurrencies with a large market capitalization – such as Bitcoin and Cardano, are given the largest portfolio weighing.
- At the other end of the scale, higher-risk projects like Uniswap and Chainlink contribute much less.
Of course, digital asset prices and performance will change throughout the day, so the best cryptocurrency funds in the UK will ensure that their portfolios are regularly rebalanced.
Fees and Commissions
When you invest in a traditional fund or ETF, you will be accustomed to several fees. This can include a commission to purchase or sell the investment, as well as ongoing maintenance fees.
Some fund providers even charge a performance fee – which is based on the amount of profit that they generate for investors. These fees can also come into play when investing in a cryptocurrency fund – so it’s important that you assess the provider’s pricing structure before proceeding.
How to Invest in the Best Cryptocurrency Fund UK? Detailed Walkthrough
If you like the sound of the eToro CryptoPortfolio – which we found to be the best cryptocurrency fund alternative in the UK, we are now going to walk you through the investment process step-by-step. By following the tutorial below, you should complete the entire process in less than five minutes!
Step 1: Open an eToro Broker Account
The first step is to visit the eToro website and look for the ‘Join Now’ button. Once you click it, a registration form will appear on your screen – much like the image below.
This will collect some personal information from you – such as your name, date of birth, and home address. You will also need to provide your email address and mobile number.
Cryptoassets are highly volatile unregulated investment products. 67% of retail investor accounts lose money when trading CFDs with this provider.
Step 2: Upload KYC Documents
As an FCA-regulated broker, eToro will ask you to upload a copy of your passport or driver’s license. This ensures that the broker remains compliant with the FCA’s rules on anti-money laundering measures.
Step 3: Deposit Funds
eToro supports a wide range of payment methods, such as:
- Debit Cards
- Credit Cards
- E-Wallets – Including Paypal and Skrill
- UK Bank Transfers
The minimum deposit is just $200 at eToro. But, in order to invest in the eToro CryptoPortfolio – you need to add at least $1,000 to your account. There will be a very small FX fee of 0.5% when you deposit funds at eToro.
Step 4: Search for CryptoPortfolio
Now that you have a funded eToro account, you can proceed to invest in the CryptoPortfolio. To go straight to the relevant investment page, simply enter ‘CryptoPortfolio’ into the search box.
You will then need to click on the search result once it loads – like in the image above.
Step 5: Place CryptoPortfolio Investment
The final step is to choose the amount of money that you wish to invest in the eToro CryptoPortfolio. As noted above, the minimum investment is $1,000.
To complete your investment, simply click on the ‘Invest’ button. And that it’s – you’ve just invested in the best cryptocurrency fund alternative available in the UK!
Best Cryptocurrency Fund UK – Conclusion
This guide has explained that the UK is yet to introduce any cryptocurrency funds – at least for retail investor clients. The good news is that we have identified several alternatives – all of which operate in a very similar nature to traditional funds.
For example, the eToro CryptoPortfolio allows you to invest in 16 digital currencies through a single trade – with the portfolio weighted based on market capitalization, daily trading volume, and pricing performance. Best of all, the CryptoPortfolio is a passive investment vehicle- as everything is managed in-house by the eToro team.