ETF vs Crypto: What the Data Says
Published: April 13, 2025 | By: WhatIfInvested.com Team
In recent years, retail and institutional investors alike have turned their attention toward two major asset classes: ETFs and cryptocurrencies. Each offers a unique path to portfolio growth, but which one delivers the best return for your risk? In this deep-dive article, we’ll analyze over a decade of data to uncover the strengths, weaknesses, and ideal use cases of both ETFs and crypto assets.
Introduction to ETFs and crypto
ETFs (Exchange-Traded Funds) are baskets of stocks, bonds, or other securities, designed to track indexes or specific sectors. They are known for their diversification, low fees, and stability.
Cryptocurrencies like Bitcoin and Ethereum are digital assets built on blockchain technology. While volatile, they offer unmatched growth potential and decentralization.
Historical returns: a 10-year comparison
Let’s compare the performance of a few key ETFs with major cryptocurrencies between 2015 and 2025.
- SPY (S&P 500 ETF): Approx. 11% annualized return
- QQQ (Nasdaq-100 ETF): Approx. 15% annualized return
- VTI (Total US Market): Approx. 10.5% annualized return
- Bitcoin: Over 100% annualized return (with major volatility)
- Ethereum: Even higher annualized gains in early years
Note: Crypto has experienced more frequent and deeper drawdowns compared to ETFs.
Volatility and risk-adjusted returns
Crypto’s volatility is both its charm and its curse. Standard deviation of monthly returns is much higher for Bitcoin and Ethereum than for any ETF.
Sharpe ratios (return per unit of risk):
- SPY: ~0.7
- Bitcoin: ~1.3 (despite volatility)
- Ethereum: ~1.5 (early years skewed results)
Diversification benefits
ETFs offer natural diversification. With one ETF like VTI, you can own over 3,000 companies. Crypto, on the other hand, is often correlated within itself (Bitcoin, Ethereum, altcoins tend to move together).
Use cases and portfolio roles
- ETFs: Ideal for retirement accounts, long-term savings, and passive investing.
- Crypto: Better suited for high-growth exposure, speculation, and portfolio asymmetry.
Fees and accessibility
ETFs generally have extremely low fees (often below 0.1%). Crypto exchanges vary, with some charging 0.5% or more per transaction, plus gas fees for DeFi.
Regulation and security
ETFs are tightly regulated. Crypto is still evolving with uncertain global regulation. Security depends on custody—wallets, exchanges, cold storage.
Case study: investing $1,000 in 2015
- $1,000 in SPY: ~$2,850 in 2025
- $1,000 in QQQ: ~$4,100 in 2025
- $1,000 in Bitcoin: ~$250,000+
- $1,000 in Ethereum (if available): >$300,000
Try the investment simulator
Compare your own strategies and see how ETFs and crypto assets perform using our interactive investment simulator.
What the data tells us
Data supports the idea that crypto offers superior upside but with extreme volatility and regulatory risk. ETFs, while slower in growth, provide stability, safety, and predictability.
Which should you choose?
For most investors, a combination works best. Use ETFs for your base (core) portfolio, and crypto as a satellite for high growth potential. This strategy balances risk and reward efficiently.
Expert insights
Most financial advisors now recommend up to 5–10% of a portfolio in crypto for younger investors or those with higher risk tolerance, with the remainder in diversified ETFs.
FAQ
Is crypto a good long-term investment?
Yes, if you can handle the volatility and believe in the technology.
Can I hold ETFs and crypto in the same account?
Yes, with modern platforms like Wealthsimple or Interactive Brokers, you can hold both.
Should I replace ETFs with crypto?
No. Crypto should complement ETFs, not replace them entirely.
What are the risks of crypto?
Volatility, hacks, regulatory bans, and market sentiment shifts.
Want to see the numbers for yourself?
Use our comparison tool and visualize how crypto stacks up against ETFs over time with real data.
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