Spot Crypto vs ETFs vs Futures: What’s the difference?

Cryptocurrencies have come a long way since the early days of Bitcoin and Ethereum. By some estimates, more than 25,000 cryptocurrencies exist today, offering a wide range of ways to gain exposure to the DeFi market. Whether you want to own crypto directly, access it through a traditional investment account, or trade on short-term price movements, there are multiple paths to gaining exposure to this fast-evolving space. But with more choice comes added complexity—and a greater need to understand how each method works.

Whether you're new to crypto or looking to diversify your approach, it's important to understand the three most common ways to gain exposure: spot crypto trading, crypto ETFs, and crypto futures. Spot crypto offers direct ownership and long-term utility. ETFs provide simplified access with built-in security. Futures deliver powerful tools for active traders seeking leverage and flexibility. Each approach offers a different mix of access, risk, and control.

Understanding the pros and cons of each can help you choose the right path—or blend of paths—for your crypto strategy. In this article, we’ll break down how each method works, what makes them unique, and which type of investor or trader they may be best suited for.

What's spot crypto trading?

Spot crypto trading is the most straightforward way to buy and sell digital assets. When you trade on the spot market, you're purchasing the actual cryptocurrency—and you own it outright. For example, if you buy 1 Bitcoin at $50,000 and hold it, you’ll gain $5,000 if the price rises to $55,000—or lose $10,000 if it drops to $40,000, and so on. Spot trading works much like trading other assets: the goal is to buy low and sell high.

The term “spot market” refers to a marketplace where financial assets are bought and sold “on the spot” for immediate delivery at the current price—known as the spot price. Transactions are recorded on the blockchain, transferring ownership. In crypto, this means you either take direct ownership of your coins or tokens in a private wallet, or they’re held in custody by your broker or exchange—often in an omnibus wallet that pools assets for multiple customers.

With spot crypto, there’s no leverage involved—you pay the full amount up front. Spot ownership allows you to transfer, stake (if available), or use your crypto for payments, but it doesn’t allow for short-selling. Fees can include trading, withdrawal, and network charges, among others. And if you choose to self-custody your crypto, strong security practices like using secure wallets and enabling two-factor authentication are essential.

*Note: Robinhood holds the majority of your crypto in cold storage, disconnected from the internet, and carries crime insurance against theft and cybersecurity breaches. You can transfer your crypto to an external self-custody wallet, like Robinhood Wallet, to have full control over your assets and private keys. For more information about trading crypto on Robinhood, click here.

A crypto ETF (exchange-traded fund) is one of the most accessible ways to gain exposure to cryptocurrencies—without owning the underlying coins. Instead of buying and storing crypto, you can buy shares of an ETF through a traditional brokerage account. If the price of the underlying coin rises, the ETF’s value typically increases too. If it falls, the ETF will lose value as well.

Crypto ETFs are designed to track the performance of a digital asset, for example, Bitcoin, Ethereum, etc. Some ETFs hold the actual coins (called spot ETFs), while others hold futures contracts tied to crypto prices. Either way, you’re buying shares in a fund—not the asset itself. ETFs trade on stock exchanges and can be held in most brokerage and retirement accounts.

Buying a crypto ETF is much like buying any stock or mutual fund. You can use market, limit, or stop orders, and once filled, the ETF shares appear in your brokerage account—no wallets or blockchain knowledge needed. This makes ETFs especially appealing for investors who want crypto exposure without managing the technical details.

Of course, you don’t get the benefits of ownership—you can’t transfer, stake, or spend the coins. And there are other trade-offs to consider like tracking error. Tracking error can cause the ETF’s price to diverge from the underlying crypto, and management fees may eat into your returns. That said, ETFs are regulated by financial authorities like the SEC, and they trade during normal market hours, providing a familiar experience.

As the crypto space continues to evolve, some ETFs have taken a broader approach. One example is a thematic ETF, which invests in companies connected to the crypto and blockchain ecosystem—such as exchanges, miners, or payment networks. This type of ETF can offer indirect exposure to crypto’s growth without holding the underlying assets themselves.

Crypto futures are financial contracts that let you speculate on or hedge against the future price of a cryptocurrency—without owning the underlying asset. For example, if you go long (buy) a Micro Bitcoin futures contract at $50,000 and the price rises to $55,000, you’d profit based on the terms of the contract. Since one Micro Bitcoin contract represents 0.1 bitcoin, a 5,000-point move would result in a $500 gain. Likewise, if the price drops by 5,000 points, you’d incur a $500 loss.

Futures have unique characteristics that make them different from spot trading or ETFs. For example, futures contracts have expiration dates and are marked to market daily, meaning profits and losses are settled at the end of each trading day. However, if the market moves against your position, you could face margin calls or even forced liquidation, so keeping a close eye on your account is essential. Also, unlike spot crypto, crypto futures trade on CFTC regulated futures exchanges like the Chicago Mercantile Exchange (CME) and are cash-settled—meaning no crypto changes hands at expiration.

Futures are also leveraged, allowing you to control a larger position with a relatively small amount of upfront capital. While leverage can amplify gains, it also magnifies losses and increases the risk of losing more than your initial investment. That’s why strong risk management—including stop-loss orders, monitoring margin requirements, and sizing positions appropriately—is critical when trading futures.

Similar to crypto ETFs, you don’t own the actual cryptocurrency when trading futures—so there’s no need for wallets or direct interaction with the blockchain. While this reduces custody risks, it introduces added complexity from a trading and management perspective. Futures trading requires active monitoring, a solid understanding of leverage, and a high tolerance for volatility. Trading costs may also include commissions and exchange fees. In short, crypto futures are best suited for experienced traders who seek greater flexibility and are confident in managing risk effectively.

To learn more about crypto futures, click here.

Ultimately, choosing between spot crypto, crypto ETFs, and crypto futures depends on your goals, risk tolerance, and how actively you want to manage your investments. Each method has its own strengths and trade-offs. As with any trading, you can use technical or fundamental analysis to guide your decisions and place market, limit, or stop orders to manage trades.

Spot crypto may be the right fit if you want to own the asset directly and are in it for the long term. It gives you full control and access to staking (if allowed by your broker) or using crypto for payments. However, it may come with custody responsibilities and doesn’t offer built-in leverage or tools for shorting. On the plus side, crypto trades 24/7, giving you around-the-clock access to the market.

Crypto ETFs are ideal if you want a more passive and familiar way to invest. They’re easy to access through traditional brokerage accounts, can be held in tax-advantaged accounts like IRAs, and follow standard U.S. market hours. They’re also regulated, which may appeal to some investors. That said, you don’t actually own the crypto, and ETF performance can lag the underlying asset due to fees and tracking error.

Crypto futures are built for active traders looking to speculate on price movements or to hedge risk of owning the actual coin. They offer leverage, the ability to short, and support for advanced strategies like hedging or spread trading. These contracts trade nearly 24 hours a day, five days a week on regulated exchanges, providing ample opportunities to enter or exit positions. Crypto futures markets are also typically deep and liquid, especially for contracts like Bitcoin and Ethereum on the CME. However, they carry higher complexity, basis risk, and are subject to margin calls and forced liquidations. Futures trading is a tool for those with experience and a well-defined risk management plan.

Of course, you don’t have to pick just one. Many investors combine approaches—holding spot crypto or ETFs as a long-term core position, while using futures to hedge downside risk or capitalize on short-term moves. This hybrid strategy can help balance long-term exposure with short-term flexibility.

Lastly, while futures offer unique advantages, they also come with significant risks and trade-offs and are not appropriate for everyone. Leverage, while powerful, can amplify both gains and losses—potentially exceeding your initial investment. Futures don’t represent ownership like spot crypto does, and trading them requires understanding complex contract specs, making the learning curve steeper.

When it comes to trading costs, there are key differences between the three. Spot crypto requires the full amount of cash upfront—you pay 100% of the asset’s value to own it outright. Crypto ETFs can be bought using cash or margin, depending on your account type, offering some financing flexibility. Futures require you to post initial margin, typically a small percentage of the contract’s notional value, which enables leverage—but also means your position is more sensitive to price swings. This means you can potentially lose more than your initial margin.

It’s also important to consider tax treatment. Spot crypto is treated as property by the IRS, meaning each sale or trade can trigger capital gains taxes. Crypto ETFs follow standard equity tax rules, and any gains or losses are reported accordingly. U.S.-listed futures, on the other hand, offer a special 60/40 tax treatment—with 60% of gains taxed as long-term capital gains and 40% as short-term, regardless of holding period. This can be favorable for some active traders.

One final note: pattern day trading (PDT) rules apply to margin accounts when trading crypto ETFs, as they do with stocks. However, spot crypto and futures are generally not subject to PDT restrictions, offering more flexibility for frequent traders—especially those managing short-term positions.

Each approach to crypto—spot, ETFs, and futures—offers a different blend of access, risk, and control. Spot crypto gives you direct ownership and utility. ETFs provide a simple entry point through traditional brokerage accounts. Futures offer powerful tools for speculation and hedging. Understanding how these options differ can help you choose the strategy—or mix of strategies—that fits your goals and risk tolerance.

Prior to trading virtual currency Futures products, please review the NFA Investor Advisory & CFTC Advisory providing more information on these potentially significant risks.