August 5, 2024, I made a decision that my friends thought was crazy: I converted 30% of my ETH position (about 300,000 RMB) entirely into spot Ethereum ETF. At that time, ETH was around $2,420, and my friends called me "putting pants on to fart" (a redundant act), but I had my own calculations — mnemonic phrases, private keys, exchange hacks, I was really fed up with these nightmares.
 
More than a year has passed, and my ETF account shows a floating profit of 58.7% (ETH current price $3,880). Although it's about 5% less than holding coins directly (mainly due to the 0.25% annual fee + tracking error), my mom can now buy ETH by herself. I call this operation "trading 5% returns for family peace of mind".

1. What exactly is a spot ETF? In one sentence: The fund company holds ETH for you

The spot Ethereum ETF is a fund established by large financial institutions (such as BlackRock and Fidelity) that directly purchases and holds real ETH, then divides it into share-like units sold to investors.
 
Super simple operation:
 
  • Open your stock account (Xueqiu / Futu / Tiger)
  • Search for "ETHA" (BlackRock) or "FETH" (Fidelity) or "3226.HK" (Hong Kong Samsung)
  • Place an order like buying stocks, T+0 trading, no Gas fees, instant settlement
 
After the market closes every day, the fund company discloses the holding addresses, which you can verify directly on Etherscan. This isn't vaporware; there's real ETH sitting in Coinbase or Fidelity's cold wallets behind it.

2. Spot vs. Futures ETF: This is the easiest pitfall for beginners!

At the end of 2024, a buddy of mine heard that "Ethereum ETF" was hot and casually bought one with a code starting with "F" (futures type). When ETH dropped from $4,200 to $2,300, his ETF fell 47% — worse than holding coins directly.
 
Remember this lifesaving mantra:
 
  • Spot ETF: Codes like ETHA, FETH, 3226.HK, directly holds real ETH, small tracking error, suitable for long-term holding
  • Futures ETF: Codes often include "Futures" or "F", invests in ETH futures contracts, affected by Contango (positive premium), incurring additional 10-15% annualized losses over the long term
 
How to quickly distinguish?
 
  • US stocks: ETHA, ETHW, FETH, BITW (spot) vs. those with "F" are basically futures
  • HK stocks: 3226.HK, 3046.HK, 9088.HK are all officially certified spot, buy with confidence

3. Why did I choose ETF over direct holding? These three pain points are all solved by ETF

1️⃣ "Mnemonic Hell" completely disappears

Last year, my mom wanted to learn investing, and when I taught her to set up a wallet, she lost 3 pieces of paper just copying the mnemonic phrase, and finally said: "Forget it, I'll just buy bank wealth management products." Now, under my guidance, she bought 3226.HK in her own stock account in 5 minutes, no longer worrying about "losing the mnemonic means losing the money".

2️⃣ Exchange security? Doesn't exist

In 2021, I lost 0.5 ETH on some exchange (about $1,800 at the time), and reporting to the police was useless. ETFs are backed by regulators, with funds stored in top custodian banks, and theft risk is almost zero.

3️⃣ Liquidity + Trading Convenience Doubled

  • No Gas fees: No more paying hundreds of dollars in "toll fees" for transfers
  • T+0 trading: Buy and sell anytime, no need to wait for block confirmation
  • Price transparency: Real-time quotes like stocks, no slippage

4. Who is it suitable for? Who is it not? (My allocation logic)

Suitable for the ETF crowd:
 
  • Traditional investors who don't want to touch crypto wallets at all (my mom, uncle, college classmates)
  • Seniors over 50 (have cognitive barriers to blockchain technology but want to allocate to digital assets)
  • People who only have stock accounts and don't want to open crypto exchanges
  • Conservative investors willing to allocate only 5-20% of assets to cryptocurrency
 
Not suitable for the ETF crowd:
 
  • Deep DeFi users (need staking, lending, governance participation)
  • Aggressive investors pursuing maximum returns (ETFs have fixed annual fees, which eat into returns long-term)
  • Believers who want to go all-in on ETH (large inflows/outflows to ETFs may have liquidity issues)
 
My current positions:
 
  • 30% spot ETF (the "safe position" for family to see, never touch)
  • 45% direct holding (in Ledger + multisig, for staking and DeFi participation)
  • 20% other crypto assets (LST, quality Altcoins)
  • 5% cash

5. Practical tips for investing in ETFs in 2025 (lessons from blood and tears)

1️⃣ Fees are the first indicator

  • ETHA and FETH annual fee 0.25%, best value for money
  • BITW annual fee 2.5%, ridiculously expensive; avoid unless you only have a US stock account and no other options
  • Among HK stock ETFs, 3226.HK (Samsung) has the best liquidity and smallest premium

2️⃣ Avoid premium traps

HK stock ETFs sometimes show 5-8% premiums (price above NAV); better to miss out than chase high premiums. Wait for a discount or par to enter. I usually set a -0.5% discount alert and buy when it hits.

3️⃣ Dollar-cost averaging is the best strategy for retail investors

I set up automatic buys for 3226.HK on the 15th of every month, regardless of price fluctuations, sticking to fixed-amount investments. Over more than a year, my holding cost is 12% lower than friends who chase highs and lows.

4️⃣ Taxes must be calculated clearly

  • US ETFs: Capital gains tax on sales (rate varies by region)
  • HK ETFs: Currently no tax for mainland residents (policy may change anytime)
  • Remember: The wool comes from the sheep; be sure to factor in taxes before investing

6. Finally, a heartfelt word

Spot Ethereum ETF isn't some "more advanced investment method"; it just lowers the **"hell-level" crypto investment threshold to "beginner village level"**.
 
You still have to bear ETH's inherent volatility risk. If ETH drops back to $1,500 in 2026, the ETF will halve too. But it gives ordinary investors, those in their 50s and 60s, and people scared off by mnemonic phrases, the opportunity to participate in the digital economy — a significance far greater than earning an extra 5%.
 
If you're still hesitating about entering but really can't get past the wallet hurdle — open a stock account, search for "ETHA" or "3226.HK", and buy 1 lot to try. When you see real "ETH" in your account, and the operation is as simple as buying Maotai stock, you'll come back to thank me.
 
(By the way, have you ever been deterred by mnemonic phrases or high Gas fees? Chat in the comments; let me know I'm not alone 😂)