ETF Methodology

How Pledge scores Bitcoin ETFs.

This is the research-desk layer behind the ETF comparison page. It explains how Pledge scores brokerage-traded Bitcoin exposure without confusing an ETF share for Bitcoin custody.

Composite scores range from 0 to 10. 8 weighted factors sum to 100%. Data checked Jun 20, 2026. Scores are rounded to 1 decimal place.

Compare ETFs All methodologies

Scoring factors

Each factor is weighted and scored 0-10 before blending into a composite.

Total weight

100%

Factor weights sum to 100%. No hidden adjustments.

Source types

Official pages, SEC filings, market data, and fact sheets.

Limitations

Documented

Fee waiver temporariness, custodian scoring bias, and point-in-time data caveats are listed explicitly.

Research desk snapshot

The ETF model starts with the investor's actual tradeoff: fee drag, execution depth, and no key control.

The comparison page now reads like an institutional ETF worksheet. This methodology explains the same field order so a reader can see why the top row wins and where the score deliberately refuses to overclaim.

Tracked funds

U.S. spot Bitcoin ETFs in the current comparison set.

Gross fee range

15–150 bps

Waivers are read separately so temporary launch pricing does not hide the durable fee.

Largest fund

IBIT

$48.2B AUM in the checked snapshot.

Fee drag

Use the effective fee, then read the waiver language.

The score gives temporary fee waivers credit only for the current snapshot. A waived fund can become less attractive once the gross sponsor fee starts compounding.

Liquidity

Execution depth can beat a small fee difference.

Average dollar volume, spreads, and market-maker depth matter because ETF investors enter and exit through brokerage markets, not on-chain redemption.

Custody

A named institutional custodian is not self-custody.

Custodian quality is scored as an ETF operating risk. It does not mean the shareholder controls keys, can withdraw bitcoin, or has bearer ownership.

Fit

The output is a research shortlist, not a buy signal.

A high score means the fund is cheaper, deeper, and cleaner on disclosed inputs. It says nothing about whether bitcoin exposure belongs in a portfolio.

Scoring factors

Eight weighted factors determine each ETF's composite score.

Every factor is scored 0-10 and then multiplied by its weight. The weighted average is rounded to 1 decimal place. The 10/10 endpoint is a benchmark, not a normal expectation for every strong ETF.

What 10/10 means

A perfect ETF score would be cheap, liquid, tightly tracked, and structurally boring.

Current spot Bitcoin ETFs can be excellent without reaching 10/10. A fund can have world-class liquidity and issuer quality while still losing points for a 25 bps fee, Coinbase custody concentration, or smaller AUM. That is the point of the score: show the tradeoff instead of pretending one large brand is perfect.

25% weight>= 25%

Expense Ratio

The annual sponsor fee charged by the ETF, expressed in basis points. Lower fees compound meaningfully over multi-year holding periods, so this is the highest-weighted factor in the model.

10/10 standard

A 10/10 ETF on fees would sit at the durable market floor of 15 bps — no spot Bitcoin ETF charges less on a durable basis — with any temporary fee waiver counted only while it is actually in effect, not after it expires.

Evidence checked

Official ETF product pages and prospectus fee disclosures

SEC filing fee tables and supplemental fee notices

Fee waiver terms, thresholds, and expiry dates when disclosed

Scoring bands

10: 0-15 bps (durable market floor; includes an active waiver to 0 bps)

9: 16-19 bps

8: 20-22 bps

7: 23-25 bps

5: 26-50 bps

3: 51-100 bps

1: 101-150 bps

0: >150 bps

20% weight15%

Liquidity

The trading liquidity of the ETF, measured by average daily dollar volume and median bid-ask spread. Higher volume and tighter spreads reduce execution costs for investors buying or selling shares.

10/10 standard

A 10/10 ETF would trade with deep daily volume, tight spreads, resilient market-maker support, and enough depth for larger orders without meaningful execution drag.

Evidence checked

Average daily dollar volume from market-data providers and issuer pages

Median bid-ask spread from ETF product pages and trading analytics

Options market depth and creation/redemption activity where relevant

Scoring bands

10: >$1B avg daily volume and <2 bps spread

7: $100M-$1B avg daily volume and <4 bps spread

4: $10M-$100M avg daily volume

2: $1M-$10M avg daily volume

1: <$1M avg daily volume

12% weight<= 10%

Tracking Error

The deviation between the ETF NAV and the spot bitcoin price over time, measured in basis points. Lower tracking error means the ETF more closely mirrors actual bitcoin performance.

10/10 standard

A 10/10 ETF would track spot bitcoin tightly through normal market conditions, with minimal premium or discount and clear NAV mechanics.

Evidence checked

Issuer-published tracking difference and tracking error data

Premium/discount history from ETF product pages

SEC filing risk disclosures on NAV calculation methodology

Scoring bands

10: <2 bps tracking error

8: 2-4 bps tracking error

6: 4-6 bps tracking error

4: 6-10 bps tracking error

2: 10-20 bps tracking error

0: >20 bps tracking error

10% weight<= 10%

Price / NAV Tracking

The market-price premium or discount to NAV — how efficiently arbitrage keeps the tradable price aligned with underlying bitcoin value. Unlike tracking error (NAV vs spot), this measures the secondary-market pricing gap an investor actually pays.

10/10 standard

A 10/10 ETF would show a median premium/discount under 0.5% sustained over 90+ days, with tight AP arbitrage keeping the market price pinned to NAV through volatility.

Evidence checked

Issuer-published premium/discount history tables

Daily NAV vs market-price close from market-data providers

SEC filing disclosures on premium/discount patterns

Scoring bands

10: <0.05% median |premium/discount| AND >$1B avg daily volume (exceptional AP arbitrage)

9: <0.10% median |premium/discount| with substantial trading volume

8: <0.10% |premium/discount| with moderate volume, or <0.25% with high volume

7: <0.25% |premium/discount| but low volume limits verification

6: 0.25-0.75% median |premium/discount|

5: 0.75-1.5% median |premium/discount|, or estimated/placeholder tracking data

4: Estimated data where premium/discount reads as 0 but volume is negligible

2: >1.5% median |premium/discount|

13% weight<= 10%

AUM

The total assets under management in the ETF. Larger AUM signals stronger institutional adoption, deeper authorized-participant engagement, and lower fund-closure risk.

10/10 standard

A 10/10 ETF would have category-leading AUM large enough to reduce closure risk, support deep creation/redemption activity, and attract institutional execution depth.

Evidence checked

Official ETF product pages and daily NAV disclosures

Market-data providers for cross-checking AUM figures

SEC periodic reports showing shares outstanding and net asset value

Scoring bands

10: >$50B AUM

7: $5B-$50B AUM

4: $500M-$5B AUM

2: $100M-$500M AUM

1: <$100M AUM

8% weight<= 10%

Issuer Credibility

The scale, reputation, and ETF operational track record of the issuing firm. BlackRock and Fidelity carry deeper institutional relationships and broader ETF distribution than newer or niche sponsors.

10/10 standard

A 10/10 ETF issuer would combine first-tier ETF operations, broad distribution, strong compliance history, and enough capital-markets support to manage stressed trading conditions.

Evidence checked

Issuer total ETF AUM and market share

Public company operating history and regulatory standing

ETF product count, capital-markets support, and institutional client base

Scoring bands

10: Tier-1 TradFi issuer (BlackRock, Fidelity-scale)

8: Tier-1 TradFi issuer with smaller crypto ETF presence

6: Established crypto-native or specialized ETF issuer

4: Smaller or newer crypto-native ETF issuer

2: Niche issuer with limited ETF operating history

7% weight<= 10%

Fee Transparency

The clarity and completeness of the ETF fee disclosure — whether waivers, fee caps, and expense ratios are prominently presented with clear expiration terms. Distinct from the fee level itself: a high-fee fund can be fully transparent, and a low-fee fund can obscure waiver mechanics.

10/10 standard

A 10/10 fund would publish a clear fee table in the prospectus, disclose all waiver terms and expiration dates on the product page, and report the effective fee prominently in fact sheets — leaving no ambiguity about what the investor actually pays.

Evidence checked

Prospectus fee table and supplemental fee notices

Product-page fee disclosure and waiver-term visibility

Fact-sheet fee reporting and gross-vs-net expense clarity

Scoring bands

10: Prospectus + daily holdings + gross/net fee + waiver terms with expiry all on product page

9: Prospectus + monthly holdings + clear gross/net fee on product page

8: Prospectus + product page shows fee and waiver terms

7: Prospectus + product page shows fee but holdings or waiver detail limited

6: Fee in prospectus but product page detail sparse

4: Fee structure requires SEC filing research to understand fully

5% weight<= 10%

Custodian Quality

The quality and concentration profile of the bitcoin custodian arrangement used by the ETF. The score gives credit for qualified-custodian status, control maturity, segregation, and multi-custodian diversification rather than treating the most common custodian as automatically best.

10/10 standard

A 10/10 custody setup would use mature qualified custody with clear segregation, strong control disclosures, and reduced single-custodian concentration where practical.

Evidence checked

Prospectus and SEC filing custodian disclosures

Official custodian identity, trust charter status, and insurance arrangements

Single-custodian and multi-custodian structures where disclosed

Scoring bands

10: Multiple qualified custodians with clear segregation and institutional controls

8: Mature single qualified custodian or issuer-affiliated institutional custodian with strong controls

6: Qualified custodian with less public control, insurance, or operating detail

4: Custodian arrangement is disclosed but concentration, controls, or legal structure are thin

2: Custodian with limited public trust or audit track record

Composite formula

The overall score is a weighted average.

No machine learning, no secret sauce. Each factor score (0-10) is multiplied by its weight, the results are added together, and the final score is rounded to 1 decimal place.

Overall = sum(factor_score * factor_weight) rounded to 1 decimal place

Expense Ratio: score * 25%

Liquidity: score * 20%

Tracking Error: score * 12%

Price / NAV Tracking: score * 10%

AUM: score * 13%

Issuer Credibility: score * 8%

Fee Transparency: score * 7%

Custodian Quality: score * 5%

Example (IBIT):Expense Ratio 6.0×25% + Liquidity 10.0×20% + Tracking Error 8.0×12% + Price/NAV Tracking 10.0×10% + AUM 10.0×13% + Issuer Credibility 10.0×8% + Fee Transparency 10.0×7% + Custodian Quality 8.0×5% = 8.7

Data sources

Every data point is traced back to a named source.

Primary sources are official ETF product pages, SEC filings, and issuer fact sheets. Secondary market-data providers are used as cross-checks.

Data source

Official ETF product pages

Issuer-hosted ETF pages used for fund name, AUM, NAV, market price, premium/discount, shares outstanding, bitcoin per share, expense ratio, fee waivers, and custodian disclosures.

Data source

SEC filings and registration statements

Public SEC filings including prospectuses, annual and semi-annual reports, and 8-K filings used for fee structures, risk factors, custody arrangements, and creation/redemption mechanics.

Data source

Market-data providers

StockAnalysis, Yahoo Finance, and similar delayed-data providers used to cross-check AUM, shares outstanding, trading volume, prices, and expense ratios.

Data source

Issuer fact sheets and press releases

Official fact sheets, fee waiver announcements, and launch materials used to confirm sponsor fee terms, waiver thresholds, and product positioning.

What moves a score

Scores change when the underlying data changes or when the methodology is corrected.

These are the conditions that trigger a score review.

Review trigger

Expense ratio changes

A new fee schedule, fee waiver introduction, fee waiver expiry, or supplemental fee notice can move the expense ratio score.

Review trigger

Liquidity materially changes

Sustained volume increases, spread compression, or a material decline in daily trading can move the liquidity score.

Review trigger

Tracking error shifts

Persistent premium or discount widening, NAV calculation methodology changes, or operational issues can move the tracking error score.

Review trigger

AUM thresholds are crossed

An ETF crossing above or below $500M, $5B, or $50B AUM thresholds triggers a scoring band change.

Review trigger

Custodian arrangements change

A new custodian appointment, custodian termination, or material change in custody insurance can move the custodian quality score.

Review trigger

The methodology is corrected

If a scoring rule or weighting is adjusted, the change is noted on this page with an explanation of why.

Limitations

What this methodology does not capture.

A scoring model is only as good as its inputs. These are the known gaps, documented here rather than averaged away.

AUM, NAV, premium/discount, and trading volume are point-in-time snapshots that change continuously during and after trading hours.

Fee waivers are temporary and expire on disclosed dates; the scoring model uses the effective fee as of the data date, not the post-waiver fee.

Tracking error is measured from issuer-published data and may differ from third-party analytics calculated over different periods.

Custodian quality is 5% of the ETF score because U.S. spot bitcoin ETFs disclose institutional custody, but concentration and control differences still matter. Price/NAV tracking and fee transparency add structural signal beyond the raw expense ratio.

Issuer credibility is a proxy scale measure, not a judgment on future product performance, regulatory compliance, or fiduciary conduct.

All ETF shares represent indirect bitcoin exposure through a trust structure; retail investors cannot redeem shares for bitcoin directly.

Use these pages alongside the methodology.

The methodology connects to the ETF comparison page, other vertical methodology pages, and the disclosure policy.

Compare

Compare BTC ETFs

Side-by-side comparison of U.S. spot Bitcoin ETFs with weighted scores, rubrics, and product notes.

Custody

Custody methodology

How Pledge reviews Bitcoin custody and control models: key control, legal protections, recovery, insurance, and concentration.

Digital Credit

Digital Credit methodology

How Pledge reviews Bitcoin-linked dollars: backing source, redemption path, peg design, yield source, and transparency.

Wallets

Wallet methodology

How Pledge evaluates Bitcoin wallets by recovery safety, key control, ease of use, and evidence quality — tracked, not scored.

Disclosure

Read the disclosure policy

Commercial relationships, affiliate fees, and how monetization stays separate from rankings.

Not investment advice. Pledge provides comparison data for educational purposes only. Scores do not recommend buying, selling, or holding any ETF, stock, or digital asset.

Past performance does not guarantee future results. ETF NAV, premium/discount, and tracking error change continuously.

Review each fund's current prospectus. Expense ratios, fee waivers, AUM, and custodian arrangements can change after a score is published.

Affiliate disclosure. Pledge currently does not earn affiliate or referral fees from any product listed on this page. If that changes, monetized links will carry a clear ↗ AFFILIATE marker.

Also Compare

BTC-Backed Loans BTC ETFs BTC Custody Digital Credit Wallets

How Pledge scores Bitcoin ETFs.

This is the research-desk layer behind the ETF comparison page. It explains how Pledge scores brokerage-traded Bitcoin exposure without confusing an ETF share for Bitcoin custody.

Composite scores range from 0 to 10. 8 weighted factors sum to 100%. Data checked Jun 20, 2026. Scores are rounded to 1 decimal place.

Scoring factors

Each factor is weighted and scored 0-10 before blending into a composite.

Total weight

100%

Factor weights sum to 100%. No hidden adjustments.

Source types

Official pages, SEC filings, market data, and fact sheets.

Limitations

Documented

Fee waiver temporariness, custodian scoring bias, and point-in-time data caveats are listed explicitly.

A perfect ETF score would be cheap, liquid, tightly tracked, and structurally boring.