Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Cryptocurrency And Blockchain Bulls Might Like These 2 ETFs

By (Tezcan Gecgil/ )ETFsJan 18, 2022 06:10
Cryptocurrency And Blockchain Bulls Might Like These 2 ETFs
By (Tezcan Gecgil/ )   |  Jan 18, 2022 06:10
Saved. See Saved Items.
This article has already been saved in your Saved Items

Cryptocurrencies have mostly started the new year on a down note. For instance, Bitcoin and Ethereum, the two largest digital assets by market capitalization, are down around 11% and 14%, respectively. But in the past year, they returned more than 19% and 163%.

However, not all cryptos are down in 2022. Cardano, Cosmos, ChainLink, Fantom and Internet Computer have already seen significant gains over the past two weeks.

Yet, the volatility in the digital asset space, especially in the short run, is not appropriate for all retail portfolios. There are currently over 15,000 cryptos. For most investors, analyzing these names to find out which will emerge the next winner is nearly impossible.

Also, not all investors have accounts with crypto brokers, like Coinbase Global (NASDAQ:COIN). Therefore, a large number of small investors would not be able to buy these assets, either.

So, today, we introduce two exchange-traded funds (ETFs) that might be appropriate for those following Bitcoin as well as the blockchain technology that is behind digital assets. Such funds enable investors to access these assets through regular brokerage accounts.

We recently covered the VanEck Bitcoin Strategy ETF (NYSE:XBTF) and the Grayscale Ethereum Trust (OTC:ETHE). Today’s discussion builds upon that analysis.

1. ProShares Bitcoin Strategy ETF

  • Current Price: $27.17
  • 52-Week Range: $24.88 - $44.29
  • Expense Ratio: 0.95%

The last quarter of 2021 saw the launch of ProShares Bitcoin Strategy ETF (NYSE:BITO), the first Bitcoin futures-linked fund to be listed in the US. This ETF wrapper does not invest directly in Bitcoin, but instead tracks the performance of Bitcoin futures, which deviates from the spot price.

BITO Weekly Chart
BITO Weekly Chart

A futures fund like BITO has to be regularly rolled forward by fund managers—in most cases, on a monthly basis. Such funds usually trade “in contango,” which means the futures price of the asset is higher than the spot price.

As a result, investors in such funds have contango risk, that can easily add up to 6%-9% a year—if not more. Thus, futures-based ETFs come with a sizeable performance tag.

When we remember that the annual expense ratio of BITO is currently 0.95%, it is easy to see why not everyone on Wall Street is very enthusiastic about Bitcoin futures-based ETFs. Potential investors should understand their potential risk and return profiles well before hitting the ‘buy’ button.

Readers should also note that the other term used in defining the structure of the forward curve is backwardation, which refers to when futures prices are lower than the spot price. Backwardation is a rare event that does not usually last for long. Therefore, long-term investors in BITO should not necessarily expect to benefit from it.

On Oct. 19, BITO opened at a price of $40.88. Then, on Nov. 10, it saw an all-time high of $44.29. But the new year has already brought a record low of $24.88. Now, the fund price is at $27.17, having lost well over 30% since inception.

Despite the volatility and decline, assets under management stand close to $1.1 billion. Although we remain bullish on the increased adoption of digital assets, Bitcoin futures-based ETFs are not appropriate for all investors.

2. Global X Blockchain ETF

  • Current Price: $20.11
  • 52-Week Range: $18.55 - $41.25
  • Expense Ratio: 0.50% per year

Research by PWC highlights:

“Blockchain is the technology that enables the existence of cryptocurrency (among other things). Bitcoin is the name of the best-known cryptocurrency, the one for which blockchain technology was invented. A cryptocurrency is a medium of exchange, such as the US dollar, but is digital and uses encryption techniques to control the creation of monetary units and to verify the transfer of funds.”

Recent metrics suggest that the blockchain market is forecast to increase from around $5 billion in 2021 to more than $67 billion in 2026, implying a compound annual growth rate (CAGR) of over 68%. Therefore, many seasoned investors are paying close attention to companies at the center of such growth.

The Global X Blockchain ETF (NASDAQ:BKCH) invests in businesses that are advancing or benefiting from blockchain technologies. Such names include crypto miners or those that develop blockchain applications and offer digital asset integration.

BKCH Weekly Chart
BKCH Weekly Chart

BKCH, which has 25 holdings, was first listed in July 2021. The top 10 holdings account for close to three-quarters of net assets of $105.1 million.

In terms of the sub-sectors, we see information technology (73.7%), financials (18.7%), communication services (2.6%) and real estate (2.2%). Close to 60% of these companies are based in the US. Next in line are those based in Canada (18.5%), China (9.5%), and Germany (7.4%).

Coinbase Global has the largest slice in the fund, with 12.98%. Other leading names on the roster are crypto miners Riot Blockchain (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA), Germany-based IT group Northern Data (DE:NB2), which focuses on artificial intelligence and machine learning, and digital asset broker Voyager Digital (OTC:VYGVF).

Since inception, BKCH is down about 20%, and saw a record low in early November. Long-term investors who are bullish on the blockchain technology could consider researching the fund further. Many of the names in the fund are also likely to benefit from potential increases in digital assets like Bitcoin.

Cryptocurrency And Blockchain Bulls Might Like These 2 ETFs

Related Articles

Cryptocurrency And Blockchain Bulls Might Like These 2 ETFs

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email