Invest in Blockchain

Invest In Blockchain Technology & Crypto Sector with These ETFs

In a previous post on the subject (see here) I identified those cryptocurrency ETFs, funds and trusts that are currently trading on U.S. and Canadian stock exchanges. There is a tremendous amount of similarity among them and in their stock performances so, after analyzing each, I have come up with 2 ETFs that consistently outperform all the others and delve into the reasons why. 

As of May 27th, 2022, the price of Bitcoin had declined by 38.2% (and Ethereum by 52.1%) and all but two of the non-inverse cryptocurrency ETFs, mutual funds, and trusts (both Bitcoin- and Ethereum-focused) had declined by those percentages, or more, and they had only declined by half that amount. Why? Because they are ETFs that almost exclusively own the stocks of companies that use or develop blockchain technology rather than focusing narrowly on tracking the price of individual cryptocurrencies making them the best possible choice for investing in the industry and foregoing the excessive volatility associated with the others.

Performance

The 2 top performers YTD (as of May 27th) were:

  1. First Trust Indxx Innovative Transaction & Process ETF (LEGR): -13.3% as of May 27th; -16.3% from its 52-week high
    • LEGR is a passively managed fund that first launched in January 2018. It tracks the performance of the Indxx Blockchain Index.
    • It only invest in companies that have devoted real resources to actually using blockchain technology – either by currently deploying blockchain technology or actively developing and, as such, excludes companies that are merely exploring this new technology.
    • It is highly diversified with 102 holdings, with no single holding weighted at more than 1.5% of net assets. As of February 2022, it
    • concentrates on the following sectors:
      • Financials (39.4%), Technology (27.3%), Telecommunications (9.3%) and Consumer Services (6.9%)
    • with its top ten holdings being:
      • JD.com (JD), Mastercard (MA), China CITIC Bank (CHBJF), ICICI Bank (IBN), IBM (IBM), Deutsche Telekom (DTEGF), Capgemini (CAPMF), Honeywell (HON), Alibaba (BABA), and the Industrial and Commercial Bank of China (IDCBF)
    • It has an expense ratio of 0.65%.
    • Go here for a chart of the most recent pricing.
  2. Simplify US Equity PLUS GBTC ETF (SPBC); -17.4% YTD; -20.1% from its 52-week high
    • SPBC seeks to provide capital appreciation by providing an efficient way for asset allocators to add Bitcoin exposure to portfolios.
      • It targets a 100% investment in the US equities
      • while simultaneously providing a 10% exposure to Bitcoin via the Grayscale Bitcoin Trust (GBTC).
    • The Fund does not invest directly in bitcoin, bitcoin futures, or other cryptocurrencies and, as such, does not track the price movements of cryptocurrencies.
    • As of May 27th, its holdings consisted of:
      • iShares S&P 500 Index Fund (IVV): 87.5%
      • Grayscale Bitcoin Trust (GBTC): 7.5%
      • Futures: 15.8%
      • Cash: -10.8%
    • The index has an expense ratio of 0.74%.
    • Go here for a chart of the most recent pricing.

Bitcoin and Ethereum

Below are the performances of Bitcoin and Ethereum since the end of December, in descending order, in comparison to the two ETFs highlighted above:

  1. Bitcoin: -38.2%
  2. Ethereum: -52.1%

Inverse Cryptocurrency ETF

For those of you who want to approach investing in the blockchain technology and cryptocurrency sector from a different angle consider:

  • BetaPro Inverse Bitcoin ETF (BITI.U): +4.6% YTD; -32.0% from its 52-week high
    • Launched in April 2021
    • Designed to provide daily investment results through short investments in bitcoin futures that endeavor to correspond to the single inverse (opposite) performance of an index that replicates the returns generated over time through long notional investments in Bitcoin Futures.
    • Go here for chart of most recent pricing.

Perhaps one of the above ETFs is right for you depending on the results of your own due diligence.

Invest in Blockchain

About Lorimer Wilson

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