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If you would like to get involved in the cryptocurrency space without the associated risk of self-custody within a digital wallet then give consideration to the following ETFs that have outperformed the sector dramatically.

Of the 30 non-inverse or short cryptocurrency / blockchain ETFs / mutual funds / trusts (see here) trading on Canadian and American stock exchanges, two declined by less than half that of the average security in the sector in July and YTD. 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. Here are the details:

Best Performing Cryptocurrency/Blockchain ETFs

1. First Trust Indxx Innovative Transaction & Process ETF (LEGR): +4.0% in July and -18.9% YTD
   • 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.
   • It concentrates on the following sectors:
     • Financials (39%), Technology (27%), Telecommunications (9%) and Consumer Services (7%).
   • Its top ten holdings are:
     • 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): +11.5% in July and -19.1% YTD
   • 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).
   • It does not invest directly in bitcoin, bitcoin futures, or other cryptocurrencies and, as such, does not track the price movements of cryptocurrencies.
   • Its holdings consist 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 Performances

For the record, Bitcoin and Ethereum advanced 21.0% and 63.1%, respectively, in July and have declined 49.0% and 53.1%, respectively, YTD.

Inverse and Short Cryptocurrency ETFs

Investors also have the option to go long Bitcoin through managed future ETFs as well as play the other side and bet against the cryptocurrency with one of the following ETFs:

• Horizons BetaPro Inverse Bitcoin ETF (BITI.U)*: +13.2% in July and -7.3% YTD
  • It is 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.
• ProShares Short Bitcoin Strategy ETF (BITI)
  • It was launched on June 21st, 2022 and is down 17.9% since then.
  • It is designed to provide inverse exposure to the daily return of bitcoin, minus fees and costs.
  • It trades in futures contracts listed on the Chicago Mercantile Exchange, rather in than the “physical” currency itself.
  • Go here for chart of most recent pricing.
• The Direxion Bitcoin Strategy Bear ETF (REKT)
  • Recently filed in the US to deliver investors a -1X inverse return of Bitcoin by providing short exposure to front-month bitcoin futures contracts traded on the Chicago Mercantile Exchange according to an SEC filing. ProShares has also made a similar filing.

*Please note that the Horizons BetaPro Inverse Bitcoin ETF (BITI.U) trades on the Canadian TSX in U.S. dollars as designated by the "U". If you are American and wish to buy it then provide your broker with the security's CUSIP number (Go here to read "Advice For Americans On Buying Cannabis Stocks Listed On Canadian Exchanges") to facilitate such a transaction.

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