June Wrap: 2 Best Cryptocurrency/Blockchain ETFs Fell 11% In June; Bitcoin Fell 32%

Close Up of Bitcoins

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If owning “physical” cryptocurrencies is a little too technical for you but you would still like to be involved in the marketplace, then consider buying one of the 32 ETFs, mutual funds or trusts that are involved in the sector.

In an earlier article for TalkMarkets I identified the 2 ETFs that stand head and shoulders above all the others. Here I provide an update on their performances in June and YTD and how that information relates to owning Bitcoin (BITCOMP) or Ethereum (ETH-X) directly,  or one of the inverse or short ETFs available.

Twenty-eight of the 30 non-inverse or short ETFs/ mutual funds/ trusts were -26%, on average, in June and -53%, on average, YTD, but the two remaining ETFs were -11% and -24%, respectively, on average, during the same time periods. Why? Because these ETFs almost exclusively own the stocks of companies that use or develop blockchain technology, rather than narrowly focusing on tracking the price of individual cryptocurrencies. Details regarding these best performing cryptocurrency/blockchain ETFs are as follows:

  1. First Trust Indxx Innovative Transaction & Process ETF (LEGR): -10.0% in June and -22.0% 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): -12.2% in June and -27.4% 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 were -32.4%, on average, in June and are now -58.9%, on average, YTD but, to repeat, the two ETFs highlighted above were only -10.8% and -24.2%, respectively, on average, during the same time periods.

Inverse and Short Cryptocurrency ETFs

Investors also have the option of playing the other side and betting against the cryptocurrency with one of the following ETFs:

  • Horizons BetaPro Inverse Bitcoin ETF (BITI.U)*: +42.1% in June and +88.1% YTD
    • It was launched in April 2021.
    • 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 was +9.2% as of June 30th).
    • It is designed to provide inverse exposure to the daily return of bitcoin, minus fees and costs.
    • It will trade in futures contracts listed on the Chicago Mercantile Exchange, rather than the “physical” currency itself.
    • Go here for chart of most recent pricing.
  • The Direxion Bitcoin Strategy Bear ETF (expected ticker REKT)
    • It will soon be launched 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.

*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.

The above information provides investors and financial advisors, alike, with insights into the make-up of the different assets in the sector and some direction as where to concentrate one's due diligence before making any investment decisions.

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