The Two Best Ways To Invest In The Crypto/Blockchain Space

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Instead of investing in cryptocurrency futures or establishing a digital wallet to take custody of the coins themselves, consider investing in one of the following ETFs that continue to dramatically outperform the sector.

Of the 30 non-inverse or short cryptocurrency/blockchain ETFs, mutual funds, and trusts (see here) trading on Canadian and American stock exchanges, there are two (2) 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 of those ETFs including their performances so far in November, in descending order, and since the end of July and in comparison to Bitcoin and Ethereum during the same time periods:

  1. First Trust Indxx Innovative Transaction & Process ETF (LEGR):
    • UP 7.6% since end of October; DOWN 1.3% since end of July
    • LEGR is a passively managed fund 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 it 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 1.6% of net assets.
    • It concentrates on the following sectors: Financials (36%), Information Technology (32%), Communication Services (9%), Consumer Discretionary (8%) and Industrials (7%).
    • Its top ten holdings, in descending order, are: S&P SE, Infineon Technologies, Honeywell, AT&T, NVIDIA, Samsung, Engie, IBM, Micron Technology and Emirates Telecommunications.
    • Its top country exposures are: USA (36%), China (9%), Germany (9%), India (8%), France (6%), U.K. (5%) and Switzerland (3%)
    • It has an expense ratio of 0.65%
    • It has a dividend yield of 3.81%
    • It has Assets Under Management (AUM) of US$112.3M
    • Go here for a chart of the most recent pricing.
  2. Simplify US Equity PLUS GBTC ETF (SPBC): 
    • DOWN 0.5% since end of October; DOWN 7.7% since end of July
    • 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 U.S. 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 are concentrated in just three areas, namely: iShares Core S&P 500 ETF: 86%; December S&P e -mini Futures contract: (15%); and Grayscale Bitcoin Trust (GBTC): 8%; Cash (-9%)
    • The ETF has an expense ratio of 0.73%
    • It has a dividend yield of 2.12%
    • It has Assets Under Management (AUM): US$47.8M
    • Go here for a chart of the most recent pricing.

Bitcoin and Ethereum Performances

In comparison to the performances of the above ETFs, Bitcoin is DOWN 18.4% since the end of October and Ethereum was DOWN 18.7 %, and they are DOWN 29.3% and 25.1%, respectively, since the end of July.

Inverse and Short Cryptocurrency ETFs

Investors also have the option of going long Bitcoin through managed future ETFs as well as playing the other side and betting against the cryptocurrency with one of the following ETFs:

  • Horizons BetaPro Inverse Bitcoin ETF (BITI.U)
    • 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.
    • It has a CUSIP number of 74347G291 (read about CUSIP numbers here)
    • Go here for chart of most recent pricing.
  • ProShares Short Bitcoin Strategy ETF (BITI)
    • It was launched on June 21st, 2022, and 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.

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Fgomez2k 1 year ago Member's comment

What about BITO?

It is realted with BITI as inversed?

Adam Reynolds 7 months ago Member's comment

What's your take on them now?

Bindi Dhaduk 1 year ago Member's comment

Where can I learn more about BITO?

Fgomez2k 1 year ago Member's comment

Bindi: ProShares Bitcoin Strategy ETF (BITO) is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way. The Fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts. 

For me it is a way to diversify your portfolio with a high-risk, high-reward asset, a Bitcoin ETF is a better option than directly buying Bitcoin.

Bindi Dhaduk 1 year ago Member's comment

Thanks.  Lorimer Wilson, do you agree?

P O 1 year ago Member's comment

Reddit has some good discussions about it.   BITO tracks BTC pretty closely (about 1% deviation).  Why not just buy the actual coin itself?

Bill Myers 1 year ago Member's comment

Can you point me in the right direction?

P O 1 year ago Member's comment

You mean buying the individual coin? Try a reputable exchange that hasn't been shut down yet.  Then move the coin off the exchange to a hard wallet.

Bill Myers 1 year ago Member's comment