Update Of The Best Performing (And New) Cryptocurrency/Blockchain ETFs

Blockchain, Technology, Smart, Bitcoin, Money

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Is going about owning “physical” cryptocurrencies a little too technical for you but you would still like to be involved in the marketplace? Well, here’s the answer: buy one of the 32 ETFs, mutual funds or trusts that are involved in the sector but without the associated risk of self-custody within a digital wallet.

"OK", you say, "but where do I find those securities?" Well, all the related securities were presented in an earlier article I wrote for bitcom.com (see here) with descriptions of each and links to their charts and daily pricing.

You might also ask, "Which ones have been performing the best this year, and why?" and I addressed that in an exclusive article for TalkMarkets the first week of June (see here). Today's article is an update of that information and how that information relates to owning Bitcoin or Ethereum directly.

As of yesterday, 28 of the 3o non-inverse or short ETFs/mutual funds/trusts had declined 53% YTD, on average, and 26%, on average, so far in June. The two remaining ETFs highlighted in this article, however, have declined by less than half those amounts, -9.6%, on average, so far in June and -26.8%, on average, 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): -8.9% so far in June and -24.5% 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): -10.7% so far in June and -30.3% 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 have declined by 69% and 77%, respectively, YTD, and have declined 31% and 38% so far in June. 

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)*: +34.0% so far in June and +77.3% 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 last week (June 21st, 2022) and is up 3.0% since then (as of June 28th).
    • 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 (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.

Before concluding this article I present below 3 charts/maps on the usage, growth, and regulation of cryptocurrencies by country and they are most revealing.


Usage

The chart below shows which countries are the heaviest users of cryptocurrencies around the world.

crypto usage

Vietnam ranks first, scoring high on overall crypto transaction value as well as payments made by individuals, primarily because they are used as an investment tool in lieu of other good options.


Growth

The chart below from Statista shows the share of respondents in selected countries who said that they used or owned cryptocurrencies in 2019 and 2021.

country crypto usage


Regulation

The above stats are influenced by the fact that, according to the Law Library of the U.S. Congress (see map below), nine (9) countries have an absolute ban on the use of cryptocurrencies while a large number of other countries (primarily in Africa, the Middle East and Asia) have an implicit ban on its use.

Crypto regulation around the world


Conclusion

The above information provides prospective independent 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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