Best Blockchain ETFs to Look Out For in 2021
From hedge funds to governments to universities to everyday retail investors, everyone is looking for an edge in the stock market. However, picking individual stocks doesn’t always work out favorably, which is why ETFs are such an attractive choice for investors of all kinds.
The latest category of ETFs gaining traction is focused on blockchain, the technology powering cryptocurrencies like Bitcoin, Ethereum, and other digital assets, which have drastically risen in value over the past decade.
While not all of these ETFs directly track cryptocurrency prices, they provide investors with a decent overview of companies on the cutting edge of blockchain or those that stand to benefit greatly from widespread adoption of the technology.
Blockchain ETFs are always on the move, so be sure to add some to your watch list. Here are a few of the best blockchain ETFs to look out for in 2021.
Top 5 Blockchain ETFS
The following ETFs are a great starting point for anyone interested in blockchain technology, although you won’t find any assets backed directly by cryptocurrencies themselves.
You might find some familiar companies in the mix here, as well as some lesser-known names making waves in the industry.
Amplify Transformational Data Sharing ETF (BLOK)
BLOK is beyond the biggest blockchain ETF in the world right now, with over one trillion dollars in total assets. For comparison, the next ETF on our list holds worth about a third of that, and the rest are even further behind.
As one of the first ETFs to jump on the blockchain trend back in 2018, Amplify blazed the trail in this category and has outperformed impressively in this three-year span.
There are some household names in the top holdings, including MicroStrategy, PayPal, and Square. You’ll also find up-and-comers like Galaxy Digital Holdings and HIVE Technologies to round out the list.
Siren Nasdaq NexGen Economy ETF (BLCN)
This ETF from Siren Advisors is valued at just over $300 million and features a long, diverse list of holdings that should spark the interest of any blockchain bulls.
Its largest position is Coinbase, the company on the front lines of retail crypto investing, and while there are some riskier plays in this ETF, you’ve also got reliable picks like Microsoft, IBM, NVIDIA, and SAP to shore things up.
BLCN hasn’t performed as well as BLOK this year, but it’s still beating the market overall.
First Trust Indxx Innovative Transaction & Process ETF (LEGR)
Another large-cap ETF with plenty of promising blockchain players, this fund from First Trust is valued at over $110 million at the moment.
In LEGR, you’ll find a range of blockchain favorites, and the fund leans Euro-heavy with holdings like Swisscom, A.P. Moller, and Nordea Bank.
Long-term returns are outstanding for LEGR at over 50%, but 2021 has seen things slow down for this fund with a YTD performance of under 14%. Still not bad, but worth considering.
Bitwise Crypto Industry Innovators ETF (BITQ)
We’re getting into mid-cap territory with this fund valued at around $50 million, but BITQ from Bitwise still deserves a shout-out.
The fund is still relatively new (May 2021 inception), so that valuation is quite impressive. For the blockchain purist, you’ll find all the main players on its list of holdings.
MicroStrategy and Riot Blockchain make up more than 20% of the mix combined, in addition to companies like HIVE, Voyager, Bitfarms, and Marathon.
This might not be the most risk-averse blockchain ETF on the market, but that’s part of the appeal.
VanEck Vectors Digital Transformation ETF (DAPP)
With over $30 million in assets under management, this VanEck ETF features a good mix of physical products, digital services, and a good sample of innovative technologies in the blockchain space.
Square is the top holding here, followed closely by Coinbase, Marathon, and Voyager. You’ll also find semiconductor chip manufacturers and infrastructure solutions to balance out the mix.
This ETF is worth a closer look for anyone interested in the future of blockchain and the on-the-ground resources needed to support it.
Top 5 Bitcoin ETFs
Not every investor is interested in companies building and leveraging blockchain technology. They want to cut to the chase and track crypto prices directly, getting in on the fun and profits.
Keep in mind that the following ETFs are not available on US stock exchanges, but it’s highly unlikely that this will remain the case for much longer.
Grayscale Bitcoin Investment Trust (GBTC)
If the early bird gets the worm, it makes sense that GBTC would top our list here. This was one of the first funds to offer fractional bitcoin ownership to investors, allowing them to leap over the challenges of buying and storing actual crypto.
While there are some steep premiums and fees to enter this fund, it has seen plenty of popularity in recent years, and the trend still appears to be climbing.
BTCetc Physical Bitcoin ETC (BTCE)
This is one of the few physically-backed bitcoin ETFs available in the world, and it’s as close as you can get to the real thing without owning a crypto wallet of your own.
BTCE currently has over $1 billion in assets, which tells us it’s hugely popular in Germany, where it’s available.
The fees are high, and the list of requirements is long, but if you can jump through those hoops, it’s worth a look.
Bitcoin Tracker One (CXBTF)
This asset is unique in that it’s not an ETF but rather an ETN or exchange-traded note. This means that CXBTF gives investors access to different market benchmarks – in this case, related to the price of Bitcoin.
It’s a bit confusing, and this asset is hard to find on OTC markets, though it might be a safer bet for busy investors looking to gain exposure to cryptocurrency more directly.
Purpose Bitcoin ETF (BTCC)
This Canadian crypto ETF was not launched long ago, but it has been a smash hit in this short stretch of time. BTCC gained nearly $500 million in assets in its first week alone thanks to massive investor interest and low fees.
It’s not common that Canada is steps ahead of the US in terms of crypto-centric policies, but this goes to show that demand is truly a force to be reckoned with.
Bitwise 10 Private Index Fund(BITW)
Bitcoin is still the king of the crypto world, but there are several altcoins showing promise as well. This fund from Bitwise tracks the top ten coins by market cap, which is a brilliant idea given how altcoins have performed this past year.
Litecoin, Ethereum, and Chainlink are just a few coins to make a list, and while it’s not available on most stock exchanges, this ETF can be accessed directly through the firm.
What is Next for Crypto ETFs?
From blockchain-ready companies to crypto ETFs and the coins themselves, there are so many angles to invest in bitcoin and other digital assets like it.
Many investors are also getting into the crypto mining game, looking for advantages in terms of hash rates, energy-efficient mining, and reliable infrastructure. While crypto prices rise and fall all the time, the technology is definitely here to say.
Time will tell where crypto ETFs go from here, but thankfully, you’ve got plenty of options when it comes to investing in blockchain and everything that comes with it.
Sources:
7 Best Crypto ETFs for 2021 | Optimized Portfolio