Blockchain ETFs represent a specific category of exchange-traded funds (ETFs) designed to capitalize on the potential of blockchain technology. Investing in blockchain ETFs (Exchange-Traded Funds) can be an option for investors looking to gain exposure to the potential growth and development of the blockchain technology sector without investing in individual blockchain-related companies. However, before investing in any ETF, including blockchain ETFs, there are several factors you should consider:
Understanding Blockchain: It’s important to have a solid understanding of what blockchain technology is, its applications, and its potential impact on various industries
Research the ETF: Not all blockchain ETFs are created equal. Research different blockchain ETFs available in the market.
Diversification: A blockchain ETF typically holds shares of multiple companies involved in blockchain technology, which can help spread risk.
Expense Ratio: The expense ratio is the annual fee that the ETF charges investors. A lower expense ratio is generally more favorable, as it reduces the impact of fees on your investment returns over time.
Market Trends and Regulatory Environment: Consider the current trends in the blockchain industry and the regulatory environment. Changes in regulations or technological advancements can have a significant impact on the performance of blockchain-related companies.
Long-Term Perspective: Investing in ETFs, including blockchain ETFs, is typically a long-term investment strategy. Short-term volatility can occur, so having a long-term perspective can help you ride out market fluctuations.
Risk Tolerance: Like any investment, investing in blockchain ETFs carries risks. The blockchain sector is relatively new and can be subject to rapid changes and uncertainties.
Consult a Financial Advisor: If you’re unsure about investing in blockchain ETFs or any investment, it’s a good idea to consult a qualified financial advisor.
4 Best Blockchain ETFs are listed below
Amplify Transformational Data Sharing ETF
The Amplify Transformational Data Sharing ETF (BLOK), founded in the year 2018. functions as an exchange-traded fund, focusing its investments on enterprises engaged in the advancement and application of blockchain technology.
BLOK mirrors the performance of the Amplify Transformational Data Sharing Index, it is a structured index that cherry-picks companies engaged in revolutionary data sharing or those collaborating in blockchain industry. The index undergoes quarterly rebalancing and annual reconstitution to maintain its integrity and relevance.
|Top 10 holdings of BLOK
|1. Coinbase Global, Inc. (COIN)
|2. MicroStrategy Incorporated (MSTR)
|3. Galaxy Digital Holdings Limited (GLXY)
|4. Marathon Digital Holdings, Inc. (MARA)
|5. Riot Blockchain, Inc. (RIOT)
|6. Hive Blockchain Technologies Ltd. (HIVE)
|7. Bit Digital, Inc. (BTBT)
|8. Hut 8 Mining Corp. (HUT)
|9. Canaan Inc. (CAN)
|10. Argo Blockchain plc (ARB)
BLOK has an expense ratio of 0.75%. This means that for every $100 invested in BLOK, you will pay $0.75 in fees each year.
BLOK is a relatively new ETF, having launched in September 2017. It has a total net assets of $592.1 million. The fund is currently trading at $24.03 per share.
BLOK is a good option for investors who want to gain exposure to the blockchain industry. However, it is important to note that blockchain is a volatile technology and the price of BLOK may fluctuate significantly. Investors should only invest in BLOK if they are comfortable with the risks involved.
Advantages of BLOK
- Emerging Technology Potential: Blockchain is swiftly evolving and holds the promise of transforming various sectors.
- Diverse Industry Exposure: BLOK provides investors with access to a broad spectrum of blockchain enterprises.
- Cost-Effective: BLOK boasts a low expense ratio, enhancing its cost efficiency.
Disadvantages of BLOK
- Technological Volatility: The instability of blockchain technology might lead to substantial fluctuations in BLOK’s price.
- Limited Track Record: As a relatively new ETF, BLOK lacks an extensive performance history for evaluation.
- International Investment Risks: BLOK’s investment in foreign companies introduces added uncertainties and associated risks.
Siren Nasdaq NexGen Economy ETF (BLCN)
The Siren Nasdaq NexGen Economy ETF, abbreviated as BLCN, founded in the year 2018. functions as an exchange-traded fund. It is designed to mirror the performance of the Nasdaq Blockchain Economy Index. This particular index is strategically crafted to gauge the profitability of firms that play an active role in the advancement, utilization, or facilitation of blockchain technology.
|Top 10 holdings of BLCN
|1. COINBASE GLOBAL INC
|2. MARATHON DIGITAL HOLDINGS INC COM
|3. MICROSTRATEGY INC
|4. OVERSTOCK COM INC DEL
|5. CANAAN INC
|6. ADVANCED MICRO DEVICES INC
|7. GALAXY DIGITAL HOLDINGS LTD
|8. INTERNATIONAL BUSINESS MACHS COM
|9. BLOCK INC
|10. GMO INTERNET GROUP
Advantages of BLCN
Exposure to growing Industry: BLCN provides investors with an avenue to participate in the rapidly expanding blockchain sector.
Cost Efficiency: With an expense ratio of 0.68%, BLCN boasts a relatively economical fee structure compared to other ETFs.
Enhanced Diversification: BLCN’s portfolio spans across multiple companies, contributing to risk mitigation by distributing investments across a variety of entities.
Disadvantages of BLCN
Volatility Challenge: as blockchain is a new area, BLCN could encounter substantial price fluctuations.
Liquidity Concerns: BLCN’s liquidity is limited, potentially leading to difficulties in the buying and selling of its shares due to lower trading volumes.
Concentration Risk: The ETF’s reliance on a handful of major companies exposes it to concentration risk, where its performance heavily relies on the fortunes of these companies.
Bitwise Crypto Industry Innovators ETF (BITQ)
The BITQ ETF, known as the Bitwise Crypto Industry Innovators ETF, founded in the year 2021. operates as a conventional and regulated exchange-traded fund. This ETF is specifically designed to mirror the Bitwise Crypto Innovators 30 Index, which serves as a gauge for the performance of businesses engaged in providing services within the cryptocurrency markets. The fund allocates its investments into securities belonging to the Index, as well as depositary receipts that represent these securities.
|Top 10 holdings of BITQ
|1. RIOT PLATFORMS
|2. COINBASE GLOBAL INC
|4. MARATHON DIGITAL HOLDINGS
|5. HUT 8 MINING
|6. HIVE DIGITAL TECHNOLOGIES LTD
|10. BIT DIGITAL
BITQ has an expense ratio of 0.85%. BITQ is a good option for investors who want to invest in the cryptocurrency industry without having to directly buy cryptocurrencies. It is also a good option for investors who want to invest in a diversified portfolio of companies involved in the cryptocurrency industry.
Advantages of BITQ
BITQ is a regulated ETF, which means that it is subject to the same rules and regulations as other ETFs. This can give investors some peace of mind, as it reduces the risk of fraud or manipulation.
BITQ offers exposure to a diversified portfolio of companies involved in the cryptocurrency industry.
BITQ has a relatively low expense ratio of 0.85%. This is lower than some other cryptocurrency ETFs.
Disadvantages of BITQ
The cryptocurrency industry is still in its early stages of development, and there is a lot of volatility in the prices of cryptocurrencies. This means that BITQ is a risky investment.
BITQ is exposed to the risks of the underlying companies that it invests in. These companies are subject to the same risks as any other publicly traded company, such as financial distress, fraud, and regulatory changes.
BITQ is not a direct investment in cryptocurrencies. This means that investors do not own any of the underlying cryptocurrencies.
Global X Blockchain ETF (BKCH)
The Global X Blockchain ETF (BKCH), founded in the year 2021. it functions as an exchange-traded fund with the primary objective of mirroring the price and yield performance of the Solactive Blockchain Index, excluding fees and expenses. The Solactive Blockchain Index is crafted to monitor the progress of businesses well-positioned to capitalize on the growing embrace of blockchain technology.
|Top 10 holdings of BKCH
|1. COINBASE GLOBA-A
|2. MARATHON DIGITAL
|3. RIOT PLATFORMS INC
|4. HUT 8 MINING CORP
|5. BIT DIGITAL INC
|6. APPLIED DIGITAL CORP
|7. HIVE DIGITAL TEC
|8. BITFARMS LTD/CANADA
|9. CLEANSPARK INC
|10. IRIS ENERGY LTD
BKCH has an expense ratio of 0.50%, which is relatively low for an ETF. This means that for every $100 you invest in BKCH, you will pay $0.50 in fees each year.
BKCH is a non-diversified ETF, which means that it can invest a significant portion of its assets in a single company or industry. This can increase the risk of the fund, but it also has the potential to generate higher returns.
|Advantages of BKCH
|Disadvantages of BKCH
|Exposure to Blockchain Technology
|Limited Cryptocurrency Exposure
|Lack of Control
Learn more about Best Blockchain ETFs: forbes
Frequently Asked Questions
Ques 1: What is the difference between Bitcoin ETF and blockchain ETF?
Ans: The primary distinction between a Bitcoin ETF and a blockchain ETF lies in their underlying focus. A Bitcoin ETF traces the value fluctuations of Bitcoin itself, whereas a blockchain ETF follows the performance of stocks belonging to firms engaged in blockchain technology.
Ques 2: Are ETFs more risky than stocks?
Ans: Overall, Exchange-Traded Funds (ETFs) are commonly viewed as having lower risk compared to individual stocks due to their greater diversification. While individual stocks can display significant volatility, ETFs, which encompass a collection of stocks, tend to encounter fewer instances of substantial price fluctuations.