Cryptocurrency is all the rage these days. If you’ve been following the news, you know Bitcoin (CCC:BTC-USD) is on fire. However, it can seem very risky for new investors to pour capital into the space due to the inherent volatility of individual cryptocurrencies. That’s where this list of crypto ETFs will come in handy.
After all, there’s a lot to keep in mind. As Laura Gonzalez, Ph.D., associate professor of finance at California State University, Long Beach, said to InvestorPlace, “It is important for investors to consider who is supporting and using the cryptocurrencies they are interested in. In addition, if investors are looking for long-term investment opportunities beyond the short-term ‘gambling’ we are seeing lately, it is important to remember that there is a trend globally towards developing central bank-based e-currencies. That will affect the fundamental value of other cryptocurrencies.”
But blockchain and crypto ETFs are professionally managed by fund managers. They invest in multiple companies involved in blockchain technologies. In essence, they are not that different than regular ETFs. Their main purpose is to provide you with some cushion against risk and volatility.
Crypto ETFs offer tremendous diversification because they invest in multiple companies from different asset classes. In addition, Cryptocurrency ETFs happen to be more tax-efficient since they are listed on the major exchanges like Nasdaq and the NYSE and are not decentralized and unregulated like the cryptocurrencies on the digital market.
Most tax havens and pension funds will not touch cryptocurrency. But that is not the case with crypto ETFs. This is because they come under U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) regulations, providing financial institutions with a sense of credibility and safety when investing in these ETFs.
Crypto ETFs are also less risky and provide better long-term returns, making them the ideal fit for risk-averse investors.
This is a list of Blockchain ETFs that are the heavy hitters of this space:
- Amplify Transformational Data Sharing ETF (NYSEARCA:BLOK)
- Reality Shares Nasdaq NexGen Economy ETF (NASDAQ:BLCN)
- First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR)
- Purpose Bitcoin ETF
- Innovation Shares NextGen Protocol ETF (NYSEARCA:KOIN)
Cryptocurrency ETFs To Buy: Amplify Transformational Data Sharing ETF (BLOK)
BLOK invests at least 80% of its net assets in stocks engaged in the development of blockchain technologies. It does not track an index. Instead, the ETF focuses on a mix of 55 value and growth stocks within the software & services, diversified financials, and media & entertainment industries.
Top holdings include MicroStrategy (NASDAQ:MSTR), PayPal (NASDAQ:PYPL) and Square (NYSE:SQ). This ETF has an expense ratio of 0.71%, a one-year return of 195%, and has surpassed $1 billion in assets under management (AUM).
Reality Shares Nasdaq NexGen Economy ETF (BLCN)
Reality Shares Nasdaq NexGen Economy ETF tracks the Reality Shares Nasdaq Blockchain Economy Index and has been around since 2018. Its portfolio comprises 74 companies, including Galaxy Digital Holdings, IBM (NYSE:IBM), and Overstock (NASDAQ:OSTK).
The portfolio is very diverse, considering that the selection comprises businesses providing multi-service merchant bank supporting digital assets to a provider of integrated circuit microprocessors for supercomputing hardware. None of the owned stakes weigh over 2% either, meaning there are fairly even levels of investment between all the holdings.
BLCN has an expense ratio of 0.68% and an AUM of $278 million. The dividend yield is very respectable at 0.51%. And at 19.28x price-to-earnings, the ETF is trading at a very attractive price point.
Cryptocurrency ETFs To Buy: First Trust Indxx Innovative Transaction & Process ETF (LEGR)
LEGR tracks the Indxx Blockchain Index, which gauges the performance of companies that are positioned to profit from blockchain technology. First Trust Indxx Innovative Transaction & Process ETF will usually invest a minimum of 90% of its net assets in securities that make up the index. The fund is comprised of 101 holdings, and some of the top ones include Oracle Corporation (NYSE:ORCL), IBM and Nvidia (NASDAQ:NVDA).
Judging by these names, you can appreciate that the fund invests in quite a wide variety of stocks in the information technology and financial industries.
This ETF has an expense ratio of 0.65% and has an AUM of $81.9 million. The ETF has a year-to-date return of 10.24%.
Purpose Bitcoin ETF (BTTC)
Our next entry on this list of cryptocurrency ETFs is the world’s first Bitcoin ETF. It started operations in February 2020 and now has an AUM of 1.3 billion CAD. The ETF has capped its MER Management Expense Ratio (MER) at 1.5%. If the MER falls below 1.50%, the savings are passed along to investors.
BTTC purchases Bitcoin and holds the coins without the risk of trading at large premiums to the value of the ETF’s underlying Bitcoin holdings. Investors will gain more direct exposure without purchasing and selling crypto directly.
It’s important to note that the most successful cryptocurrencies have experienced outsized gains. Due to the uncertainty and volatility inherent in the sector, many investors favor an investment vehicle like an ETF to play the cryptocurrency space.
Hence, Purpose Bitcoin ETF is for those investors looking to take advantage of Bitcoin price appreciation while leaving management and security to Bitcoin experts.
Cryptocurrency ETFs To Buy: Innovation Shares NextGen Protocol ETF (KOIN)
Innovation Shares NextGen Protocol ETF started trading in 2018 and has holdings in 45 companies. Major holdings include Nvidia, Intel (NASDAQ:INTC) and PayPal, so you get a lot of diversification with this one.
This ETF has an expense ratio of 0.95%. It has a weighted average market cap of $294.67 billion. Innovation Shares NextGen Protocol ETF has an annual dividend yield of 0.39% per share and an AUM of $26.65 million. This ETF has a year-to-date return of 8.61%.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.