What is a blockchain ETF
The ETF itself is a fund whose shares/shares are traded on an exchange. Blockchain ETF is a particular example of such a fund, the managers of which invest the funds of shareholders in companies, one way or another connected with the use and / or development of blockchain technologies.
Blockchain ETF should be distinguished from Bitcoin ETF or Crypto ETF. The last two are more focused on following the price of BTC or any other cryptocurrency.. Blockchain-ETF gives the shareholder the opportunity to invest immediately in a wide range of organizations:
- Companies that directly invest in the crypto industry. Among the most famous are Elon Musk’s Tesla and Michael Saylor’s Microstrategy.
- Mining enterprises such as Riot Platforms, Argo Blockchain, Hut 8 Mining Corporation, Marathon Digital Holdings and others.
- Crypto exchanges. The most striking example is the American Coinbase, which has been trading its shares on the stock market for a long time.
- Financial institutions. This includes both investment companies and banks.. This includes, for example, the largest investor in the planet BlackRock, as well as a number of large banks Wells Fargo, BNP Paribas, Citigroup.
- Technology companies. This category may include business representatives who are not directly related to cryptocurrency, but whose developments are actively used in blockchain projects. For example, chip developers like Nvidia and AMD.
Why you should invest in blockchain ETF
Investing in anything is meant for one thing – making a profit.. However, cryptocurrencies themselves are extremely volatile instrument.. You can both earn quickly and lose quickly.
Buying shares of a single company is also quite risky.. It is difficult to say for sure: whether the price of specific shares will rise. And yes, anyone can go broke.. A vivid example is the recent collapse of the Silvergate bank, a considerable number of shares of which were in the hands of the aforementioned BlackRock.. Although such a large investment company probably employs serious analysts.
And the blockchain ETF is such a diversified basket. Such funds tend to invest in many companies at the same time.. Therefore, by purchasing ETF units, you simply minimize the risks.
Fidelity Crypto Industry and Digital Payments ETF
The fund is owned by financial company Fidelity Investments or simply Fidelity. This is a fairly young ETF, which was formed in April 2022. It mainly invests in financial services and technology companies.. Investments can be made both in American securities and in foreign ones. The fund focuses on the Fidelity Crypto Industry and Digital Payment Index, which reflects what is happening with cryptocurrencies, blockchain companies and organizations providing services in the field of digital payments.
The fund is traded on the NASDAQ under the ticker symbol FDIG.. Number of shares/units outstanding is 1.7 million. The price of one security of the Fidelity Crypto Industry and Digital Payments ETF at the time of writing, on Wednesday, March 29, was $14.25.
The main share among the fund’s investments is occupied by Coinbase – 13.97%, Block Ink – 10.75% and Marathon Digital Holdigns Ink. – 10,55%. As you can see, all these companies are somehow connected with cryptocurrencies.
FDIG has a fairly small commission – 0.39%. The amount of the fund’s assets exceeds $20 million.
VanEck Digital Transformation ETF
The fund follows the MVIS Global Digital Assets Equity Index, which in turn focuses on companies involved in digital assets. The fund was formed in 2021. As with Fidelity, this ETF is also invested primarily in two sectors: financial services (nearly 59%) and technology companies (just over 41%).
The largest share of the VanEck Digital Transformation ETF portfolio is Riot Platforms with 7.96%, Coinbase with 7.7% and MicroStrategy with 6.9%.. More than a third of the fund’s investments are securities of non-US companies.
Shares of this ETF are traded on the NASDAQ under the ticker symbol DAAP.. 6.5 million shares in circulation. The price of one DAAP paper on March 29, 2023 was $4.08.
The commission here is slightly higher than in FDIG and is 0.5%. The number of assets exceeds $25 million.
Amplify Transformational Data Sharing ETF
It is the oldest blockchain ETF traded on exchanges.. His investments are fully focused on companies related to blockchain development.. However, they belong to different sectors of the economy.. Most ETF investments are made in IT companies (31%), as well as in the capital market (21%). The bulk of organizations are North American – 77%. European business accounts for only 2%.
The largest share in the fund’s investments is occupied by Riot Platforms – 5.6%, Coinbase – 5.32 and MicroStrategy – 5.24%. There are over 35 different securities in the Amplify Transformational Data Sharing ETF portfolio.
The fund shares are traded on the NYSE Arca platform under the ticker symbol BLOK.. Total free float reaches 23.15 million. As of March 29, one security of the fund costs $17.97.
Fund commission = 0.75%. The total number of assets exceeds $410 million.
iShares Blockchain and Tech ETFs
This fund tracks the results of an index that reflects the activities of US and foreign companies involved in the development, innovation and use of blockchain and crypto technologies.. ETF is quite young. He was born only in April 2022.
The portfolio of the fund really represents all sectors of the economy related to the blockchain. There is also AMD – 4.58%, and NVIDIA – 4.27%. And the largest part of the capital, predictably, is invested in Riot Platforms – 15.56%, Coinbase – 12.02% and Block – 8.58%.
iShares Blockchain and Tech ETF trades on the NYSE Arca platform under the ticker IBLC. There are quite a few shares of the fund in free float – 400,000. The current price of one security is $14.93.
Commission at IBLC is relatively small – 0.47%. The total assets of the fund are slightly less than $6 million.
To summarize: a blockchain ETF is a diversified basket that consists of companies directly or indirectly involved in the promotion of blockchain technologies.. There are a lot of such funds in the US market.. They differ in the composition of portfolios, the number of assets and the fees charged.