Cryptocurrencies

3 ETFs for Crypto-Curious Investors

A pile of cryptocurrencies
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Per usual, things are interesting in the world of digital assets and that has implications for crypto exchange traded funds.

Since we last visited the universe of cryto ETFs less than two months ago, the landscape has dramatically changed thanks in large part to the long-awaited debuts of ETFs providing some form of direct bitcoin exposure.

To call that a seminal event in the history of the ETF industry might not be hyperbole. Some experts liken it to the debut of the first US-listed three decades while others believe bitcoin ETFs could ultimately prove as important, if not more so, than their gold-backed predecessors.

Bottom line: Change is afoot in the crypto ETF arena and that's good news for investors. With that in mind, here are some opportunities for market participants to assess, including some bitcoin funds.

ProShares Bitcoin Strategy ETF (BITO)

The ProShares Bitcoin Strategy ETF (BITO) is the US-listed ETF linked to bitcoin, but it's a futures-based product because regulators are dithering on approval of spot bicoin ETF and it's anyone's guess when a physically backed bitcoin ETF will be approved in the U.S.

Proving that appetite is nearly insatiable for the bitcoin/ETF marriage, BITO, which debuted less than a month ago, topped $1 billion in assets under management in just two days on the market. As of Nov. 11, BITO has $1.58 billion in assets under management, easily making it one of the most successful new ETFs to come to market this year.

BITO was followed by the Valkyrie Bitcoin Strategy ETF (BTF). That actively managed ETF, which debuted several days after BITO, invests in bitcoin futures as well.

“The Fund will not directly invest in bitcoin. Under normal circumstances, the Fund will seek to purchase a number of bitcoin futures contracts so that the total notional value (i.e., the total value of the bitcoin underlying the futures contracts) of the bitcoin underlying the futures contracts held by the Fund is as close to 100% of the net assets of the Fund as possible,” according to Valkyrie.

Global X Blockchain ETF (BKCH)

The Global X Blockchain ETF (BKCH) is one of an array of funds that qualify as crypto ETFs, but don't actually provide direct exposure to bitcoin or any other digital asset. Rather, BKCH and its brethren in this still evolving fund category are built on the foundation of equities – a growing number of which are proving to have positive correlations to crypto currencies.

BKCH components include crypto miners, companies engaged in blockchain and crypto transactions, purveyors of blockchain technology, including hardware and software, and more. While BKCH isn't a crypto ETF in the purest sense of the term, investors should sleep on the benefits of blockchain as digital assets increase in relevance.

“Digital assets are primarily developed on blockchain networks where transactions are validated by independent nodes and propagated throughout the network on a peer-to-peer basis. Digital assets are typically traded through digital asset exchanges, but they can also be traded on a peer-to-peer basis directly on the blockchain,” according to Global X research.

Amplify Transformational Data Sharing ETF (BLOK)

The Amplify Transformational Data Sharing ETF (BLOK) is one of the original funds to fill the crypto ETF void using stocks. To boot, BLOK is actively managed – a strategy that could pay off for investors in this still young asset class. BLOK's objective is to be at least 80% allocated to “companies actively involved in the development and utilization of blockchain technologies.”

Like the aforementioned BKCH, BLOK is allocated to stocks that display above-average correlations to bitcoin and other cryptos, though that isn't the explicit objective of the fund. In tangible terms, BLOK's crypto correlations are, in part, derived from a combined 58% allocation to transactions companies and crypto miners.

Other holdings include Nvidida (NVDA)PayPal (PYPLand even ETF sponsor WisdomTree (WETF). Add it all up and BLOK is a sensible idea for investors looking for more of a crypto ETF feel than they get with standard tech funds.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Todd Shriber

Todd Shriber got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long/short hedge fund where he specialized in trading sector and international ETFs leading up to and during the financial crisis. He would later become the web editor at ETF Trends. Currently, he analyzes, researches and writes on ETFs for a variety of Web-based publications and financial services firms.Shriber has been quoted in the Barron's, CNBC.com and the Wall Street Journal. His work has been published on Web sites such as Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business and Nasdaq.com.

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