The cooling appetite for cryptos stands in sharp contrast to the increasing number of cryptocurrency (exchange traded funds) ETF filings, with at least 18 applications tabled this year. ETFs offer a unique way of investing in a sector indirectly.
Nevertheless, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler dampened the fresh wave of optimism among Bitcoin (CCC:BTC-USD) exchange-traded fund advocates hoping for possible approval for a Bitcoin-based exchange-traded fund, saying digital currencies require much more regulation before they can take a plunge into the ETF universe.
ETFs are regarded as low-risk investments. They hold a basket of stocks so think of them like a mini-portfolio. In contrast, cryptos are notoriously volatile. Just look at Bitcoin, the world’s largest cryptocurrency, as an example.
It set an all-time high of approximately $65,000 in April. But then the price began to oscillate wildly. As environmental and regulatory concerns mounted, it dropped below $30,000 in June but has since recovered to more than $48,000, briefly passing above $50,000, even as the U.S. Senate passed an infrastructure bill that would allow for broad oversight of virtual currencies.
Consequently, it may seem ETFs and cryptos are antithetical to each other. However, it may seem challenging to invest in these digital assets individually. It may be better to put your mind at ease and invest in crypto ETFs. They provide you with instant diversification, are more secure, and are listed on major stock exchanges such as Nasdaq and the New York Stock Exchange, making them tax efficient. Furthermore, although an ETF gives the holder diversification benefits, it still trades like a stock.
So, without further ado, let’s look at five cryptos ETFs that are making waves:
- Amplify Transformational Data Sharing ETF (NYSEARCA:BLOK)
- Siren Nasdaq NexGen Economy ETF (NASDAQ:BLCN)
- First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR)
- Purpose Bitcoin ETF (TSX:BTTC)
- Innovation Shares NextGen Protocol ETF (NYSEARCA:KOIN)
Crypto ETFs to Buy: Amplify Transformational Data Sharing ETF (BLOK)
Amplify Transformational Data Sharing ETF started operating back in 2018. In contrast to most ETFs, it does not track an index. Instead, it uses a blended investment strategy pouring capital in a mix of value and growth stocks of various market capitalizations worldwide, focusing on software & services and diversified financials industries. Therefore, it is a bit different from some of the other crypto ETFs out there.
Major holdings include Hut 8 Mining (NASDAQ:HUT), a Canadian cryptocurrency mining company offering blockchain infrastructure and technology solutions; MicroStrategy (NASDAQ:MSTR), a provider of enterprise software platforms; and Riot Blockchain (NASDAQ:RIOT), a Bitcoin mining company that is involved in the provision of special cryptocurrency mining computers.
And do not think that the company only invests in cryptos. You also get some nice diversification when investing in this one. After all, Square (NYSE:SQ), a financial services and digital payments company, is one of the fund’s top holdings. This ETF has an expense ratio of 0.71% and is invested in a total of 47 companies. BLOK has a 52-week low of $23.40 and a 52-week high of $62.94. Amplify has a one-year return of 96%. BLOK has a dividend yield of 1.4% and paid 66 cents per share in the past year.
Siren Nasdaq NexGen Economy ETF (BLCN)
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BLCN tracks the Nasdaq Blockchain Economy Index, intended to measure the returns of companies involved in “developing, researching, supporting, innovating or utilizing blockchain technology.”
This ETF has an expense ratio of 0.68%. BLCN has net assets of $276.6 million. It has a 52-week low of $32.88 and a 52-week high of $53.31. It has an annual dividend of 60 cents per share and a one-year return of 28%.
Top holdings include class A shares of Coinbase Global (NASDAQ:COIN), which operates a cryptocurrency exchange platform; class A shares of Square; Advanced Micro Devices (NASDAQ:AMD), a global semiconductor company based in Santa Clara, California, that develops computer processors and related technologies for business and consumer markets; and Accenture (NYSE:ACN), an Irish multinational company offering consulting and professional services.
Crypto ETFs to Buy: First Trust Indxx Innovative Transaction & Process ETF (LEGR)
LEGR tracks the Indxx Blockchain Index, which measures the performance of companies that either actively utilize, invest in, develop or have products that will benefit from blockchain technology.
Per the ETF’s investment policy, the fund normally invests a minimum of 90% of its net assets in equity securities that comprise the index and has a total of 100 holdings. Consequently, most of the stocks in its portfolio consist of companies involved in the information technology and financial industries.
LEGR has an expense ratio of 0.65% and assets under management of $120 million. Top holdings include Nvidia (NASDAQ:NVDA), a graphics processing unit manufacturer; Oracle (NYSE:ORCL), a multinational computer technology company; and Wipro (NYSE:WIT), an Indian multinational offering information technology, consulting and business process services.
Purpose Bitcoin ETF (BTTC)
Purpose Bitcoin ETF, the world’s first Bitcoin ETF, has crossed $1 billion in assets under management after launching with more than $590 million in AUM in February. The ETF carries a management fee of 1%.
It invests directly in physically settled Bitcoin, not derivatives, and holds it in cold storage, without the risk of trading at large premiums to the value of the ETF’s underlying Bitcoin holdings. This allows easy access to the cryptocurrency without buying and selling crypto directly through a wallet on an exchange like Coinbase.
The ETF has capped its MER Management Expense Ratio (MER) at 1.5%. Therefore, if the MER falls under 1.5%, the savings are passed along to investors.
Crypto ETFs to Buy: Innovation Shares NextGen Protocol ETF (KOIN)
Innovation Shares NextGen Protocol ETF, which started to trade in 2018, tracks the Innovation Labs Blockchain Innovators Index and holds 43 companies. It has an expense ratio of 0.95% and AUM of $30.3 million.
Top holdings include Bill Gates co-founded tech giant Microsoft (NASDAQ:MSFT), Nvidia, Visa (NYSE:V) and Mastercard (NYSE:MA), the world’s two largest payment card network processors. The fund employs a “passive management” investment strategy, which exposes you to large and mid-cap global technology equities. Consequently, a host of familiar names are well represented in this portfolio.
It has a 52-week low of $30.63 and a 52-week high of $43.96. The annual dividend yield stands at 1.25%. KOIN has a one year return of 31%. Compared to some of the other ETFs on this list, KOIN may come across as a bit more conventional due to its holdings. Thus, if you are more of a risk-averse investor, this one should be right up your alley.
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On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.
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