Investing in Blockchain ETFs: All You Need to Know

by ImmuneBytes
Blockchain Etfs

Since the launch on Tuesday, Oct 19, the ProShares Bitcoin Strategy ETF has amassed $1.2 billion in investor assets, the quickest billion-dollar fundraising on record!

ETFs were inevitable. It was almost impossible for the two hottest areas of investment to not cross paths. ETFs are here and you must get ready for them before it gets too late! 

How?

Keep reading to find out!

An Introduction to Blockchain ETFs

A cryptocurrency exchange-traded fund (ETF) is a fund consisting of cryptocurrencies. While most ETFs track an index or a basket of assets, a cryptocurrency ETF tracks the price of one or more digital tokens.

The technology vaulted to fame with the advent of Bitcoin, but the technology has expanded beyond just cryptocurrencies. Blockchain ETFs have the potential to benefit from the increased adoption and utilization of blockchain technology. 

Blockchain ETFs are funds that meet at least one of the following two criteria:

  • They are funds that invest in companies involved with the transformation of business applications through the development and use of blockchain technology.
  • They are funds that invest in futures and options pegged to the performance of Bitcoin, Ether, and other cryptocurrencies, or in cryptocurrency investment products offered by asset managers like Grayscale or Bitwise.

Based on investor sales or purchases, the share price of cryptocurrency ETFs fluctuates daily. Just like common stocks, they are also traded on a daily basis. 

Cryptocurrency ETFs provide several benefits to investors, such as significantly lower cryptocurrency ownership costs and outsourcing the steep learning curve required to trade cryptocurrencies. 

However, the regulatory status of cryptocurrency ETFs is still unknown.

Recommend Read: Top 7 Blockchain ETFs To Invest In 2022

Benefits of Cryptocurrency ETFs

Cryptocurrency ETFs are a nascent asset class, and given the regulatory uncertainty, their market is still being defined. But they might be one of the best instruments through which to own cryptocurrencies. 

Some of the most prominent benefits of crypto ETFs are listed below:

  • The biggest benefit of cryptocurrency ETFs is that they provide exposure to the crypto without the additional expenses of ownership.
  • Shares in cryptocurrency ETFs offer exposure to a fast-rising asset class at a fraction of the actual cost to purchase crypto.
  • Cryptocurrency jargon, steeped in its technological underpinnings, has remained a persistent roadblock to crypto adoption. Investing in a cryptocurrency ETF outsources the learning curve to analysts.
  • Cryptocurrencies have been exposed to the big question about security. A cryptocurrency ETF outsources security functions to the providers of these ETFs. 
  • There are over 1,800 cryptocurrencies available in the market. The infrastructure to buy and sell these tokens is, as yet, undeveloped. ETFs enable investors to diversify without incurring the costs for each token.

Having such benefits, who wouldn’t want to dive into the world of ETFs?

Crypto ETFs In Comparison

When choosing a Crypto ETF one should consider several other factors in addition to the methodology of the underlying index and performance of an ETF, such as:

Symbol ETF Name Asset Class Avg. Daily Volume Previous Closing Price 1-Day Change
BLOK Amplify Transformational Data Sharing ETF Equity 534,200.0 $52.11 6.63%
BITO ProShares Bitcoin Strategy ETF NA 7,522,900 $40.91 2.71%
GBTC Grayscale Bitcoin Trust Multi-Asset 15,800.0 $44.65 1.09%
BITQ Bitwise Crypto Industry Innovators ETF Equity 119,800 $27.25 6.35%
BKCH Global X Blockchain ETF Equity 116,800 $30.40 7.16%
DAPP VanEck Digital Transformation ETF Equity 49,200.0 $27.47 6.51%
BLCN Siren Nasdaq NexGen Economy ETF Equity 48,100.0 $49.89 4.66%

Source: https://etfdb.com/etfs/

Metrics such as daily volume, closing, and opening prices, asset class, and daily change are vital in deciding the ETF to go for!

With this comparison, let’s see some of the newly launched ETFs and what’s famous about them!

Recommend Read: Bitcoin ETF is Coming Soon

New ETFs Launches

Valkyrie’s ETF 

The new Valkyrie fund officially called the Bitcoin Strategy ETF, went live on the Nasdaq under the ticker BTF when stock markets opened Friday at 9:30 a.m. ET. But after roughly a few hours of trading, the stock was changing hands at $24.01, down 4% from the initial price, according to Nasdaq.

ProShares Bitcoin Strategy ETF

The first U.S. bitcoin futures to go live, the ProShares Bitcoin Strategy ETF (stock ticker BITO), launched Tuesday and attracted more than $1 billion of assets in just two days, the fastest-ever ETF to hit the milestone.

VanEck’s Bitcoin Futures ETF

VanEck will join ProShares in launching a bitcoin futures ETF in the coming weeks.

The company revealed it had secured approval to launch its bitcoin-linked ETF in a post-effective filing with the U.S. Securities and Exchange Commission (SEC), indicating the SEC has given the company permission to launch its fund after Oct. 23, a Saturday. Trading will begin “as soon as practicable after the effective date,”.

Bottom Line

ETFs operate like a hybrid between mutual funds and stocks. Many people who are skeptical about cryptocurrency but believe in the “transformative” blockchain technology behind it see blockchain ETFs as a much more sound investment.

There are ways you can expose your portfolio to cryptocurrency without actually purchasing coins, but proceed with caution and use all of the same diligence as you would with any other speculative investment. None of these stocks or specialized ETFs are guaranteed to go up at all and may experience increased volatility, similar to what is found in crypto markets themselves. 

Just like any crypto investment, you should be willing to accept the risks associated with it. 

About Us 

ImmuneBytes is a Blockchain security firm that employs the industry’s best tools and practices to provide a comprehensive smart contract security audit. We have a team of robust and experienced security professionals who are adept at their niches and provide you with a quality service. We have worked on 155+ projects spread across the world on different Blockchain frameworks with some of the industry’s top firms and we continue to unfold the decentralized movement.

We are also providing consultancy, coming up with a bug bounty platform, and also an insurance product to provide our clients with a hassle-free security product catalog. Stay tuned.

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