Are Blockchain ETFs a Good Investment?

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While blockchain ETFs are a great way to get exposure to the new technology, they can also have risks. These risks include unexpected changes in investor sentiment, volatility, and pricing valuations. Additionally, they face increased government regulation, which can cause their value to drop rapidly. As such, it is crucial to understand the risks involved with this type of investment before making the decision to purchase ETFs.

One type of ETF is the VanEck fund, which focuses on the blockchain industry and owns companies in both emerging and developed markets. The majority of the fund’s holdings are based in the US, Canada, and Japan, but it still contains a number of other companies focused on blockchain tech. As such, it is likely to be the most volatile ETF. However, it is also one of the most direct ways to invest in blockchain technology.

The Siren Nasdaq NextGen Economy ETF was launched in January 2018. Its holdings include companies in the blockchain space, and has a 0.68 percent expense ratio. Some of its top holdings include Mastercard (NYSE:MA), Plus500 (LSE:PLUS), and Visa Inc.

Blockchain technology has several applications in large corporations, including digital security, infrastructure, and automation. ETFs that invest in blockchain can provide exposure to this growing industry, and investors can get in early with the first funds. However, the majority of blockchain funds are still young, with little or no track record. Therefore, investors should take their time to learn more about these funds before making the investment decision.

BLCN tracks the Nasdaq Blockchain Economy Index, which was created in partnership with Nasdaq. The index is based on the performance of companies implementing blockchain technologies. Its top holdings include companies with a market cap of $200 million or more. The top 10 holdings account for more than 20 percent of the fund’s total assets. These companies include Accenture, American Express, and Advanced Micro Devices.

The Global X Blockchain ETF invests in 25 tech companies. Its top holdings are Bitcoin mining companies that use blockchain technology to integrate digital assets. The fund’s performance over the past year has been mixed, but the broader IT sector has outperformed the market.

Bitcoin is a popular crypto asset, and there are many crypto ETFs in the market today. Although the newest ones focus on Bitcoin, there are also ETFs that focus on blockchain-centric stocks, including Ethereum. Bitwise’s Crypto Industry Innovators ETF also invests in publicly-traded companies that use blockchain technology and cryptocurrency.

While BITO does not invest directly in Bitcoin, it does invest in futures contracts that bet on the future value of the underlying asset. The funds are subject to CME regulations and hold U.S. Treasury bills as collateral. However, BITO does have a high expense ratio of 0.95%. This works out to roughly $95 a year on a $10,000 investment.

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