May 17, 2022
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In recent months, many new crypto investors have learned a hard lesson: Prices don’t always go up.
For instance, Bitcoin — the largest cryptocurrency in the world — is down 37% year to date and 57% below its all-time high of $68,990 in November 2021.
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While sentiment is far from bullish these days, billionaire investor Mark Cuban’s recent comments might cheer up crypto enthusiasts.
“Crypto is going through the lull that the internet went through,” writes the Shark Tank star and Dallas Mavericks owner in a tweet.
“After the initial surge of exciting apps, NFTs, DeFi, P2E, we saw the imitation phase as chains subsidized the movement of those apps to their chains (ala bandwidth and storage subsidies by startups in the 2000s).”
Not all companies are the same. In the crypto arena, Cuban expects the winning players to be those that “use smart contracts to improve business productivity and profitability.”
If you don’t want to pick individual winners and losers in the crypto world, you can still get exposure to the space through ETFs.
Here’s a look at three of them.
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Global X Blockchain ETF(BKCH)
Blockchain is more than just bitcoin. To get exposure to leading players in the segment, consider Global X Blockchain ETF.
The fund invests in businesses that are solidly positioned for the increasing adoption of blockchain technology. They include crypto miners, digital asset transaction technologists and developers of blockchain applications.
Global X Blockchain ETF’s portfolio currently consists of 27 stocks, with the top five holdings being Marathon Digital Holdings (11.0%), Riot Blockchain (10.9%), Coinbase Global (9.4%), Galaxy Digital Holdings (8.1%) and Northern Data (6.5%).
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The ETF has an expense ratio of 0.5%.
More: ETFs vs. mutual funds: What's the difference?
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First Trust Indxx Innovative Transaction & Process ETF (LEGR)
First Trust Indxx Innovative Transaction & Process ETF aims to replicate the performance of the Indxx Blockchain Index. The index is made up of companies that are either actively using, investing in, or developing products that benefit from blockchain technology.
The ETF holds 103 stocks, making it one of the more diversified funds in the space.
While most blockchain ETFs focus on the U.S., LEGR gives investors access across the globe. In fact, the U.S. represents just 34.9% of the fund’s geographical exposure.
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LEGR also has geographic exposure to China (11.5%), Germany (8.5%), India (7.4%), France (5.4%), the U.K. (5.0%) and Switzerland (3.0%) among others.
LEGR’s expense ratio is 0.65%.
Bitwise 10 Crypto Index Fund (BITW)
If you simply want to invest in large cryptocurrencies, Bitwise 10 Crypto Index Fund is worth a look.
The fund tracks an index made up of the 10 largest crypto assets weighted by market capitalization. Because cryptocurrencies are often highly volatile, the index is rebalanced monthly to stay up to date with the rapidly changing market prices.
The fund’s five largest holdings are Bitcoin (63.7%), Ethereum (27.9%), Cardano (2.0%), Solana (2.0%) and Polkadot (1.4%).
BITW has a relatively high expense ratio of 2.5%.
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Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
