Crypto Dominates January’s Top Performing ETFs

It’s official: Digital assets have had an impressive start of the year after trailing almost every asset class in 2022, according to Bloomberg data for the full month of January. 

Once you factor out leveraged and inverse exchange-traded funds, the 30 top-performing ETFs year-to-date were heavily focused on digital assets, from the nearly 99% gain of the Valkyrie Bitcoin Miners ETF (WGMI) to the 31.2% share price increase seen by the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).  

Source: Bloomberg; data as of 1/31/2023

“Digital assets have sold off significantly more than the broader market, so we hit a point where we exhausted most of the selling pressure,” said Spencer Bogart, general partner at Blockchain Capital, previously told etf.com.  

WGMI only launched in February 2022, but consider that the VanEck Digital Transformation ETF (DAPP), the No. 3 performer this year with a gain of 67%, was down nearly 86% in 2022 and was the second-worst performer after the recently closed Viridi Bitcoin Miners ETF (RIGZ).  

The only ETF in the top 20 that doesn’t focus on digital assets is the iPath Bloomberg Nickel Subindex Total Return ETN (JJN), which was up 24.4%, likely due in part to its use in energy transition technologies, though it is forecast to be in surplus this year, according to a recent Reuters article.  

However, if you look beyond those top 20 ETFs, more diversity begins to creep into the list, though it is still liberally sprinkled with crypto-related assets and remains fairly tech heavy. The ARK Fintech Innovation ETF (ARKF) is up 29.2%, though that fund has a nearly 11% weighting in Coinbase, which is up more than 65% year to –ate, so it’s not completely divorced from the crypto economy. 

And in fact, ARK ETFs, which are focused on disruptive innovation, are fairly prevalent in these funds ranked 21-30 for performance. The ARK Next Generation Internet ETF (ARKW) comes in just behind its sister fund, with almost the same return. Coinbase Global makes another appearance in ARKW’s holdings, with a weight of 6.6%, as does the Grayscale Bitcoin Trust, with a weight of 5.7%.  

The ARK flagship ETF, the ARK Innovation ETF (ARKK), is on the list, with an increase of 27.8% and a 4.7% weight to Coinbase. Those three ARK ETFs were each down more than 65% in 2022.  

Falling between ARKW and ARKK is the iPath Bloomberg Copper Subindex Total Return ETF (JJC), up 28.4%, driven at least in part by demand from the renewable energy sector. Similarly, the VanEck Rare Earth/Strategic Metals ETF (REMX) was up 25.1% through the end of January. Such metals are also used in the transition to a low-carbon economy.  

Two online retail ETFs that were hit hard last year also saw significant increases during the first month of the year. The ProShares Online Retail ETF (ONLN) and the Amplify Online Retail ETF (IBUY) were up 27.2% and 25.1%, respectively. Both funds were down more than 50% in 2022. 

The Roundhill Meme ETF (MEME) is another fund hit hard in 2022 that is currently rebounding. It finished January gaining 25.3%, quite a turnaround after a steep decline last year. 

Most of the best-performing ETFs of January 2023 had fallen so much last year that the argument could be made that their share prices had nowhere to go but up. However, expectations that the Fed could halt or slow its rate hiking likely helped to boost them as well.  

Contact Heather Bell at [email protected]