S&P 500 Addition Sends Coinbase-Heavy ETFs Soaring
- Coinbase becomes the first crypto firm to be added to the benchmark S&P 500 index.
- CRPT allocates over 15% to Coinbase shares and has surged 35.7% over the past month.
- Strategy and COIN dominate top holdings across major crypto ETFs.
Coinbase Global Inc. (COIN) shares jumped more than 24% on Tuesday after the cryptocurrency exchange was announced as “the first digital asset player to be included in the benchmark S&P 500 index,” according to Reuters.
The company will replace credit-card issuer Discover Financial Services (DFS), which is being acquired by Capital One Financial Corp. (COF), with the change taking effect before trading begins on May 19.
This milestone for cryptocurrency's mainstream acceptance comes as several ETFs already hold heavy positions in the exchange that will soon join the widely tracked benchmark index.
Coinbase shares make up large portions of several crypto-focused ETFs, according to FactSet data. The First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT) allocates 15.5% of its portfolio to Coinbase, making it the fund's third-largest holding.
CRPT, which actively invests in companies supporting the crypto industry, has seen positive year-to-date fund flows of $9.7 million despite mixed performance. The ETF is up 2.6% year to date and has surged 35.7% over the past month, though it declined 2.8% over the past three months, according to FactSet.
Crypto ETFs Show Varying Performance
The Global X Blockchain ETF (BKCH), which tracks a market-cap-weighted index of global companies involved in blockchain technologies, holds Coinbase as its largest position at 13.7% of assets.
Despite inflows of $22.2 million year to date and $6.4 million over the past month, BKCH is down 18.2% year to date and 21.1% over the past three months, though it has gained 26.2% in the past month, according to data from FactSet.
The Fidelity Crypto Industry and Digital Payments ETF (FDIG) also has Coinbase as its largest equity holding at 12.6%, after its cash collateral position. FDIG has attracted $10 million in new assets year to date despite being down 12.2% over the same period and falling 15.1% over the past three months, though it rose 19.5% in the past month, according to FactSet data.
Source: FactSet
Oppenheimer analyst Owen Lau has raised the firm's price target for Coinbase to $293, noting that "S&P 500 inclusion will benefit Coinbase for a while as institutional investors take time to prepare to get into the stock," according to Reuters.
"It sets an example for other crypto companies to go public and earn a seat in the S&P 500," Lau told Reuters about Coinbase's index inclusion.
Shares of Strategy Inc. (MSTR), formerly known as MicroStrategy, represent another major cryptocurrency exposure across these funds, accounting for 20.2% of CRPT's portfolio, making it the largest equity position in that fund.
Cryptocurrency-mining companies also feature prominently across these ETFs, with MARA Holdings, Inc. (MARA) appearing as a top-10 holding in all three funds. Galaxy Digital Holdings Ltd. also commands large allocations in CRPT (15.3%) and BKCH (7.8%), according to FactSet data.
