Blockchain ETFs Stall Despite Returns

September 05, 2019

How Will Blockchain Drive Profits?

“For blockchain to be a viable investment theme, we need two things,” he noted. “First, we need to have cryptos stabilize and rally; second, we need blockchain application for companies to become a driver of profits.”

Neither of these things is yet in place. Yes, bitcoin has rallied sharply this year, but many have been looking for a corrective move that took bitcoin off recent highs such as backing up toward support levels around $8,000. It’s a market that’s still very volatile.

On the application front, blockchain is said to be changing the global shipping industry, for example, but investors are still looking for more headline-grabbing implementation involving household-name companies doing interesting things with blockchain.

A quick glance at BLOK’s top holdings shows that a lot of companies leading implementation of blockchain are global stocks that U.S. investors may not know much about. At the top, GMO Internet and Digital Garage are Japanese internet services and infrastructure providers using blockchain technology in their tools and services.

News such as Facebook’s efforts to launch Libra would help this segment attract more investor attention.



Ahead Of Their Time?

It could, in the end, all be a matter of timing.

The big growth potential story tied to Blockchain—the same one that sent ETF issuers racing to bring first-to-market blockchain ETFs about a year ago when four funds launched within days of each other—is still intact. But it could be that these funds were ahead of their time.

It’s not unusual to see narrowly focused thematic ETFs take a few years before finding traction, and blockchain ETFs—funds accessing one of the growthiest tech edges of the market—may have been just a little too early to the party.

You can see a complete list of blockchain ETFs here.

Contact Cinthia Murphy at [email protected]

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