3 ETFs for Blockchain Bulls

Bitcoin: I’m sure you’ve heard of it. 

What's less known is behind the cryptocurrency itself lies the infrastructure known as blockchain that may potentially allow the coins to move from volatile investments to viable cogs in the wheel of future finance.  

Blockchain Technology 

IBM.com lays out the essence, purpose and potential benefits of blockchain quite well: 

Blockchain defined: Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved. 

Why blockchain is important: Business runs on information. The faster it’s received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members. A blockchain network can track orders, payments, accounts, production and much more. And because members share a single view of the truth, you can see all details of a transaction end to end, giving you greater confidence, as well as new efficiencies and opportunities. 

Blockchain ETFs 

Investors need to ask themselves if it’s bitcoin they really want or blockchain stocks. Because as the industry awaits the potential approval of exchange-traded funds that allow investors to access the spot price of bitcoin through a convenient ETF package, there already exists some funds that are trying to capitalize on the opportunity that a wider adoption of blockchain technology may present.  

Here are three to consider. They belong to a wide-ranging group in terms of issuers, size and specific emphasis. All three are up at least 150% in price this year, and so it might just be a matter of time before these smaller ETFs get thrust into the spotlight.  

3 Blockchain ETFs 

It’s strange to think that BlackRock Inc.’s iShares unit would have one of the very smallest ETFs in a “hot” space like this, but that’s the case with the iShares Blockchain and Tech ETF (IBLC). With just over $14 million in assets, this ETF invests primarily in cryptocurrency mining. IBLC made its debut in April 2022 and holds 37 stocks, mostly from the U.S. and Canadian companies. It is a highly focused ETF with just four stocks accounting for 44% of its assets. IBLC is up a cool 226% this year. 

No one will shed a tear for the Fidelity Crypto Industry and Digital Payments ETF (FDIG), because its parent company essentially revolutionized the mutual fund industry alongside Vanguard Group and because this blockchain ETF is up “only” 150% this year. FDIG’s holdings overlap with only about one-third of IBLC’s holdings, but it is similarly concentrated in that about 45% of the ETF consists of only four stocks. It holds 38 in total, with a weighted average market capitalization of $23 billion. 

And the Global X Blockchain ETF (BKCH) is a $169 million fund that was launched in July 2021, making it one of the early movers in this sector. It is not a misprint that BKCH is up more than 300% so far this year. The common theme continues in that four of its holdings make up 51% of the total ETF, and the top 10 account for about 77% of assets.  

The spot bitcoin ETF saga gets a lot of attention, and the dust hasn’t yet settled on the wrangling between issuers and the Securities and Exchange Commission.

In the meantime, these three blockchain ETFs have established themselves as winners. To ETF investors, they represent another, related way to pursue the short-term and long-term potential of this new era of tokenization and alternative forms of payment and recordkeeping.