Crypto has a market cap of around $2 trillion, a far cry from the S&P 500’s market cap of roughly $40 trillion, but considering that just five years ago the market cap for crypto was around $20 billion, the growth potential is extremely attractive, and Wall Street has taken notice. The Wall Street Journal’s Dion Rabouin discussed Wall Street’s increasing interest and investment into crypto in a recent video.
Wall Street has been betting increasingly larger on crypto, with major hedge funds worldwide such as Tudor Investment Corporation and Europe’s Brevan Howard committing to crypto in big ways. Coinbase reports that institutional clients traded $1.14 trillion in cryptocurrencies in 2021 on its exchange, a growth of about 10 times its trading in 2020.
“It’s more than double the $535 billion in trading done by retail investors,” Rabouin says. “That shows just how big a slice of the crypto pie Wall Street is taking.”
The opportunities within crypto for some of these big players include creating alternative revenue streams (something that is becoming increasingly more enticing in a rising rate environment), more management fees, and trading commissions as crypto continues to grow.
“Many also see crypto as the first new asset class in a generation; that creates all sorts of opportunities for new clients and more gains,” Rabouin says.
The growth and evolution of crypto has led to alternative means to invest within the space that don’t require spot cryptocurrency exposure through derivatives such as futures, options, and swaps. Tack onto that the opportunities that exchanges and market makers can offer investors, as well as the broadening of crypto assets themselves, and it creates a wide playing field for entrants to crypto investing.
“The market has also grown significantly in a short amount of time, rising from a market cap of around $150 billion in March 2020 to $1.7 trillion in March 2022,” explains Rabouin. “That growth means that professional money makers can safely make big bets without moving the entire market or drawing undue attention.”
Investing in Crypto With BLOK
For investors who want access to the growing crypto space with diversified exposure, the Amplify Transformational Data Sharing ETF (BLOK) can be a great solution.
BLOK currently has $1 billion in AUM, is actively managed, and invests in companies directly involved in developing and using blockchain technology. BLOK was also the first blockchain ETF approved by the SEC and launched in 2018.
The fund invests in companies partnered with or directly investing in companies utilizing and developing blockchain technologies. However, the fund does not invest directly in blockchain technology or cryptocurrencies.
BLOK spreads its holdings across the size spectrum, investing in all market caps. As of the end of December, top allocations within the blockchain industry included transactional at 38.0%, crypto miners at 23.0%, and venture at 11%. BLOK invests across the blockchain landscape, in miners, exchanges, and developers.
BLOK has an expense ratio of 0.71% and currently has 46 holdings.
For more news, information, and strategy, visit the Crypto Channel.