The cryptocurrency hype is spilling over to the ETF as investors jump on the new blockchain-related ETFs as a way to gain indirect exposure to the cryptocurrency mania.
For instance, the Amplify Transformational Data Sharing ETF (NYSE Arca: BLOK) and the Reality Shares Nasdaq NexGen Economy ETF (NasdaqGM: BLCN), which launched in mid-January, have already gathered $169.7 million and $85.9 million in assets under management, respectively. Additionally, the First Trust Indxx Innovative Transaction & Process ETF (NASDAQ: LEGR), which debuted on Thursday, has $3 million in assets.
Blockchain is the technology behind the innovative cryptocurrency industry. A blockchain is a decentralized database shared across all users that facilitates the process of recording transactions and tracking assets across a business network. This foundational technology is expected to pave the way for significant disruptions across many industries.
The surge in investment interest for anything cryptocurrency related remains robust, despite bitcoin prices plunging over 40% since its December highs.
“It is rare for new ETFs to pull in such a large amount of cash,” Todd Rosenbluth, CFRA’s director of ETF and mutual fund research, told CNBC, “but there has been pent-up demand for a thematic approach to gain exposure to Blockchain.”
BLOK utilizes an actively-managed approach to investing in the fast developing world of blockchain-based technology, allowing the fund’s portfolio managers to respond in real-time to valuations, company fundamentals and announcements that may impact the blockchain marketplace. For instance, Taiwan Semiconductor Manufacturing and Overstock.com are among its top holdings. Taiwan Semiconductor has revealed strong sales surge due to demand from cryptocurrency “miners” while Overstock.com has a division focused on developing and investing in blockchain businesses.
BLCN includes companies that are committing material resources to developing, researching, supporting, innovating or utilizing blockchain technology for their proprietary use or for use by others. For example, IBM is developing a number of enterprise blockchain projects and SBI Holdings is a prominent Japanese financial services company working with cryptocurrencies.
Lastly, the newly launched LEGR also focuses on companies across the globe that are either actively using, investing in, developing, or have products that are poised to benefit from a new technology known as blockchain. The underlying index seeks to include only companies that have devoted material resources to the use of blockchain technologies.
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