In this article, we discuss the 10 crypto ETFs to watch in 2022. If you want to skip our detailed analysis of these ETFs, go directly to the 5 Crypto ETFs to Watch in 2022.
Exchange-traded funds (ETFs) are a great entry point into trades related to particular asset classes. When the asset class in particular is volatile, like Bitcoin futures, it makes all the more sense to use ETFs for exposure to investments in blockchain technology. This new tech is being used in a variety of industries from banking to retail. Crypto ETFs also offer the twin benefits of investments in digital currencies as well as established stocks that benefit from the rise of blockchain. Digital asset manager CoinShares revealed in November last year that year-to-date inflows into digital asset investment products had reached a record $8.9 billion.
This, per CoinShares, was up more than $2 billion compared to the inflows recorded in 2020. Weekly inflows in these products were around $174 million at the time, the 12th consecutive week of inflows. Crypto ETFs, which started launching in July last year, had a huge part to play in this bullish view of digital assets. However, over the past few weeks, amid a broader lull around growth offerings, crypto ETFs have suffered as well, with digital asset products recording outflows of $73 million last week, the fifth consecutive weeks of outflows.
This negative sentiment appears to be cooling off as investments in blockchain-related equities increase. Some of the top crypto related stocks to buy now according to hedge funds include Mastercard Incorporated (NYSE:MA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and CME Group Inc. (NASDAQ:CME), among others discussed in detail below.
Our Methodology
The crypto ETFs that are expected to perform well in 2022 considering the macroeconomic environment were preferred for the list. The top holdings of each fund are mentioned alongside other details for further clarity.
Data from around 900 elite hedge funds tracked by Insider Monkey was used to quantify the hedge fund sentiment around each top holding.
Photo by Executium on Unsplash
Crypto ETFs to Watch in 2022
10. Siren Nasdaq NexGen Economy ETF (NASDAQ:BLCN)
Siren Nasdaq NexGen Economy ETF (NASDAQ:BLCN) is an exchange traded fund that invests 80% of assets in component securities of an index that measures the return of firms that are dedicating tangible resources to the development and research related to the use of blockchain technology.
One of the biggest holdings of the Siren Nasdaq NexGen Economy ETF (NASDAQ:BLCN) is Block, Inc. (NYSE:SQ), a payments technology firm with hundreds of millions invested in crypto assets.
At the end of the third quarter of 2021, 98 hedge funds in the database of Insider Monkey held stakes worth $8.8 billion in Block, Inc. (NYSE:SQ), up from 94 in the preceding quarter worth $10 billion.
Alongside Mastercard Incorporated (NYSE:MA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and CME Group Inc. (NASDAQ:CME), Block, Inc. (NYSE:SQ) is one of the crypto stocks feeling the heat of a market slowdown in growth.
In its Q1 2021 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Block, Inc. (NYSE:SQ) was one of them. Here is what the fund said:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown
from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.
We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
SQ shares lost 50% over the last 12 months.
9. First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR)
First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR) is an exchange traded fund that invests 90% of assets in an index consisting of firms actively using, developing, or expected to benefit from the use of blockchain technology.
A flagship holding of the First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR) is NVIDIA Corporation (NASDAQ:NVDA), a visual computing firm.
At the end of the third quarter of 2021, 83 hedge funds in the database of Insider Monkey held stakes worth $10 billion in NVIDIA Corporation (NASDAQ:NVDA), compared to 86 in the preceding quarter worth $9 billion.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
Even though technology stocks registered double digit losses so far this year, LEGR is down only 2%.
8. Amplify Transformational Data Sharing ETF (NYSE:BLOK)
Amplify Transformational Data Sharing ETF (NYSE:BLOK) is an exchange traded fund that invests at least 80% of net assets in the equities of companies that are involved in the development and utilization of transformational data sharing technologies. The fund also invests in non-US companies.
A premier holding of the Amplify Transformational Data Sharing ETF (NYSE:BLOK) is PayPal Holdings, Inc. (NASDAQ:PYPL), a financial technology firm based in California.
At the end of the third quarter of 2021, 123 hedge funds in the database of Insider Monkey held stakes worth $12.8 billion in PayPal Holdings, Inc. (NASDAQ:PYPL), compared to 143 in the preceding quarter worth $16.4 billion.
In its Q4 2020 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ:PYPL) was one of them. Here is what the fund said:
“For the full year 2020, one of the top performers was PayPal, which we purchased in 2019, the company continues to take market share in digital payments and has seen an acceleration in user adoption and engagement, especially within their “silver tech” or older user demographic. We expect many more years of ongoing double-digit growth from their various business segments and new initiatives.”
7. Global X Blockchain ETF (NASDAQ:BKCH)
Global X Blockchain ETF (NASDAQ:BKCH) is an exchange traded fund that invests 80% of total assets in US stocks and non-US stocks that are expected to benefit from the advances in the field of blockchain technology.
Global X Blockchain ETF (NASDAQ:BKCH) has $114 million in net assets with a net expense ratio of 0.50%. A top holding of the fund is Coinbase Global, Inc. (NASDAQ:COIN), one of the largest crypto exchanges in the world.
Among the hedge funds being tracked by Insider Monkey, New York-based firm ARK Investment Management is a leading shareholder in Coinbase Global, Inc. (NASDAQ:COIN) with 6.9 million shares worth more than $1.5 billion.
In addition to Mastercard Incorporated (NYSE:MA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and CME Group Inc. (NASDAQ:CME), Coinbase Global, Inc. (NASDAQ:COIN) is one of the stocks expected to benefit from the further mainstreaming of blockchain technology.
In its Q3 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Coinbase Global, Inc. (NASDAQ:COIN) was one of them. Here is what the fund said:
“Coinbase (COIN): We established a new position in Coinbase, the dominant US crypto exchange and brokerage, this quarter. Given the misperceptions and early-stage nature of the industry, I thought it would be helpful for our partners’ understanding to share a report outlining our thesis, which we published on October 31st.
At a high level, we believe the crypto economy is in the middle of “crossing the chasm” into mainstream adoption & use cases, which will result in millions of mainstream users needing to transact in crypto in some form.
Coinbase is well positioned in the Western, regulated markets to capture this influx – considering their dominant market share / mindshare, their focus on the casual user and thus superior userexperience compared to alternatives, and their position as a “toll-booth” for this industry. Longer-term, we also believe Coinbase has “super-app” ambitions, and will be the primary gateway for both the general population and institutions to interact with the crypto economy…” (Click here to see the full text)
6. Grayscale Bitcoin Trust (BTC) (OTC:GBTC)
Grayscale Bitcoin Trust (BTC) (OTC:GBTC) is a closed end grantor trust. These trusts are different from conventional ETFs because they issue a fixed number of shares when going public. These shares are afterwards traded in Over-the-Counter (OTC) markets.
The price of Grayscale Bitcoin Trust (BTC) (OTC:GBTC) shares closely follows the price of Bitcoin, the most popular cryptocurrency. The fund manages billions in digital currency assets and charges a management fee of 2%.
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Disclosure. None. 10 Crypto ETFs to Watch in 2022 is originally published on Insider Monkey.
