- Bitwise Crypto Industry Innovators ETF (BITQ): Provides a convenient way to profit from the growth of the crypto ETFs economy
- First Trust Indxx Innovative Transaction & Process ETF (LEGR): Offers exposure to companies actively using blockchain technology
- Invesco Alerian Galaxy Crypto Economy ETF (SATO): Offers exposure to moves in Bitcoin
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Blockchain and crypto ETFs (exchange-traded funds) have been among the hottest investment vehicles of 2021. As prices of cryptos like Bitcoin (BTC-USD ) and Ethereum (ETH-USD) soared to record highs last year, other altcoins also rose to prominence as well.
Analysts suggest that “the blockchain market will grow to $20 billion in annual revenues.” As a result of these developments, the industry acceptance of digital assets, blockchain stocks, and ETFs that hold them has also increased.
Yet, 2022 has been a different story for cryptos. So far in the year, BTC-USD and ETH-USD have lost around 6.5% and 14.0%. Similarly, the Global X Blockchain ETF (NASDAQ:BKCK) ), which was initially launched in July 2021, is down 27.5% year-to-date (YTD).
Despite recent declines in price, metrics suggest that “The user index for 2021 shows a 97% confidence in cryptocurrencies.” Put another way, global consumers and investors remain bullish on the industry.
With that information, here are three blockchain and crypto ETFs to buy:
| BITQ |
Bitwise Crypto Industry Innovators ETF |
$14.74 |
| LEGR |
First Trust Indxx Innovative Transaction & Process ETF |
$39.29 |
| SATO |
Invesco Alerian Galaxy Crypto Economy ETF |
$15.73 |
Bitwise Crypto Industry Innovators ETF (BITQ)
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52-week range: $13.40- $35.68
Dividend yield: 3.68%
Expense ratio: 0.85% per year
Our first blockchain ETF, the Bitwise Crypto Industry Innovators ETF (NYSEARCA:BITQ) offers exposure to the companies leading the new crypto economy. It is heavily skewed toward companies that generate most of their revenue from their crypto-related business activities.
BITQ, which tracks the Bitwise Crypto Innovators 30 Index, has 30 holdings. It started trading in May 2021. With regards to sub-sectors, infrastructure & hardware at 24.19%, asset management at 13.67%, and mining at 12.11%.
The top 10 stocks in the portfolio account for close to two-thirds of its net assets of $117 million. Among them are asset management firm Galaxy Digital (OTCMKTS:BRPHF); MicroStrategy (NASDAQ:MSTR); Coinbase Global (NASDAQ:COIN) and cryptocurrency banking platform Silvergate Capital (NYSE:SI).
The ETF reached a 52-week high of $35.68 on Nov. 9, 2021. Yet, it has declined more than 27% YTD. The fund enjoys a relatively low price-to-earnings (P/E) ratio of 14.01 & price-to-book (P/B) ratio of 4.62. Readers interested in stocks that give access to the blockchain technology and crypto assets could consider researching the fund further.
First Trust Indxx Innovative Transaction & Process ETF (LEGR)
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52-week range: $36.51- $45.38
Dividend yield: 2.00%
Expense ratio: 0.65% per year
Our second fund is the First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR). It provides investors with exposure to firms that are actively using, investing in, developing, or have products that are poised to benefit from blockchain technology. The fund started trading in January 2018.
LEGR, which tracks the Indxx Blockchain Index, has 102 holdings. In terms of sectoral allocations, we see financials leading at 36.72%, followed by information technology at 33.10%, and consumer discretionary at 9.14%.
The top 10 holdings account for close to close to 15% of its net assets of $149 million. Alibaba (NYSE:BABA); PayPal (NASDAQ:PYPL); Nvidia (NASDAQ:NVDA); and information technology services and digital transformation company Capgemini (OTCMKTS:CAPMF) are among the most prominent holdings.
The ETF reached an all-time high of 45.38 on Jan. 13, but has since declined steadily. Thus, it is down about 10.5% YTD. The fund has an attractive P/E ratio of 12.45 and a P/B ratio of 1.60. Many of the names in this diverse fund are likely to create shareholder value in the coming quarters.
Invesco Alerian Galaxy Crypto Economy ETF (SATO)
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52-week range: $14.46- $35.24
Dividend yield: 0.73%
Expense ratio: 0.60% per year
The final choice on our list of crypto ETFs to buy is the Invesco Alerian Galaxy Crypto Economy ETF (BATS:SATO). It provides exposure to digital asset companies which are materially engaged in cryptocurrency trading as well as cryptocurrency mining. It can also invest in crypto exchange-traded products (ETPs). It started trading in October 2021.
SATO, which tracks the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity, Trusts, and ETPs Index, has 44 holdings. With regards to sectors, it is heavily tilted toward information technology at 63.12%, followed by investment companies at 16.34% and financials at 14.96%.
The top 10 names in the portfolio account for close to 45% of net assets of $7.5 Million. In other words it is a small and concentrated fund.
Among the top holdings are Bitcoin-tracking fund Grayscale Bitcoin Trust (OTCMKTS:GBTC); blockchain technology company GreenBox (NASDAQ:GBOX); high-performance computing (HPC) infrastructure name Northern Data (OTCMKTS:NDTAF); and bitcoin mining and power generation facility Greenidge Generation (NASDAQ:GREE).
The ETF reached a high of $35.24 on Nov. 10 2021. Since then, it has lost 53% of its value. Interested readers could regard this decline as a good opportunity to buy into a crypto ETF like SATO.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
