After falling more than 50% from its peak back in April, bitcoin is racing higher once again. On August 23rd, bitcoin was trading back above $50,000 and while it’s since pulled back modestly from that level, it seems clear that the cryptocurrency is firmly back in traders’ favor. Bitcoin has now made a 67% retracement of its earlier 2021 losses.
Bitcoin Price Chart
In terms of the ETF marketplace, there’s still no direct way to invest in bitcoin. There are more than 20 different filings for a bitcoin ETF (or some derivation of it), but the SEC to date has shown little inclination that it’s ready to give the green light on such a product.
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There are, however, a handful of ETFs out there that do have bitcoin exposure inside their portfolio, both directly and indirectly. Granted, the cryptocurrency positions held by these funds is relatively minimal and won’t move the needle in a major way, but here are five of them that certainly benefited from bitcoin’s latest rally.
Viridi Cleaner Energy Crypto Mining & Semiconductor ETF (RIGZ)
RIGZ is only about a month old and has just $10 million in assets under management, but it’s clearly benefited from debuting at just the right time. In its brief existence, it’s already gained more than 40%.
RIGZ is an actively-managed fund that is focused on the cryptocurrency mining and semiconductor spaces. The portfolio managers invest in companies that are market participants creating cryptocurrency themselves while overlaying a clean energy screen in order to avoid those potentially damaging the environment through excess energy usage. The fund will also invest in companies in the semiconductor industries, focusing on those that develop or manufacture computer chips used in crypto-mining industries.
It’s important to note that RIGZ doesn’t invest in cryptocurrency directly, but its focus on crypto mining obviously ties the fund to it indirectly.
The fund is quite concentrated, holding just 18 names, with the top holdings including Marathon Digital Holdings, Bitfarms Limited and Hut 8 Mining Corp.
Bitwise Crypto Industry Innovators ETF (BITQ)
Bitwise is one of the largest crypto asset managers, with over $1.5B in assets. BITQ tracks an index of companies that generate the majority of their revenues from their crypto business activities.
The index itself is divided into two tiers:
- At least 80% of the index will comprise of “pure play” companies that are primarily focused on the crypto market. In general, these companies derive more than 75% of their revenue directly from servicing cryptocurrency markets, including crypto mining firms, crypto mining equipment suppliers, crypto financial services companies, or other financial institutions servicing primarily crypto-related clientele, or have more than 75% of their net assets accounted for by direct holdings of bitcoin, ethereum, or another liquid cryptoassets.
- No more than 20% of the index comprises a supporting tier composed of large-cap companies with diversified business interests that include at least one significant public business line focused on the crypto market. These companies generally have a “significant dedicated business initiative” explicitly focused on the crypto ecosystem that is reported in at least one of the company’s official quarterly or annual filings from the past 12 months.
Like RIGZ, BITQ debuted just earlier this year. It’s gained a little more traction, managing around $68 million in assets, and is slightly more diversified, holding 30 names currently. BITQ also holds RIGZ’s three major names listed above as well as Microstrategy, Hive Blockchain and Riot Blockchain.
It will not hold individual cryptocurrencies either.
Amplify Transformational Data Sharing ETF (BLOK)
BLOK was one of the original blockchain ETFs and is still the most successful according to assets under management. BLOK is actively-managed and targets companies actively involved in the development and utilization of blockchain technologies. “Involved” could be defined as engaging directly in research and development, profiting from the demand for such applications, partnering with companies engaged in blockchain development or being a member of blockchain consortiums and groups.
BLOK is a little different than the two funds already mentioned because it does have a direct position in bitcoin. The fund owns roughly 1% positions in the Evolve Bitcoin ETF, the 3iQ Coinshares Bitcoin ETF and the Purpose Bitcoin ETF – three exchange-traded products that have been approved and trade in Canada.
BLOK has gained 40% year-to-date.
Simplify U.S. Equity PLUS GBTC ETF (SPBC)
The third ETF debuting just this year to target the cryptocurrency space comes from Simplify. Its name makes it pretty clear how it’s going to invest.
SPBC offers a portfolio consisting of two distinct segments – a 100% equity position achieved through the use of S&P 500 futures contracts, plus a 10% exposure to bitcoin via the Grayscale Bitcoin Trust (GBTC). Overall, the fund has 110% combined exposure to the two assets.
I’ve noted before that GBTC isn’t necessarily the best way to achieve bitcoin access, although it’s probably the simplest for those who don’t want to mess around with an individual crypto wallet. GBTC is a trust, which means it can trade at a premium or discount to the price of the underlying asset, much in the same way that a closed-end fund does, so it can potentially deliver very different returns than a direct investment in bitcoin.
Still, it’s a bitcoin exchange-traded product and is probably the best option there is for the time being.
ARK Next Generation Internet ETF (ARKW)
Yes, it wouldn’t be a bitcoin article without a mention of Cathie Wood and the ARK ETFs!
GBTC is actually ARKW’s 2nd largest holding with a weighting of nearly 6%. ARK has been a frequent holder and trader of the bitcoin trust along with ancillary names, such as Coinbase, and I suspect this will remain the case for some time.
ETFs With Bitcoin Exposure
- Viridi Cleaner Energy Crypto Mining & Semiconductor ETF (RIGZ)
- Bitwise Crypto Industry Innovators ETF (BITQ)
- Amplify Transformational Data Sharing ETF (BLOK)
- Simplify U.S. Equity PLUS GBTC ETF (SPBC)
- ARK Next Generation Internet ETF (ARKW)
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Also read:
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