Cryptocurrency ETFs have become popular since the pandemic began because they help investors get around the challenges of investing in digital currencies. The best crypto ETFs are BITQ, BLOK and BITS.
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The number of digital coins is growing at a rapid pace and it can be difficult for investors to find the best coins.
Another challenge for investors investing directly in cryptocurrencies is having to learn about crypto wallets and exchanges. Wallets are like private accounts that hold cryptocurrencies while crypto exchanges only allow crypto trades. What that means is that you have to have separate crypto accounts to invest directly in digital coins.
Best Crypto ETFs To Watch
Through crypto ETFs, you can trade through the regular U.S. exchanges, just like you would with a stock.
Remember that several crypto ETFs that trade in U.S. markets hold derivatives rather than actual coins. They are different from ETFs that hold stocks or bonds.
But crypto ETFs behave like exchange-listed stocks and other ETFs that hold stocks. So the trading principles that apply to stocks apply to crypto ETFs as well.
Some crypto ETFs also hold blockchain companies. Blockchain is the technology behind cryptocurrencies and enables financial transactions to be permanently recorded on a peer-to-peer digital network.
Apply CAN SLIM System
The best guide for choosing cryptocurrency ETFs are the factors in IBD’s CAN SLIM method and chart analysis. A strong performance will set a successful ETF apart. Growth in supply can be tracked through the ETF’s market cap and average trading volume.
It is always a good idea to pick a leader over a laggard. Leaders are companies that have shown strong growth in recent quarters. For cryptos, this means higher rate of adoption along with significant price appreciation.
Price could depend on a variety of factors. Some of these are similar to the ones affecting stocks, such as increasing and falling supply. Others, such as technology upgrades that affect the price of coins, are not. Coins are also versatile and have several use cases that also affect their pricing.
As in the case of stocks, the market is an important factor, and understanding the market direction is vital to investors. This is because a company with strong earnings and forecasts can underperform when the market direction slopes down. On the other hand, a company that has been trading above its support line may break out to new highs due to the momentum in a market that is trending upward.
Remember, cryptos are volatile assets and this affects their performance in any market condition.
Since late July, IBD’s market outlook has been “confirmed uptrend.” Investors should still be cautious as fears of recession have not disappeared and inflation remains high after hitting 9.1% in June. After the Russian-Ukraine war and news that OPEC+ has committed to only a small increase in oil production, oil continues to weigh on markets.
Best Crypto ETFs To Watch
The best cryptocurrency ETFs are those that find support at their 50-day moving average or break through resistance lines.
ProShares Bitcoin Strategy ETF (BITO) is the first U.S. Bitcoin-linked ETF and holds Bitcoin futures contracts. The ETF saw strong demand and as of April 2022, it had $234 million in average trading dollar volume. It was among the top 4% of the most actively traded ETFs in the U.S., according to the company.
Its relative strength line, which compares the fund’s performance with the S&P 500, has been declining. Shares have fallen below their 50-day moving average. The ETF is not a good buy opportunity, at least until it climbs back above that line.
The Amplify Transformational Data Sharing ETF (BLOK) invests in blockchain companies. Top holdings include MicroStrategy (MSTR), Coinbase (COIN), Silvergate Capital (SI) and Accenture (ACN).
With $635 million in market cap, BLOK in July climbed above its 50-day line, though its poor Relative Strength Rating remains a concern.
Best Crypto ETFs: Watch For 50-Day Line
Bitwise Crypto Industry Innovators ETF (BITQ) has a market cap of $80 million, according to MarketSmith. The fund invests in MicroStrategy, Silvergate Capital, Coinbase, Marathon Digital Holdings (MARA), Riot Blockchain (RIOT) and other prominent players in crypto assets. Shares of BITQ in the last few weeks have recently risen above their 50-day line, though the RS Rating remains below 10.
Global X Blockchain and Bitcoin Fund (BITS) has a market cap of $9 million. The fund invests in the Global X Blockchain ETF (BKCH) and Bitcoin futures.
Shares are above their 50-day line, though the RS Rating also is low. Crypto ETFs are slowly rebounding from deep declines, leaving them with low RS Ratings and RS lines.
The Valkyrie Bitcoin Miners ETF (WGMI) has a market cap of $4 million and is also above its 50-day line. The fund holds several companies with connections to Bitcoin mining, such as Advanced Micro Devices (AMD), CleanSpark (CLSK), Bitfarms (BITF), Hive Blockchain (HIVE) and Riot Blockchain.
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