Crypto ETFs Are Most of the Year’s Best Performing Funds
Bitcoin prices are up and so are crypto and blockchain ETFs, which are now outperforming almost every other fund on public markets
AshDesign/Shutterstock, modified by Blockworks
Crypto, blockchain and bitcoin-related ETFs are off to a stellar start to the year.
Of the 20 best performing ETFs on the market year to date, 13 invest in the crypto sector, according to ETF Database.
Valkyrie’s Bitcoin Miners (WGMI) and GraniteShares’ 1.5x Long Coinbase Daily (CONL) lead the charge, sitting in third and fourth place with around 135% returns.
CONL provides leveraged exposure to the daily price fluctuations of Coinbase shares, after accounting for fees and expenses. Coinbase (COIN) is up more than 110% this year and has rebounded from Jan. 6’s all-time low of $31.55.
VanEck’s Digital Assets Mining (DAM) and VanEck’s Digital Transformation (DAPP) follow in sixth and eighth place, respectively, having returned 120% and 100% so far this year.
ProShares’ UltraShort Bloomberg Natural Gas (KOLD) is number-one with 148% returns. The S&P 500 is up almost 7.5% across the same time period.
VanEck’s DAM follows MVIS’s Global Digital Assets Mining Index, which includes companies that generate at least 50% of their revenue from crypto mining or mining hardware manufacturing. Marathon, Riot and Hut 8 are its largest current holdings. DAPP’s portfolio is mostly bitcoin miners.
Investors allocate to ETFs instead of the underlying because they are widely available in traditional brokerage accounts, Sam Callahan, an analyst at bitcoin financial services firm Swan Bitcoin told Blockworks.
“It allows them to gain exposure in retirement accounts like IRAs and 401K’s given that ETFs are securities that fit into existing regulatory frameworks,” he said.
Still, ETFs come with additional costs and risks that don’t exist when investing in the underlying assets, according to Callahan.
Amplify’s Transformational Data Sharing ETF (BLOK), the industry’s largest blockchain fund with $437 million assets under management, ranks far below with 30% returns.
The actively-managed fund holds Riot, MicroStrategy and Coinbase stock, among other obvious picks, but it also backs firms dabbling in blockchain more broadly, including GMO Internet Group, CME Group and Accenture.
Outperforming crypto-related ETFs are still tracking under the S&P 500 over the past year
Bitcoin helps crypto ETFs race to the top
Bitcoin (BTC) and ether (ETH) have outperformed other market sectors this year — a rising tide lifting these crypto ETFs.
Despite significant headwinds and uncertainty in the last 12 months, institutional investors have flagged intentions to allocate a portion of their portfolios to crypto funds.
Earlier this month, Blockworks reported 48% of institutions still plan to buy up crypto ETFs — a drop of 6% from the year prior. The findings were based on responses gathered from 325 institutional investors, financial advisers and fund managers
“This kind of performance from crypto assets was unexpected going into 2023,” Miguel Morel, CEO at blockchain intelligence unit Arkham, told Blockworks.
“Many investors were still sidelined and waiting for additional fallout from the previous year, but one unspoken rule of investing is that the market never waits for you to be ready.”
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
