6 best cryptocurrency ETFs to look out for in 2022: First Trust Indxx Innovative Transaction & Process ETF (LEGR) Amplify Transformational Data Sharing ETF (BLOK) Purpose Bitcoin ETF (BTCC) Proshares Bitcoin Strategy ETF (BITO) Valkyrie Bitcoin Strategy ETF (BTF) Grayscale Bitcoin Trust (GBTC)
Table of contents [Show]
- What is a Cryptocurrency ETF (Exchange-Traded Funds)?
- 6 best cryptocurrency ETFs to look out for in 2022
What is a Cryptocurrency ETF (Exchange-Traded Funds)?
Cryptocurrency exchange-traded funds (ETFs) are a new class of investment products that hold cryptocurrency and trades like stocks. They're like traditional ETFs which offer investors exposure to a pool of stocks, bonds or other assets - but in this case, the investment focus is cryptocurrencies.
Similarly, the value of an ETF is based on the value of whatever it holds.
For example, an ETF could own shares in a basket of different cryptocurrencies; therefore, the value of its shares will change based on how those cryptocurrencies perform in relation to each other and against major fiat currencies like the U.S. Dollar or the Euro.
In addition, crypto ETFs give investors a stake in the cryptocurrency market without the risk of owning digital currency directly. They also provide investors with low-cost access to this burgeoning market.
In the following paragraphs, we'll highlight some of the best cryptocurrency exchange-traded funds (ETFs) that you should have your eyes on in 2022.
Let's get to it:
6 best cryptocurrency ETFs to look out for in 2022
- First Trust Indxx Innovative Transaction & Process ETF (LEGR)
- Amplify Transformational Data Sharing ETF (BLOK)
- Purpose Bitcoin ETF (BTCC)
- Proshares Bitcoin Strategy ETF (BITO)
- Valkyrie Bitcoin Strategy ETF (BTF)
- Grayscale Bitcoin Trust (GBTC)
First Trust Indxx Innovative Transaction & Process ETF (LEGR)
The First Trust Indxx innovative transaction and process ETF is a popular blockchain ETF with a unique selection and weighting process. Half of the fund's weight is used for companies that actively develop blockchain technology, and the other half is used for companies that use blockchain technology.
This unique method makes the LEGR fund have a different composition and balance from other cryptocurrency exchange-traded funds (ETFs). Similarly, this $142 million fund holds 101 shares, including Nvidia Corp. (NVDA), Advanced Micro Devices Inc. (AMD) and Salesforce.com Inc. (CRM).
The dividend yield of the LEGR fund is 1.28% and the expense ratio is 0.65%.
Amplify Transformational Data Sharing ETF (BLOK)
Amplify Transformational Data Sharing ETF (BLOK) is a fund that invests approximately 80% of its total assets in stocks engaged in the development of blockchain technology. Interestingly, BLOK doesn't track indexes like other ETFs, rather, it focuses on various values and growth stocks in the cryptocurrency ecosystem.
Also, some of its major holdings include tech giants like MicroStrategy, PayPal, Coinbase, and Square. In addition, BLOK has an expense ratio of 0.71%, a one-year return rate of 195%, and currently manages more than $1 billion in assets.
The value of this fund may rise from the current $59 per share as related stocks show signs of continued performances, coupled with the growing size of the crypto market in the coming months and years.
Purpose Bitcoin ETF (BTCC)
Purpose Bitcoin ETF is the world's first Bitcoin ETF, and one of the largest in terms of asset under management (AUM). After its launch in February 2020, it has assets under management of over 590 million U.S. dollars, with a management fee of 1%.
One major advantage of BTCC is that it directly purchases bitcoins and holds them in cold storage, without the risk of trading at a high premium that's higher than the value of the underlying bitcoin asset. This method allows investors to get more direct exposure without directly buying and selling cryptocurrencies through wallets on exchanges such as Coinbase.
Proshares Bitcoin Strategy ETF (BITO)
This is the first cryptocurrency ETF approved in the United States, and it was indeed a game-changer for crypto investors.
BITO ETF tracks the performance of bitcoin futures contracts. It also holds different bitcoin futures contracts and has more than $1.4 billion in assets under management less than a month after being approved by the U.S. Securities and Exchange Commission (SEC).
The annual expense ratio of the BITO ETF is 0.95%, which equates to $95 for every $10,000 invested. This makes BITO one of the best bitcoin futures ETFs currently available to investors. As the adoption rate of Bitcoin continues to increase as more institutions and investors seek access to BTC, the future looks bright for BITO whose value will keep rising.
Valkyrie Bitcoin Strategy ETF (BTF)
Valkyrie Bitcoin Strategy ETF (BTF) - also a Bitcoin futures ETF - launched shortly after BITO started trading on the New York Stock Exchange. BTF trades on the Nasdaq Stock Exchange, and just like BITO, it doesn't directly invest in Bitcoin. In contrast, BTF holds front-month Chicago Mercantile Exchange Bitcoin futures.
In addition, BTF manages nearly $60 million in assets, with an expense ratio of 0.95%. That's not all, investors should also be on the lookout as Valkyrie Bitcoin Strategy plans to launch more crypto ETFs in the coming months and years.
Grayscale Bitcoin Trust (GBTC)
As of December 2021, Grayscale Bitcoin Trust assets under management (AUM) is approximately $31.1billion. Interestingly, the GBTC is more of trust than a crypto ETF, however, Grayscale has committed to converting the fund into an actual ETF.
Similarly, since its establishment in 2013, the trust has become the most attractive destination for large banks and investment companies looking to increase their exposure to the crypto market. Recently, Morgan Stanley purchased $240 million of GBTC stock, becoming the second-largest shareholder after ARK Invest.
Cryptocurrency exchange-traded funds (ETFs) present a safe bet for savvy investors who are looking to insulate themselves against the volatility of the crypto market. Their popularity in recent times is unprecedented, matched only by their huge investment potentials as a sure-fire means of portfolio diversification, and a viable option for early retirement plans.
Consequently, as ETFs continue to grow and offer more investment exposure for individuals and institutions, the future looks promising and attractive for smart investors.