Bitcoin Rally, Crypto Boom Provide Epic Sparks For Blockchain ETF
Bitcoin backed off its recent highs, reminding investors it doesn't move up in a linear fashion. The good news is the largest digital currency and some of its cryptocurrency peers are proving there's legitimacy and staying power for the asset class.
What Happened: The bad news is, at least for investors in the U.S., that the timeline for the launch of a bitcoin exchange-traded fund remains murky at best and those waters may be further muddied by some of President Biden's appointments.
As long as bitcoin is part of the everyday investment lexicon and until there's a related ETF, investors can revisit blockchain ETFs, such as the Amplify Transformational Data Sharing ETF (NYSE: BLOK). Pursuant to regulations set forth by the Securities and Exchange Commission several years ago, BLOK and its peers cannot use the term “blockchain” in titles, but that's what these funds are: Blockchain ETFs.
Why It's Important: Investors are taking note of BLOK's ties to the crypto universe. The actively managed ETF just turned 3 years old and celebrated by topping $500 million in assets under management.
“Just over three years ago we launched the first actively-managed ETF focused on the dynamic market segment of blockchain-related stocks,” says Christian Magoon, CEO of Amplify ETFs. “BLOK has provided investors with additional portfolio diversification through its unique portfolio makeup that includes the Bitcoin Investment Trust. We continue to see a bright future for blockchain technology and its many applications.”
Making the milestone all the more impressive and relevant is BLOK's performance. The fund more than doubled over the past year and is up 11% to start 2021. Again, investors are taking note as BLOK's year-to-date inflows tally $144 million.
What's Next: Now home to $533 million in assets and 55 stocks, BLOK offers bitcoin exposure via a 5.80% weight to MicroStrategy (NASDAQ: MSTR), one of the more direct equity plays on the digital currency. Secondary plays, such as venues where consumers can purchase digital assets, including Square (NYSE: SQ) and PayPal (NASDAQ: PYPL) combine for almost 8% of the fund's weight.
Over 41% of the fund's components are software names and another 17% are diversified financial services firms.
BLOK also offers some firepower via smaller stocks as mid- and small-cap names combine for over 42% of the fund's roster.
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