Exchange-traded funds based on shares of publicly traded blockchain companies were able to boost their returns significantly in 2023. Analysts expect blockchain ETFs to grow even more following the approval of spot Bitcoin and Ethereum ETFs in the United States.
According to VettaFi data, some exchange-traded funds related to the blockchain and cryptocurrency industries managed to substantially increase their volumes and multiply their investment returns this year.
The sector leader with a 218.35% year-to-date gain was the VanEck Digital Transformation ETF (DAPP). DAPP was launched in April 2021. It tracks the price and performance of the MVIS Global Digital Assets Equity Index, which is based on the performance of major crypto companies including Coinbase, MicroStrategy, and Block. DAPP’s growth was primarily influenced by the stock prices of Coinbase and MicroStrategy, which are up 321% and 300%, respectively, since the beginning of the year.
Other blockchain ETFs that achieved solid gains this year include:
- Global X Blockchain ETF (BKCH). The fund tracks companies dealing with hardware devices for mining and storing digital assets. The fund’s shares are up 209.46% year-to-date.
- Bitwise Crypto Industry Innovators ETF (BITQ). It tracks an index of 30 cryptocurrency companies from around the world. The fund is up 196.17% year-to-date.
- Global X Blockchain & Bitcoin Strategy ETF (BITS). The fund invests in equity securities of blockchain companies and long positions in BTC futures. The fund’s year-to-date return is up 185.45%.
- iShares Blockchain and Tech ETF (IBLC). The fund tracks an index of global companies involved in the development and use of blockchain and cryptographic technologies. The fund gained 159.75% year-to-date, setting an all-time high of $8.4 in November.
- First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT). The fund tracks companies active in the cryptocurrency mining industry, including providers of mining equipment and merchant and commercial crypto companies. The fund’s year-to-date return is up 151.62%.
- Fidelity Crypto Industry and Digital Payments ETF (FDIG). The exchange-traded fund tracks an index of global stocks involved in the crypto payment processing industry. The fund’s shares are up 129.67% year-to-date.
However, despite a successful year, the performance of blockchain ETFs is still far from their all-time highs. According to TradingView, as of 13:00 (GMT+2), December 15, the price of DAPP is $8.79, 77% below its November 2021 peak. The situation is similar for BKCH and BITQ prices, which are now 58% below their peak levels.
The main reason behind the increasing popularity of blockchain ETFs is the growing adoption of crypto initiatives and the implementation of blockchain at the government level. Analysts also attribute the growth of exchange-traded funds to the anticipation of the imminent approval of spot Bitcoin and Ethereum ETFs by U.S. regulators.
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