ETFs for Cryptocurrency — Do They Work?

ETFs, short for Exchange Traded Funds, are a fantastic investment choice in the traditional stock market. They are basically a type of investment fund in which the money you invest gets automatically spread across a huge variety of stocks and commodities in a specific market, and they have really low commissions. There are ETFs for real estate, tech, commodities, and all kinds of stocks. But are there any ETFs for cryptocurrency, and are they any good?

If you want to have a diversified portfolio of cryptocurrency holdings, you might have to do that yourself. However, there are definitely ETFs in the cryptocurrency world, and they’re really taking off in 2021. These ETFs don’t invest in cryptos directly, but instead invest in companies that use blockchain technology to function. Basically, these companies are directly tied to the success of Bitcoin and other cryptocurrencies. They also invest in futures and options related to Bitcoin and the main altcoins (Ether, Litecoin, etc), so their price is closely related to the price of cryptos.

However, a massive percentage of all crypto-based startups fail. Those that don’t, however, are usually extremely successful. So instead of guessing, consider investing in a blockchain ETF to cover your bases and reach the entirety of the blockchain ecosystem.

Here is a list of the best crypto ETFs, from highest net assets to lowest:

1. BLOK (Amplify Transformational Data Sharing ETF)

Amplify’s crypto ETF is one of the best ones in the market right now. It’s very liquid, with over 350 million dollars in total net assets. The net expense ratio is just 0.7%, which is quite low for one of these ETFs. Around 41% of their assets are alocated to Tech companies, 21% to Financials, 13% to Industrials, 8.5% to Customer Service companies, and the rest is either in cash or in other sectors.

2. BLCN (Siren Nasdaq NexGen Economy ETF)

BLCN is about half as big as BLOK, with 188 million dollars in net assets. Their net expense ratio is about the same at 0.68% (not a difference you should worry about unless you have a ton of money). Their allocation is similar to BLOK’s as well, but with an even heavier focus on Technology and Financials (44.5% and 29.75% respectively). If, for some reason, you don’t trust industrial companies that use blockchain that much, consider investing in BLCN over BLOK.

3. LEGR (First Trust Indxx Innovative Transaction & Process ETF)

LEGR is much smaller than the previous two, but still considerably big at a solid 54 million net assets. Their net expense ratio is also lower at 0.65%. The key difference with the previous two is that it allocates more to the financial sector (38%) than to the technology sector (32%). Only around 12% is assigned to companies in the industrial sector! If you strongly believe in the financial sector of the blockchain ecosystem, this is the ETF for you.

4. KOIN (Capital Link NextGen Protocol ETF)

The smallest of the four, with only 20.6m net assets, is also the most expensive one in terms of fee,s with an expense ratio of 0.73% which is quite high. It’s also the most technology-heavy of the four, with almost 57% of its assets allocated to the Technology sector! If you strongly believe that blockchain as a technology will take over the world, this ETF is probably your best bet. However, it’s not traded that much and it’s pricey, so keep that in mind.

Overall, if you’re trying to create a balanced portfolio for your crypto investments, having a percentage of it in an ETF is a fantastic idea. It’s much safer than putting your money into a single company that uses crypto and allows you to dip your toes in the entire ecosystem. If you choose one of the four listed above, you’ll also be investing in one of the best cryptocurrency ETFs.

Originally published at on January 27, 2021.




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