Three top cryptocurrency ETFs

23 views 1:12 pm 0 Comments March 29, 2024

In January, the Securities and Exchange Commission approved the first 11 spot-bitcoin exchange-traded funds, and they have been quite popular with investors.

However, they are not the only options for those looking to tap into the fast-growing cryptocurrency industry. Several other ETFs invest in companies that in some way serve the industry. These ETFs might be good options for investors who might be wary or unsure about the industry, as they afford the opportunity to invest in a mix of stocks as opposed to trying to pick individual winners.

Here are three of the best cryptocurrency ETFs that invest in different parts of the industry.

1. First trust SkyBridge crypto industry and digital economy ETF

As the name suggests, the First Trust SkyBridge Crypto Industry and Digital Economy ETF (NYSEARCA:CRPT) invests in companies that are involved in cryptocurrency or the digital economy.

The crypto companies included in this ETF must derive at least 50% of their revenue from goods produced or sold, investments made, or services performed in the crypto ecosystem. Additionally, at least 50% of their assets must be accounted for by direct holdings of bitcoin, ether, or another crypto asset.

Meanwhile, the digital-economy companies in this ETF must get at least 50% of their revenue from goods produced or sold, investments made, or services performed in the digital-economy ecosystem.

SkyBridge Capital actively manages this fund for First Trust, scanning the universe of stocks and ADRs for companies it believes have the best opportunity for capital appreciation.  

Currently, the ETF holds 30 stocks with 81% of them based in the U.S. The top three holdings are MicroStrategy (NASDAQ:MSTR), Coinbase Global (NASDAQ:COIN), and Marathon Digital Holdings (NASDAQ:MARA).

The ETF is up by about 43% year to date, trading at just $14.90 per share as of March 28, so it is accessible with a low entry price. Over the past year as of March 28, it has returned a whopping 244%. However, illustrative of the volatile nature of crypto stocks, the ETF has plunged about 23% since its inception on Sept. 20, 2021, so be prepared for volatility. For an ETF, it also has a fairly high expense ratio of 0.85%.

2. Valkyrie Bitcoin miners ETF

The Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI) focuses primarily on companies involved in bitcoin mining. The actively managed fund invests at least 80% of its assets in companies that get at least 50% of their revenue from either bitcoin mining operations or companies that provide the chips, hardware and software, or other services to companies engaged in bitcoin mining. Thus, it also includes semiconductor stocks, tapping into another high-growth area.

The ETF’s top three holdings are CleanSpark (NASDAQ:CLSK), Marathon Digital and NVIDIA (NASDAQ:NVDA). Currently, it holds just 22 stocks.

Year to date, the ETF’s stock price is off by about 5%, but over the past year as of March 28, it has returned 125%, currently trading at $19.26 per share. Since its inception on Feb. 7, 2022, it is down by about 26%. The ETF’s expense ratio is 0.75%.

3. Schwab crypto thematic ETF

The Schwab Crypto Thematic ETF (NYSEARCA:STCE) is a little different than the other two in a couple of ways. First, it is passively managed, tracking the performance of its own proprietary Schwab Crypto Thematic Index, so it has a lower expense ratio than the others at 0.3%.

The fund invests in companies that may benefit from the development or utilization of cryptocurrencies and other digital assets and business activities connected to blockchain and other distributed-ledger technology.

The second difference with this fund is that it’s a little more diversified than most other crypto ETFs, although one would not certainly not call it a diversified fund. However, for a crypto fund, it is a little broader, with about 50% in technology stocks, 43% in financials, 5% in consumer discretionary stocks, and 2% in communication services.

Overall, the Schwab ETF holds about 37 stocks, with MicroStrategy, Coinbase and CleanSpark as the three largest holdings. However, among the top 10 names are financial companies like Robinhood Markets (NASDAQ:HOOD), Block (NYSE:SQ) and PayPal (NASDAQ:PYPL).

The ETF is up by about 24% year to date and has soared roughly 126% over the past 12 months as of March 28. Since its inception on Aug. 3, 2022, the ETF is up by about 58%.

Keep in mind that these are considered aggressive growth investments and are highly volatile. Investors should not invest more than they can afford to lose and should keep their allocations relatively small and as part of a broadly diversified portfolio. These ETFs also do not have three-year track records as of now, so their long-term performance has yet to be established.