Bitcoin & Blockchain ETFs: What Investors Should Know – October 11, 2021

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Bitcoin rose above $57,000 today and is now up more than 95% year-to-date. Earlier in April, it had surged above $63,000 and then plunged to less than $30,000 in July. Its market capitalization now exceeds $1 trillion.

Some public companies like Tesla (TSLA Free Report) and MicroStrategy (MSTR Free Report) hold Bitcoin on their balance sheets. El Salvador recently became the first country to accept it as legal tender.

Europe and Canada have approved many cryptocurrency exchange-traded products (ETPs). In fact, eight of the 10 best performing ETPs in the world this year are European cryptocurrency funds, per WSJ. These include ETPs tracking Binance, Ether and Ripple.

In the US, it has been eight years since Winklevoss twins applied for a Bitcoin ETF. Since then, many providers have applied for such ETFs, but the SEC continues to reject them.

While the digital currency can be easily bought on platforms like PayPal (PYPL Free Report) , Coinbase (COIN Free Report) and Robinhood (HOOD Free Report) , many investors prefer an ETF that would help them hold Bitcoin safely and conveniently in their brokerage accounts.

In the absence of an ETF, investor use products like the Grayscale Bitcoin Trust (GBTC) that can trade at a significant discount or premium to their NAV. But now there are increasing hopes that a Bitcoin futures ETF could be approved soon. SEC Chair Gary Gensler has signaled his preference for futures tracking ETFs, created under the existing 1940 Investment Company Act, which provides significant investor protections.

Futures based products are however not as efficient as physically based products in general since derivatives add another layer of complexity, with the need to rollover. They also are not very good at tracking spot prices.

BLOK and the Siren Nasdaq NexGen Economy ETF (BLCN Free Report) hold companies that are involved in developing or using blockchain technologies. Their top holdings include NVIDIA (NVDA Free Report) and Microsoft (MSFT Free Report) .

Please watch the short video above to learn more.