Blockchain ETFs are on a steep climb up – but it may take a while for disillusioned investors to return

Quick Take

  • The last six months have seen strong performances by the biggest blockchain exchange-traded funds (ETFs), launched in early 2018
  • The ETFs track the share-price of companies that develop or use blockchain technology, largely investing in mining, tech or finance firms
  • After a year-long downwards curve, the last six months have instead shown their value surge sharply upwards
  • Still, investors remain shy, with the assets invested in the ETFs generally still down

January 2018 saw the first four blockchain ETFs break onto the scene in quick succession in the US. They were somewhat of a novelty, tracking the share price of 20 to 50 companies developing or using blockchain in some capacity, for an average 0.75% management fee. Investors flocked to them, pumping in hundreds of millions, hoping to nab a piece of a pie predicted to save banks between $15 billion and $35 billion a year according to consulting firm Bain.

However, a snapshot review at the start of 2019 looked less than promising. Between their inception and January, the value of the 6 major ETFs all dropped between 5% and 22%. In particular, the flagship Amplify Transformational Data Sharing ETF (BLOK) dropped 20%. As a result, investors retreated, with the ETF’s combined net investment assets (AUM) losing more than $21 million in combined net outflows, or ~7% of the combined funds brought into the products in 2018. One blockchain ETF even closed in January.

But today, things look a little different as winter turns to spring. Analysing the performances of 3 of the biggest (by AUM) Blockchain ETFs in the last 6 months, things are on the upswing. These graphs, in order of AUMs, illustrate their steady rise in value between January and today. KOIN was the best performing fund up over 22% YTD.

The trend looks to be far-reaching, even across more…

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