Blockchain technology was all the rage back in 2018, when Bitcoin and other cryptocurrencies dominated daily headlines.
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And it’s back in the spotlight as big banks start to allow wealthy clients access to funds that enable Bitcoin ownership. Tesla recently joined other big companies in accepting the crypto cash as a form of payment.
So how can you cash in on the renewed interest in Bitcoin and its underlying blockchain technology? Though several Bitcoin exchange traded funds recently debuted in Canada, the U.S. has yet to approve one.
Grayscale Bitcoin Investment Trust (GBTC) is the closest you can get to a Bitcoin ETF. But instead of holding a basket of stocks, GBTC tracks the market price of the cybercurrency.
Blockchain ETF Turns 3
ETFs focused on blockchain though, have been around for a few years. Blockchain is a digital ledger of information stored chronologically in “blocks” to allow for the efficient and nearly instantaneous processing and transfer of data, including cryptocurrencies.
Siren Nasdaq NexGen Economy ETF (BLCN), which tracks the Siren Nasdaq Blockchain Economy Index, marked its third anniversary in January. The index comprises companies that are involved in developing, researching or utilizing blockchain technology.
As of Dec. 31, technology companies made up the biggest sector weight in the $312.9 million fund, at nearly 33% of assets. Communications accounted for 23%, consumer staples 11%, health care 10% and consumer discretionary 9%. Smaller positions in financials, energy and industrials made up the rest.
U.S. stocks represented nearly half, or 49%, of the fund’s portfolio. The next biggest country weightings were China, Japan and Germany at 16%, 11% and 5%. Canada and South Korea made up about 2% each while 11 other countries also had small representation.
Top 10 holdings as of Thursday included Square (SQ), Marathon Digital (MARA), IBM (IBM), SAP (SAP), Microstrategy (MSTR) and Microsoft (MSFT). The top 10 accounted for nearly 16% of total net assets.
Bitcoin Miner Leads Top Holdings
Marathon Digital leads with a nearly 380% year-to-date gain. The Las Vegas-based company mines Bitcoin, “with a focus on the blockchain ecosystem.” Microstrategy has rallied almost 80% this year. The business analytics software provider has amassed more than $2 billion in Bitcoin.
Square and Microsoft, both IBD Leaderboard stocks, were up a respective 19% and 14% this year through Thursday’s close. In October, payment processor Square said it bought around $50 million in Bitcoin. Its Cash App lets users buy and sell Bitcoin. Microsoft, one of the early adopters, started accepting Bitcoin as payment through its online store in early 2014.
The blockchain ETF, up 22% this year, is finding support at its 10-week moving average. That sets up a chance to buy or add shares. After falling 35% during the coronavirus market crash, BLCN rebounded 201% from its March 2020 low to its March 2021 high.
Siren completed its acquisition of Reality Shares Nasdaq NexGen Economy and two other Reality Shares ETFs in November. BLCN charges a 0.68% expense ratio.
Follow Nancy Gondo on Twitter at @IBD_NGondo
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