Gamdom: All about Blockchain ETF

The Securities and Exchange Commission (SEC) approved the offering of exchange traded funds (ETF) for Bitcoin (BTC), giving the asset a strong market surge for 2024. Investors are eagerly anticipating a similar approach for other digital assets. Allowing investors to join this market will surely give it a significant boost in 2024. 

As the SEC has just approved Bitcoin ETFs, why should they also consider approving blockchain ETFs? How could this approval positively impact the crypto economy? The answers to these questions lie in the details of such offerings. Dive into what blockchain ETF is and what it means for crypto markets as a whole:

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The difference between Blockchain ETF and Bitcoin ETF

The best way to understand the disparity between Bitcoin and blockchain ETFs is to recognise both their similarities and differences. Both are exchange-traded products (ETP) which means that they function the same way. Exchanges are the ones that decide how funds are invested on behalf of client investors. However, one is for Bitcoin and the other is for blockchains. 

For an even deeper understanding, here are a few examples:

• Bitcoin ETF → The exchange conducts the buying, selling, and storing of BTC on behalf of the clients. They can also diversify their portfolio if the investors who gave the funds will profit mainly from Bitcoin’s market trends and leverages.
• Blockchain ETF → The exchange invests funds gathered for various blockchain-based projects. Some of these ETFs can be specific or diverse as long as the clients earn marginal profits from successful blockchain investments. 
   

Another key difference between them is that the SEC has only given their approval for Bitcoin ETFs on 10th January. There’s also the Ethereum (ETH) ETF which they haven’t announced yet but it was one of the running products to be considered in 2023. Blockchain ETF is not yet available in exchanges following SEC regulations, limiting its potential in the global market. 

How is ETF useful for blockchain investors?

Research and development in any field can benefit from funding. This is no different from blockchain-based companies trying to find more ways to make a more scalable, interoperable, and adaptable system. The reason why many investors are eager to opt for a blockchain ETF is to reap the rewards of its eventual impact on decentralised industries as a whole. 

To this day, many established companies need support from the crypto community to realise their vision. They have stakeholders keeping their networks afloat but the bigger spenders have always been those who invest in blockchain ETF. It’s not available in the US but it is offered in various exchanges around the world, allowing the blockchain industry to keep moving forward.

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Development of blockchain technology and applications

Blockchain is already being used in many technologies thanks to its versatile uses. Here are some of the most notable ones that are being developed further:

• Payment services: This is one of the first applications of blockchain technology as the main purpose for Bitcoin. It now extends its use to money lending, investments, and securities. 
• Data sharing: Crypto is data travelling on blockchain networks. This inspired platforms like Ethereum to create a blockchain that is meant to support file sharing and programming rather than being strictly for finance. 
• Internet of Things (IoT): This is a system where every device is connected through the cloud. Blockchain ensures a secure and hacker-resistant infrastructure, unifying numerous electronics into an interactive network. 
• Content creation: This application is more nuanced depending on the community using it but the consensus is that it creates a decentralised space for creators. Non-fungible tokens (NFTs) and blockchain entertainment like play-to-earn (P2E) games. 
• Logistics and tracking: Utilising blockchain-coded data proves valuable in tracking inventory and progress. Its distributed ledger, accessible to all partners, enables instant tracking of inventory and delivery progress instantly. 
   

Blockchain has a near-limitless potential for applications. That’s why many expect it to be the centre of most technologies in the Web3 space. There’s still a long way to go before these become the norm and investments from blockchain ETFs can greatly help that endeavour. 

How to invest in Blockchain ETF

To clarify, the answer to the question ‘what are Blockchain ETFs’ is that they are investment strategies, not assets. Investing in them involves opting into an exchange’s funding plans. The strategy should disclose what stocks it covers and why. 

If you choose to become an investor, then you are a client and the financial institution you’re consulting is using your funds on your behalf. The only way to invest in blockchain ETFs is to find a brokerage or exchange that offers it. 

They are typically named after the platform where they are available followed by the ‘ETF’ plus the ticker enclosed in a parenthesis. An investment typically involves going to brokerages/exchanges and expressing your interest in joining their venture. 

The profit you can make from Blockchain ETFs will be based mostly on stocks’ marginal returns. How much you get is an agreement between you and the exchange which should be disclosed upfront before you declare your intention to become an investor. 

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Examples of Blockchain ETFs

If you are interested in investing in blockchain ETFs, then there are already plenty of options to choose from. Here are a few of the best and what makes them great:

• Global X Blockchain ETF (BKCH)

This product was released in July 2021 covering stocks that follow Bitcoin prices. It seeks to invest in almost all kinds of companies benefiting from blockchain adoption including digital assets mining, hardware, and asset integration. The most notable inclusion in its portfolio is Riot Blockchain (RIOT), Coinbase, Nvidia, and PayPal. 

• Bitwise Crypto Industry Innovators ETF (BITQ)
   

This offering came out in May 2021 and it was already one of the largest and fastest-growing asset managers specialising in cryptocurrencies. It also covers stocks in crypto mining but with a focus on equipment suppliers and financial services. BITQ is currently invested in MicroStrategy Inc., BitFarms Ltd., Coinbase Global Inc., and Bakkt Holdings Inc.

• Amplify Transformational Data Sharing ETF (BLOK)
   

This offering is much older than the other two, having launched in January 2018. It was one of the first Blockchain ETF, giving it the first-mover advantage in its industry. BLOK has a broader target covering stocks for almost all companies related to digital assets mining and blockchain applications in general. 

These are all offered in various exchanges outside of the SEC’s jurisdiction. If regulatory concerns worry you that's going to be a problem for you, it’s advisable to stay informed about potential developments in the future. However, these have all been great in the past few years. BLOK, in particular, is considered the best Blockchain ETF because of its advantages. The others are profitable, too, so they’re worth taking. 

Is blockchain ETF a good investment venture in 2024?

Blockchain development remains dynamic, with numerous ideas being explored but not all of them yield profitable outcomes. Every investment can be a high-risk venture unless you diversify across different stocks. Doing so will require lots of funds which most small-time investors don’t have. Opting in a blockchain ETF, however, can trivialise that matter. 

Investing in a blockchain ETF can help you leverage on marginal gains for a diverse range of stocks even with a small budget. Therefore, you are more likely to earn a profit than either lose or stay stagnant in the blockchain industry. Therefore, blockchain ETFs are good investments in 2024 and in general. 

Bitcoin ETF’s success possibly helps blockchain market trends

One of the most exciting prospects that made blockchain ETF so promising is how the majority of the industry is reliant on Bitcoin’s success. This is the most valuable asset in the world and it is used in many institutional trading. That includes investment in other blockchain companies with rapid development like Chainlink (LINK), Cardano (ADA), and Polygon (MATIC). 

With Bitcoin ETFs’ success, international cross-border bank, Standard Chartered, foresees fund inflows ranging from $50 billion to $100 million in 2024. This can lead to not only boosting BTC’s popularity but also bringing attention to other blockchains. Demands for scalability and interoperability will rise once again and development for better infrastructure will be a focus. 

Take a step into Blockchain ETFs today 

There are already many great investment opportunities in blockchain ETFs. Now is the opportune time to explore and capitalise on their potential. You can confidently seize these opportunities and potentially benefit from the rapid development of the blockchain industry through ETFs. 

If you prefer to wait for offerings that fall under SEC’s regulatory framework, that option remains open. Don't miss out on the chance to be a part of this transformative journey in the world of investments.

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