Crypto ETFs Top Performing Funds as New Year’s Rally Strengthens

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The crypto-focused exchange-traded fund (ETF) market saw an upward surge in 2023 amid a surge in cryptocurrency prices.

So far this year, the 14 best-performing ETFs are all related to digital assets, excluding leveraged products, out of roughly 2,000 funds tracked by Bloomberg, media reported on Friday, noting that funds cryptos dominate the $6.8 trillion ETF market.

The surge in crypto funds comes as digital assets are off to a bright start this year. Bitcoin, the world’s largest cryptocurrency, surged above $21,000 in the past day after months of inactivity. Ethereum also reached around $1,600. Both coins have gained around 10% over the past day.

Crypto ETFs have been in the spotlight this year after a lackluster performance last year. In 2022, cryptocurrency-related funds were among the worst performers as the industry lost an estimated $2 trillion in value amid the collapse of a number of high profile projects.

Specifically, the Valkyrie Bitcoin Miners ETF (WGMI), a major Bitcoin mining fund with investments in 20 companies, including Argo Blockchain, Bitfarm, and Intel, among other notable names, has gained around 70% year-to-date.

ETF WGMI was listed on Nasdaq in February 2022 but did not invest directly in BTC. 80% of its net assets provide exposure through the securities of companies that derive at least 50% of their revenue or profit from BTC mining. Valkyrie invests the remaining 20% ​​in companies that hold “a significant portion of their net assets” in Bitcoin.

Additionally, the VanEck Digital Assets Mining ETF (DAM) jumped about 56%, according to data compiled by Bloomberg. The fund was largely made up of mining companies Bitcoin Riot, HIVE Blockchain Technologies, and Marathon Digital Holdings, among others.

Double-digit gains from the VanEck Digital Transformation ETF (DAPP), Global X Blockchain ETF (BKCH) and Bitwise Crypto Industry Innovators ETF (BITQ) help the funds rank among the top five performing exchange-traded funds this year . Athanasios Psarofagis of Bloomberg Intelligence said:

“There is a bit of mean reversion happening at the start of the year – the worst performing equity ETFs of 2022 start off on the strongest foot in 2023, notably crypto-related ETFs. Investors who reaped tax losses in 2022 may be looking to return now. »

Crypto ETFs provide exposure to crypto without the added expense of ownership. Therefore, these funds are seen as the next big step for the crypto industry that could drive mainstream adoption.

Launched in 2021, ProShares Bitcoin Strategy ETF was the first Bitcoin ETF to be approved in the United States. However, this fund tracks Bitcoin prices through futures contracts traded on the CME market, unlike a spot Bitcoin ETF.

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