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Top 10 Blockchain ETFs to Buy in 2019

  • Alex Morris
    📚 WikiCoin

    Are top Blockchain ETFs simply tech stocks in expensive clothes? Find out whether you should invest in Blockchain ETFs if you are hesitant to buy Bitcoin

Top 10 Blockchain ETFs to Buy in 2019
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Why should investors buy top Blockchain ETFs?

Blockchain has become one of the major buzzwords in the tech space over the recent years, and it comes as no surprise that many want to capitalize on the revolutionary technology. That prompted the appearance of Blockchain ETFs where old meets new.

ETFs can be bought and sold in the form of stocks. While cryptocurrencies are generally deemed to be extremely risky, Blockchain ETFs that are comprised of the most established stocks on the market are considered to be a much safer choice. U.Today has come up with the list of top 10 Blockchain-oriented ETFs to invest in 2019.    

👉MUST READ Starting a Blockchain Business: DLT 101

BLCN

BLCN invests in stocks of the companies that are dealing with Blockchain. The ETF has more than 60 stocks. The advisory board of BLCN consists of crypto influencers who decide what stocks they should invest in.

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Despite a bumpy start, Eric Ervin, the CEO of BLCN, is not deterred by disappointing numbers, taking a long view into the future. He believes that the technology is still too nascent, and we are dealing with a long-term investment.

BCNA

Reality Shares has yet another Blockchain ETF, and its focus is placed on China, the second largest stock market in the world. Ervin claims that China is betting big on the DLT technology — it has almost three times the amount of patents the US has. Not surprisingly, Alibaba is their main holding, but the fund also has exposure to China’s A-Shares — before they invest in a particular stock, they asses the number of Blockchain-related patents as well as the degree of innovativeness. Eventually, they only select the companies with the highest score.

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BLOK

Amplify’s ETF was launched simultaneously with Reality Shares in mid-January of 2018. BLOK also intentionally excludes the words ‘Bitcoin’ and ‘Blockchain’ from its full name. Prior to that, the SEC issued a warning after a lot of stocks shoehorned these trendy words despite not dealing with crypto at all (case in point: Riot Blockchain (RIOT), which immediately saw its stocks skyrocketing).    

BLOK owns the stocks of IBM, NASDAQ, Overstock and other behemoths that are keen on the Blockchain technology.     

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Notably, there is one key difference between BLOK and BLCN — Amplify is an actively managed ETF.

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BKC

Back in May, BKC joined the crowded Blockchain ETF space. Brian Kelly, a Bitcoin permabull and a constant CNBC contributor, spearheads the fund. The holdings with the highest weighting in the fund include Overstock.com, GMO Internet and Global Unichip. Kelly states that BKC is a top-of-the-mind option for those who would like to invest in cryptocurrencies without dealing with enormous price swings and security issues. Overall, BKC holds the stocks of 32 companies.

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KOIN

The fund utilizes artificial intelligence in order to discover new Blockchain stocks. It specifically targets stocks with related keywords.   

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Since the list of KOIN’s holdings includes many big-name companies in the likes of Microsoft and Visa, it is definitely a safe bet for investors, but the predominance of conventional stocks makes it hard to make sizeable gains. Investing in companies with low market capitalization is considered to be a huge risk for such funds.

LEGR

First Trust Indxx has three groups of Blockchain stocks:

  1. Stocks of companies that have already come up with their own Blockchain-related products (for instance, IBM).   

  2. Those companies that are already utilizing the Blockchain technology, but they use technology that has been developed by other companies.

  3. The last group of stocks is attributed to those companies that are only dipping their toes in Blockchain.

Such a diverse approach to investment is considered to be one of the main advantages of LEGR. However, the fact that the fund rebalances its holdings to other stocks only twice a year makes it less attractive than other options.

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LDGR

Blockchain ETF is supposed to be more than tech stocks in expensive clothes. LDGR actually offers to invest in companies that have a proven record of investing in Blockchain-related stocks. Just like in the case with KOIN, it cherry-picks the companies with the help of AI.

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According to the company’s CEO Lewis Bateman, they are exclusively focusing on investing in stocks of those companies that already have Blockchain-related patents. Mastercard Inc. and Royal Bank are among their top holdings. It hasn’t been an easy run for LDGR, but the same can be attributed to practically any other ETF that was launched after January. However, Bateman claims that this LDGR stands out among the rest of earlier launched funds because of its robust buildout.    

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LINK

LINK is the first entry on our list that actually features the word ‘Blockchain’. In its portfolio, this actively managed fund features stocks of 31 global companies that are dealing with the nascent technology. Raj Lala, the CEO of Evolve ETFs, is a firm believer in the disruptive potential of the DLT, and the fund is an opportunity to capitalize on that.         

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Things didn’t go particularly smooth for this fund since its stocks have shed more than 20 percent of their value since LINK’s inception in May. Hut 8 Mining Corp is at the top of its holdings list with a 10.8 percent share.    

HBLK

Harvest Portfolios was responsible for launching the country’s first Bitcoin ETF HBLK that focuses both on large-scale and small-scale Blockchain businesses. Notably, this became the very first Canadian ETF that got the green light from regulators. Back in February, the Ontario Securities Commission approved the ETF.     

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The main purpose of this ETF is to become an entry point for investors who are seeking access to the burgeoning tech sector. Subsequently, they buy the stocks of already established companies.   

BKCH

In June 2018, the Horizon fund was listed on the Toronto Stock Exchange (yet another Canadian Blockchain ETF on our list). In 2018, Blockchain ETFs became the salient feature of the country’s biggest stock exchange.  

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The fund’s chief executive Steve Hawkins claims that he is not sure how big the adoption of the Blockchain technology is going to be, but the investments are necessary for building out the technology. BKCH, according to Hawkins, is focusing on well-established companies (the holding of this ETF include the stocks of Nvidia Corp. and Digital Realty Trust Inc.).

What differs Blockchain ETFs from Bitcoin ETFs?

Since there is a lot of confusion, it is worth pointing out that no aforementioned Blockchain stocks are dealing directly with cryptocurrencies. The Winklevoss brothers were on track to launch their own Bitcoin ETF, but they didn’t get the approval from the SEC. Bitcoin ETF is seen as a catalyst for the next bull market, but SEC commissioner Hester Peirce (better known as ‘Crypto mom’), claims that it could take years for the much-anticipated approval.  

Hopefully, this article helped you pick up the best Blockchain ETF! Stay tuned with U.Today!   

Top 10 Blockchain ETFs

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Is BTC and Cryptocurrency Crash 2018 Similar to the Dotcom Crash?

  • Denys Serhiichuk
    📚 WikiCoin

    Lots of people compare cryptocurrency market growth with the Dotcom example. This topic was extremely discussed in 2018 when most of the coins decreased in their value by dozens of percentages. Prominent figures of the industry shared their opinions that Bitcoin would face the same crash as it happened with Dotcom. In this article, we will analyze the similarities and differences between them.

Is BTC and Cryptocurrency Crash 2018 Similar to the Dotcom Crash?
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Many analysts compare Bitcoin with the largest bubbles in the economy of countries, such as “tulipmania”, which in the 17th century led all of Holland to a crisis, or an unjustified increase in the value of shares of Internet companies in the late nineties. In the latter case, the Dotcom bubble burst in 2000, and $1.5 trillion literally disappeared in a short time.

Like this situation, an unprecedented influx of funds greatly increased the capitalization of Bitcoin from the end of 2017, and by the end of January 2018, the fate of the great crypto-bubble became similar. But for all the similarity of the model, it is still early to compare Bitcoin with the Dotcom bubble and fragile economic systems.

What is the Dotcom bubble?

In the late 1990s - early 2000s, the sphere of high technologies was on an unprecedented rise. During these years the popularity of the Internet among ordinary users and among large companies reached a peak. In the wake of the HYIP, more and more new companies opened, and the old ones issued their shares to the stock exchange, seeking to attract as many investments as possible. Intensive growth in stocks continued for several years, but then almost all companies lost more than half, and about 90% of capitalization.

At this time, there was a rise in the stock market, and the NASDAQ index, determined by the rate of shares of high-tech companies, rose from a value below 1000 to above 5000 in the period from 1995 to 2000.

NASDAQ index

The Dotcom bubble has grown out of a combination of speculative investment or investment in popular products, an oversupply of venture financing for startups and the inability to generate revenue. Investors poured money into the Internet projects in the second half of the 90s, hoping that someday these companies would shoot up.

The bubble, which was formed over the next 5 years, was fueled by cheap money, easy capital, excessive investor confidence in the market and blatant speculation. Venture capitalists who were looking for a new great opportunity invested in any company whose name used the “.com” domain. Such investments could pay off only after several years of successful existence of these companies; however, investors, embraced by the desire for easy profit, ignored the fundamental calculations. Companies that were yet to start generating revenue, and often finish the product, went to an IPO, and their shares soared 3-4 times a day.

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Within a few weeks, the stock market lost 10%. Investment capital began to flow from the market, and along with them began to dissolve the viability of the Dotcoms. The market capitalization after having reached hundreds of millions of dollars lost all value in a matter of months. By the end of 2001, most of the Dotcoms whose shares traded freely on the stock exchanges had closed, and trillions of dollars in investment capital evaporated.

The similarity and differences between the Dotcom bubble and the cryptoсurrency crash

Dotcom bubble

The main similarity between the Dotcom bubble and the cryptocurrency market is the correlation of the graphs. In both cases, the explosive growth and the repeated overcoming of the historical highs were followed by a strong decline.

In the early 2000s, Internet companies were “in vogue” and in the West, any average citizen could buy a stake in such companies. Now the whole world is talking about digital currencies and the process of buying coins has become easier.

On the other hand, the capitalization of the entire digital market even at its peak was several times lower than the capitalization of the NASDAQ stock exchange, where most high-tech companies trade. Many experts argue that digital assets have not become such a popular financial instrument so that they can be compared with stocks traded on one of the largest stock exchanges in the world.

NASDAQ and Bitcoin graphs)

In the 2000s, the Dotcom bubble burst; in 2018, the crypto market collapsed. The main question is: how to avoid major losses, using the experience of past years?

How to avoid losses when the market collapses

We should admit that at the moment the opportunities of investors are limited. The market has already managed to take off and collapse. And in the most unpleasant situation are those who bought cryptocurrency in December 2017 - January 2018, at the very peak.

Some experts argue that even in this situation, universal tactics of HODL (a distorted buy-and-hold option) will save investors.

Billionaire-businessman Tilman Fertitta, founder and CEO of Landry’s, a multi-brand corporation, expressed his point of view about the similarities between cryptocurrency growth and the Dotcom bubble, but noted that Bitcoin is real and “here to stay”.

Fertitta, who is also the leading reality show “Billion Dollar Buyer”, compared the growth of the entire cryptocurrency ecosystem with the Dotcom bubble and mentioned that people most likely just forget that the addition of “.com” to the end of the company name helped grow stocks.

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Despite numerous statements by skeptics and opponents of Bitcoin, Fertitta believes that digital currencies are not going anywhere. The main risk of cryptocurrency lies in the fact that governments of different countries do not regulate it in any way.

“Go to the bank and try to withdraw a million dollars, they don’t have the money. It’s just paper. That’s all bitcoin is, is paper, but it’s not insured by the FDIC today. And until it’s insured, a lot of people are never going to buy it,” stated the billionaire.

Another famous person in the financial industry is the co-founder and partner of the cryptocurrency company Crypto Oracle, Lou Kerner. He is confident that cryptocurrency will succeed as Amazon did, and Bitcoin investors should calm down and follow the lead of technology giant, which lost 95% of its value in two years but has now become the world's largest online store by market capitalization.

According to Kerner, the current weak position of cryptocurrency in the market can be explained by the fact that digital assets lack confidence. Meanwhile, the expert calls Bitcoin “the greatest savings that ever existed”.

“It should surpass gold over time. It won't happen overnight”, Kerner predicts.

What is more, it is foolish to sell an asset that has already lost 80-90% of the cost. The compensation will be scanty, and with long-term retention, there is a chance that, although not soon, the asset will restore its value and the investor will be able to recoup the investment. On the other hand, even leading high-tech companies took 10 - 15 years to update their historical highs after the collapse in the early 2000s.

Investors who are well versed in digital assets can now try to purchase some of them at a relatively low price.

One of the reliable ways to eliminate the risk of losing capital is to invest in new promising projects while their assets are sold at a starting price.

It can also be an excellent option for diversifying investment assets that have a real product or service.

Reasons why Bitcoin is not a bubble

Bitcoin bubble

We selected the top 5 explanations why the main cryptocurrency cannot be considered a bubble.

  • Legal exchange

One of the most serious problems of Bitcoin so far has been a cautious attitude on the part of legislators and financial regulators. They are confused by its decentralized nature and connection with criminal elements in the darknet at the dawn of its existence. However, the position of the authorities is gradually changing. In April 2017, Japan officially legalized Bitcoin as a means of payment, which immediately spurred its cost and degree of distribution in the country.

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In the Philippines, people are increasingly using Bitcoin for low-cost remittances. The country stated that it would regulate Bitcoin, thereby giving the cryptocurrency legal status and approving the use of remittances. In the near future, Bitcoin may become a full-fledged means of payment in these countries. The trend is likely to continue, given the growing demand for Bitcoin from investors and users of online payment systems around the world.

  • Demand from commercial structures

In the early stages of the Bitcoin existence, it was used as a means of payment by only a few shops (usually owned by cryptocurrency enthusiasts). Currently, the situation has dramatically changed. Bitcoin can be used with leading technology companies and online stores. The rapid rise of the Bitcoin price, media attention, and acceptance in countries like Japan have led to increased interest in cryptocurrency from commercial structures. Arguments in favor of Bitcoin in online trading are very strong: the commission is lower than on credit cards; the risk of fraud with the return of payments is zero. Cryptocurrencies allow you to reach customers in regions with poorly developed banking infrastructure and attract new, tech-savvy customers. The more Bitcoin will spread, the higher and more stable will be the demand for digital currency. And given its limited distribution in the trading environment, the opportunities for growth are truly immense.

  • The preservation of wealth in countries with distressed economies

Another reason why Bitcoin is not a bubble is that cryptocurrencies are in high demand in economically disadvantaged countries. For example, in Venezuela, Bolivia, and Zimbabwe, Bitcoin is used to preserve savings and acts as an alternative means of payment in the context of a rapid devaluation of national currencies. This is evidenced by the increase in trade volumes, inversely proportional to the value of local currencies and economic growth in problem regions.

A look inside Bitcoin allows companies and people in countries with strict capital controls to receive remittances from abroad. In other words, wherever there is a crisis in the economy, the demand and distribution of Bitcoin are growing.

  • Bitcoin has become known relatively recently

2017 was the year when the public first learned about cryptocurrency. If you asked any passerby about Bitcoin five years ago, he probably would have looked with bewilderment. Today, most people have heard of Bitcoin, and some even know that it costs more than gold. Now that Bitcoin has gained popularity, the potential demand for it from new investors is huge. Institutional investors also have started to think about investing money in Bitcoin and other digital currencies.

  • The number of Bitcoin is limited

Finally, another key reason for such a high cost of Bitcoin is that growing demand is facing limited supply. The cryptocurrency was designed in such a way that the maximum number is 21 million. In addition, the rate of creation of new coins decreases with time. Thus, the growing demand for digital currency is faced not only with a limited amount but also with a constantly falling supply. Apparently, the debate about whether Bitcoin is a bubble will continue. However, comparing cryptocurrencies and shares of Internet companies should not be done given the serious fundamental differences between the two classes of assets.

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So, is Bitcoin a bubble or not?

“Bubble or not” logo

It is logical that everyone who enters the cryptocurrency market shows some caution, especially when it comes to investment and trade. At the same time, one cannot deny the innovations brought by Blockchain technology itself.

The consequences of the Dotcom bubble not only showed how dangerous bubbles can be but also demonstrated that truly innovative and technologically advanced companies can survive the crisis. For example, Amazon and eBay, which were able to stay afloat despite all market fluctuations thanks to the creation of new ideas and a good grip.

Of course, the situation with cryptocurrencies and Dotcom will be different. Businesses implementing blockchain technologies should be guided by the experience of Dotcoms, forming their own strategy.

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