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Cryptocurrency has topped the list of winners in the first quarter of 2023 due to the bets over slower interest rate hikes by the Federal Reserve. Bitcoin, the largest digital currency by market value, has gained about 68% in prices this year. Bitcoin topped 26,000 for the first time since June 2022 in mid-March when market sentiments turned positive on expectations of the Fed’s dovishness (read: 5 ETF Areas Up At Least 35% This Year).
The currency staged a solid uptrend in January on hopes of slower Fed rate hikes this year, then took a brief dive in early February to again record a rise in the second month of the first quarter. The final month of the quarter was pretty eventful as two banks of the United States – Silicon Valley Bank and Signature Bank – were shut down. Moreover, Silvergate Capital – one of two main banks for the crypto industry – announced in early March that it will wind down operations and liquidate its bank.
However, such news boosted cryptocurrencies, instead of pushing them down. Bank failures created uncertainty in the economy and market. The Fed adopted a less-hawkish tone in March. All these dragged down bond yields. Investors expected the end of Fed rate hikes soon. This bolstered growth investing in March and favored tech investing areas that included cryptocurrencies too.
Notably, growth investing (like technology, internet, payments, software, and even blockchain and cryptocurrency) has suffered a lot in the past year due to higher rates. Companies have seen their valuations eroding. Such low valuations also helped cryptocurrencies to bounce back this year.
Against this backdrop, below we highlight a few winning cryptocurrency ETFs of the first quarter.
The Valkyrie Bitcoin Miners ETF is an actively-managed exchange-traded fund that will invest at least 80% of its net assets in securities of companies that derive at least 50% of their revenue or profits from bitcoin mining operations and from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. The fund charges 75 bps in fees.
VanEck Digital Assets Mining ETF ) – Up 89.3%
The underlying MVIS Global Digital Assets Mining Index tracks the performance of companies that are participating in the digital assets mining economy. The fund charges 50 bps in fees.
VanEck Digital Transformation ETF (DAPP - Free Report) ) – Up 73.8%
The underlying MVIS Global Digital Assets Equity Index is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of the global digital asset segment.
Bitwise Crypto Industry Innovators ETF (BITQ - Free Report) ) – Up 73.16%
The underlying Bitwise Crypto Innovators 30 Index measures the performance of companies involved in servicing the cryptocurrency markets, including crypto mining firms, crypto mining equipment suppliers, crypto financial services companies, or other financial institutions servicing primarily crypto-related clientele.
The underlying Solactive Blockchain Index provides exposure to companies that are positioned to benefit from further advances in the field of blockchain technology. The fund charges 50 bps in fees.
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Top ETF Area of Q1 & Its Winning ETFs
Cryptocurrency has topped the list of winners in the first quarter of 2023 due to the bets over slower interest rate hikes by the Federal Reserve. Bitcoin, the largest digital currency by market value, has gained about 68% in prices this year. Bitcoin topped 26,000 for the first time since June 2022 in mid-March when market sentiments turned positive on expectations of the Fed’s dovishness (read: 5 ETF Areas Up At Least 35% This Year).
The currency staged a solid uptrend in January on hopes of slower Fed rate hikes this year, then took a brief dive in early February to again record a rise in the second month of the first quarter. The final month of the quarter was pretty eventful as two banks of the United States – Silicon Valley Bank and Signature Bank – were shut down. Moreover, Silvergate Capital – one of two main banks for the crypto industry – announced in early March that it will wind down operations and liquidate its bank.
However, such news boosted cryptocurrencies, instead of pushing them down. Bank failures created uncertainty in the economy and market. The Fed adopted a less-hawkish tone in March. All these dragged down bond yields. Investors expected the end of Fed rate hikes soon. This bolstered growth investing in March and favored tech investing areas that included cryptocurrencies too.
Notably, growth investing (like technology, internet, payments, software, and even blockchain and cryptocurrency) has suffered a lot in the past year due to higher rates. Companies have seen their valuations eroding. Such low valuations also helped cryptocurrencies to bounce back this year.
Against this backdrop, below we highlight a few winning cryptocurrency ETFs of the first quarter.
ETFs in Focus
Valkyrie Bitcoin Miners ETF (WGMI - Free Report) ) – Up 108.3%
The Valkyrie Bitcoin Miners ETF is an actively-managed exchange-traded fund that will invest at least 80% of its net assets in securities of companies that derive at least 50% of their revenue or profits from bitcoin mining operations and from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. The fund charges 75 bps in fees.
VanEck Digital Assets Mining ETF ) – Up 89.3%
The underlying MVIS Global Digital Assets Mining Index tracks the performance of companies that are participating in the digital assets mining economy. The fund charges 50 bps in fees.
VanEck Digital Transformation ETF (DAPP - Free Report) ) – Up 73.8%
The underlying MVIS Global Digital Assets Equity Index is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of the global digital asset segment.
Bitwise Crypto Industry Innovators ETF (BITQ - Free Report) ) – Up 73.16%
The underlying Bitwise Crypto Innovators 30 Index measures the performance of companies involved in servicing the cryptocurrency markets, including crypto mining firms, crypto mining equipment suppliers, crypto financial services companies, or other financial institutions servicing primarily crypto-related clientele.
Global X Blockchain ETF (BKCH - Free Report) ) – Up 72.7%
The underlying Solactive Blockchain Index provides exposure to companies that are positioned to benefit from further advances in the field of blockchain technology. The fund charges 50 bps in fees.