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Blockchain ETFs: What Investors Need to Know

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Bitcoin has been on a wild ride again; it is now trading below $9,000 after touching a record high above $19,500 in December.

Further, hopes for launch of a bitcoin ETF were dashed by the SEC recently. But investor demand for cryptocurrency related assets remains high.

Four blockchain ETFs were launched over the past few days. Investors have poured money at a record pace into these ETFs that provide exposure to the technology that underpins cryptocurrencies.

In simple words, blockchain is a shared, digital ledger that all users can see and but no single user can control. It’s a transformative technology and many experts say it could change our world.

The International Data Corporation (IDC), expects blockchain spending to grow at compound annual growth rate (CAGR) of 81.2% over the 2016-2021 to reach $9.2 billion in 2021.

The Amplify Transformational Data Sharing ETF (BLOK - Free Report) is an actively managed ETF. It has pulled in $187 million in assets since its launch just a couple weeks back. I don’t know whether its popularity is due to active management in this evolving space or the ticker.

The Reality Shares Nasdaq NexGen Economy ETF (BLCN - Free Report) tracks a smart-beta benchmark. The fund has 59 holdings as of now which are weighted using a proprietary “Blockchain Score,” designed to identify the companies that may benefit most from blockchain technology.

The First Trust Indxx Innovative Transaction & Process ETF (LEGR - Free Report) uses a three-tier scoring system, putting eligible securities into the three categories: Tier One--Active Enablers, Tier Two--Active Users and Tier Three--Active Explorers.

Only companies in the first two tiers are included in the index with 50% allocation to each category. The selected companies are weighted equally within each category.

Innovation Shares NextGen Protocol ETF (KOIN)  is the latest one to join the race. It uses AI to select blockchain innovators and adopters. The ETF provider hopes to uncover companies for inclusion that might be overlooked by traditional analytical research.

To learn more about these ETFs, please watch the short video above.


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