Bitcoin (BTC) and other altcoins started the new year on an upbeat note, with most cryptocurrencies surging to multi-month highs. Aside from the cash market, the stock exchange-traded fund (ETF) market is also dominated by BTC, with Valkyries Bitcoin Miners ETF (WGMI) being the top stock ETF market, up 40% year-to-date.
The Bitcoin mining ETF is leading the traditional stock ETF market and leveraged stock ETFs in what is considered a rare occurrence. Eric Balchunas, senior ETF analyst at Bloomberg, pointed out that the Valkyrie Bitcoin Mining ETF is highly “concentrated,” investing in just 20 companies, including Argo Blockchain, Bitfarm, and Intel, among other notable names.
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The WGMI ETF was listed on Nasdaq in February 2022 but did not invest directly in BTC. 80% of its net worth provides exposure to the securities of companies that derive at least 50% of their revenue or profits from BTC mining. Valkyrie invests the rest of the 20% in companies that hold “a significant portion of their net worth” in Bitcoin.
Performance of the stock ETF market. Source: Bloomberg
The first Bitcoin ETF to be approved in the United States was the ProShares Bitcoin Strategy ETF, launched in October 2021, which tracked Bitcoin prices through futures contracts traded on the CME marketplace. The first ETF caught on early in the market, seeing $1 billion in trading volume on its first day. This led many to believe that its success would eventually convince regulators to approve the first spot market-based ETF in 2022. However, a prolonged crypto winter and crypto contagion turned the tide on crypto ETFs.
Cryptocurrency-related ETFs became the two worst-performing ETFs in Australia in 2022, with the same story playing out in the United States. According to ETF.com, the four worst-performing ETFs in the US in 2022 were crypto-related.
Related: Grayscale CEO highlights 20% GBTC stock buyback option if ETF conversion fails
Crypto ETFs have been seen as the next big step for the crypto industry to drive mainstream adoption. However, this has been hampered by the ongoing bear market and several negative events in 202.
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