After a tumultuous year, Bitcoin Mining ETFs are back on top of the performance charts for the first month of 2023.
Bitcoin (BTC) and other altcoins kicked off the new year with a bang, with most cryptocurrencies rising throughout the month. Apart from the spot market, the ETF market is also dominated by BTC, where the Valkyrie Bitcoin Miners ETF (WGMI) is the market-leading stock ETF, up 40% year to date.
Bitcoin Mining ETF is a market leader among traditional equity ETFs and leveraged equity ETFs and is considered rare. Bloomberg senior analyst Eric Balchunas called the Valkyrie Bitcoin Mining ETF “very strong,” investing in just 20 companies, including Argo Blockchain, BitFarm and Intel, among other well-known names.
ETF, United States, Cryptocurrency
The WGMI ETF will be listed on Nasdaq in May 2022, but will not directly invest in BTC. It provides exposure to 80% of net assets through bonds for companies that generate at least 50% of their revenue from BTC mining. Valkyrie invests the remaining 20% in companies that have “a significant portion of their total assets” in bitcoin.
Stock Price Stock Market Performance ETF Source: Bloomberg
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The first Bitcoin ETF approved in the United States is the ProShares Bitcoin Strategy ETF, which will launch in October 2021 and track bitcoin prices through futures contracts traded on the CME market. The first ETF took the market by storm early on, trading over $1 billion on its first day. This has led many to believe that success will finally convince regulators to approve the first market-based ETF in 2022.
Cryptocurrency-related ETFs become the two worst performing ETFs in Australia by 2022, and the same story happens in the United States. According to ETF.com, four of the worst ETFs in the United States in 2022 are related to crypto.
Related: Grayscale CEO highlights 20% buyback option if GBTC fails ETF exchange
Crypto ETFs are considered another big step towards mainstream adoption in the crypto industry. However, this is hampered by a prolonged bear market and a number of bad events in 2020.