Did you buy Coinbase (COIN) when the hot IPO went public on Wednesday? Newly traded stocks can be highly volatile, making them riskier.
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But with the cryptocurrency craze back in full swing, digital cash and related stocks are hot again. For investors who wish to take part in the cashless trend, there are less risky ways to play than investing in digital currency.
Exchange traded funds focused on Bitcoin, blockchain or other cashless businesses can offer crypto exposure with lower risk. That’s because such funds tend to own a basket of related stocks.
The Amplify Transformation Data Sharing ETF (BLOK) is in the blockchain camp. Blockchain is a digital ledger that tracks and stores transactions, including cryptocurrencies. The actively managed $1.4 billion BLOK ETF aims to invest at least 80% of its net assets in companies involved in developing and using blockchain technologies.
U.S. stocks represented more than two-thirds, or more than 68%, of assets as of March 31. About 23% was in the Asia-Pacific region, 8% in Western Europe and less than 1% in Africa/Middle East.
Software and services accounted for nearly 55%, diversified financials 14%, 7% was not classified, and 6% was in technology hardware and equipment. Smaller stakes in sectors including retail, banks, media and chips made up the rest.
Top 10 holdings as of Thursday included MicroStrategy (MSTR), Galaxy Digital, PayPal (PYPL), Square (SQ) and Marathon Digital (MARA). The top 10 totaled nearly 42% of the 53-stock portfolio.
Crypto Cash And Much, Much More
Marathon Digital leads the fund with a more than 300% year-to-date gain. The Las Vegas-based company mines Bitcoin, “with a focus on the blockchain ecosystem.” MicroStrategy has rallied about 90% this year. The business analytics software provider has amassed more than $2 billion in Bitcoin.
Cashless payment stocks Square and PayPal were up a respective 21% and 17% through Thursday’s close. Square allows small businesses to use mobile devices to conduct cashless transactions. Square stock is getting close to a 283.29 buy point.
In 2018, Square launched Cash App, which enables users to buy and sell Bitcoin. In October, Square said it bought around $50 million in Bitcoin. It followed up in February with a $170 million Bitcoin purchase.
PayPal last month launched “Checkout With Crypto,” an online checkout service for consumers who own cryptocurrencies. PayPal stock is building a new base with a 309.24 buy point. Both Square and PayPal are IBD Leaderboard stocks.
Coinbase And Bitcoin Exposure
BLOK also holds smaller stakes in Grayscale Bitcoin Trust (GBTC) and Coinbase Global, which held its highly anticipated IPO on Wednesday. In its first day of trading, Coinbase opened at 381 and reached as high as 429.54.
The biggest U.S. cryptocurrency exchange was given a reference price of 250 a share late Tuesday for its direct listing on the Nasdaq. Coinbase, the first major crypto company to go public, closed at 328.28 on its first day.
Grayscale Bitcoin Trust, which tracks the price of Bitcoin, has soared 64% this year.
BLOK, up 57% this year, is easily outpacing the S&P 500’s 11% return. It’s also beating the broader market over the long haul. The Amplify ETF’s three-year average annual return is 45.4%, vs. 18% for SPDR S&P 500 ETF Trust (SPY), according to Morningstar Inc.
The ETF’s shares are finding support at the 10-week moving average as they shape a base with a 63.04 buy point, according to MarketSmith chart analysis. The ETF charges a 0.71% expense ratio.
Follow Nancy Gondo on Twitter at @IBD_NGondo
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