Best Blockchain ETFs: Your Guide to Investing in the Technology Behind Crypto
Many investors recognize blockchain as the technology underpinning popular cryptocurrencies like Bitcoin and Ethereum. However, its applications extend far beyond the realm of digital currency, impacting various industries and services. Investing in this technology is possible through various avenues, including exchange-traded funds.
What is Blockchain Technology?
At its core, blockchain can be simply viewed as a continuously growing ledger of data, or “blocks,” which are recorded on independent computers connected through a shared network. Each block of data is permanently “frozen” in time on an open, accessible ledger. This feature makes blockchain technology particularly valuable for industries where security and data integrity are crucial, such as finance.
In essence, blockchain reduces the risk of fraud or data manipulation by decentralizing information. By linking and verifying data in a transparent manner, blockchain also streamlines and automates processes that were once inefficient, such as manually recording transaction information. A prime example of blockchain’s real-world application is Walmart’s use of it to ensure food safety. By tracing products back to their origins, they can quickly identify and isolate the source of any potential contamination, such as in the case of an E. coli outbreak.
Major corporations like Microsoft (MSFT), PayPal (PYPL), Starbucks (SBUX), Salesforce (CRM), and IBM (IBM) are also leveraging blockchain for purposes including digital security, infrastructure improvements, and automation.
How to Invest in Blockchain
Beyond direct trading in cryptocurrency or investing in individual stocks, investors can gain exposure to blockchain technology through exchange-traded funds (ETFs). A blockchain ETF holds a diversified portfolio of publicly traded companies that are involved in blockchain technology. Importantly, blockchain ETFs typically do not directly hold cryptocurrency assets, though some may be tied to the futures of major cryptocurrencies like Bitcoin or Ethereum. These funds are designed to invest in global companies, many of which are well-established technology firms.
Top Blockchain ETFs
Since pure-play blockchain companies are rare, the holdings within these ETFs often overlap with other broad-based ETFs. Below is a table showing ETFs with significant assets under management focused on the broader blockchain ecosystem. (Data as of February 6, 2025.)
Source: etfdb.com, data as of February 6, 2025
ETF Details:
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Amplify Transformational Data Sharing ETF (BLOK): This actively managed fund targets global companies developing and applying blockchain technologies. It invests at least 80% of its net assets in companies involved in “transformational data sharing technologies”. Top holdings include Robinhood Markets (HOOD), Metaplanet (MTPLF), and Galaxy Digital Holdings (GLXY).
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Siren Nasdaq NexGen Economy ETF (BLCN): This ETF focuses on global companies that are investing in the development, research, and support of blockchain technology for others to use. Top holdings include Accenture (ACN), Robinhood, and Qualcomm (QCOM).
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First Trust Indxx Innovative Transaction & Process ETF (LEGR): This ETF offers exposure to global companies positioned to benefit from blockchain technology or its increased efficiencies. Top holdings: JD.com (JD), Salesforce (CRM), and Industrial and Commercial Bank of China Ltd (IDCBY).
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Global X Blockchain ETF (BKCH): Investing in global companies that are participating in blockchain activities such as digital asset mining and integration. Top holdings: Coinbase Global (COIN), MARA Holdings (MARA) and Core Scientific (CORZ)
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VanEck Digital Transformation ETF (DAPP): This ETF invests 80% of its total assets in securities of digital transformation companies and seeks to track the Global Digital Assets Equity Index. Top holdings are Coinbase Global, Strategy (MSTR) and Block (XYZ).
Cryptocurrency vs. Blockchain ETFs
If your primary interest lies in trading digital currencies, Bitcoin and Ethereum ETFs offer a route to investing through traditional exchanges. You also have other ways to own cryptos directly or through futures contracts. For trading cryptocurrencies like Bitcoin, you can access specialized crypto exchanges such as Coinbase or Binance. Also, many brokers offer Bitcoin future contracts.
Risks Associated with Blockchain ETFs
Similar to other thematic investments such as electric vehicles or artificial intelligence, blockchain ETFs can encounter market volatility. These risks can be related to market sentiment, regulatory changes, or company valuations.
Bitcoin, which utilizes blockchain technology to document all transactions, has been around since 2009 but still faces skepticism. This uncertainty can translate into greater volatility for blockchain-related investments. Assessing the current and future value of Bitcoin and other cryptocurrencies remains a challenge for both retail and sophisticated investors.
Regardless of the challenges, the trend in cryptocurrency trading continues to surge, along with the adoption of blockchain, making it an evolving area for investors.
