Bitcoin (BTC) and other altcoins started the new year on the up, with most cryptocurrencies climbing to multi-month highs. Aside from the spot market, the equity ETFs market is also dominated by BTC products, with the Valkyrie Bitcoin Miners ETF (WGMI) being the leading equity product in the market and up 40% in so far this year.
The Bitcoin Mining ETF is leading the market for traditional equity ETFs and leveraged equity ETFs, which is considered a rare occurrence. Bloomberg Senior ETF Analyst Eric Balchunas he pointed that the Bitcoin mining Valkyrie ETF is very “focused”, with investments in only 20 companies, including Argo Blockchain, Bitfarm and Intel, among other notable names.
The WGMI ETF debuted on the Nasdaq in February 2022, but did not directly invest in BTC. 80% of its net assets offer exposure through securities of companies that derive at least 50% of their income or profit from mining BTC. Valkyrie invests the remaining 20% in companies that have “a significant portion of their net assets” in Bitcoin.
The first approved Bitcoin ETF 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. The first ETF gained a lot of early market traction, seeing $1 billion in trading volume on its first day. This led many to believe that success would ultimately convince regulators to approve the first spot-market-based ETF in 2022. However, a prolonged bear market and an epidemic of bankruptcies turned the tables on cryptocurrency ETFs.
Cryptocurrency-related ETFs became the two worst performing ETFs in Australia in 2022, and the same thing happened in the United States. According to ETF.com, the four worst-performing US ETFs in 2022 were related to cryptocurrencies.
Cryptocurrency ETFs were seen as the next big thing for the cryptocurrency industry to drive mass adoption. However, this was hampered by the prolonged bear market and several negative developments in 2022.
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