With an overwhelming number of options to choose from, investors may find it challenging to navigate the crypto market's complexities. That's where crypto-based exchange-traded funds (ETFs) come in. They can provide investors with exposure to an asset class budding with potential.
Compared to a dismal 2022, the first half of 2023 has been more favorable as the broader crypto market has rallied more than 60% and once again reclaimed a $1 trillion total market cap. Accordingly, some of the top-performing ETFs year to date have been those with a crypto focus. If you're looking to amplify your crypto exposure and position your portfolio for future growth, these are three top crypto ETFs to consider.
Valkyrie Bitcoin Miners ETF
Bitcoin is by far the most valuable crypto by market value and as it goes, so goes the rest of the market. And recently, Bitcoin has been on a tear, up more than 60% year to date. This resurgence has made the business of mining bitcoins profitable yet again. As such, the Valkyrie Bitcoin Miners ETF (NASDAQ: WGMI) is up a blistering 146% in 2023, making it the fifth-best-performing ETF in the entire stock market.
Rather than having to sort through a number of miners, this fund provides a simple way for investors to gain exposure to the mining industry with varying allocations to the top miners in the world. It should be noted that due to the correlation between miners' profitability and the price of Bitcoin, this ETF is susceptible to those same price fluctuations.
After debuting on the Nasdaq just as a bear market began to unfold in 2022, the ETF is rebounding after losing 80% of its value. With its 0.75% expense ratio, Valkyrie provides a relatively inexpensive way for investors to capitalize on a potential Bitcoin bull market looming on the horizon.
VanEck Digital Transformation ETF
The VanEck Digital Transformation ETF (NASDAQ: DAPP) takes a slightly different approach to investing in the digital assets market. With its strategy of holding companies involved in various aspects of the cryptocurrency industry, such as blockchain technology, digital payments, and cybersecurity, the VanEck Digital Transformation ETF is also one of the top-performing ETFs in 2023 with a year-to-date return of 119%.
Some of the top holdings in the fund consist of the same Bitcoin mining companies as in the Valkyrie ETF, but there's some added diversity with holdings in Coinbase Global, MicroStrategy, and Galaxy Digital, which collectively making up about 15% of the fund. Diversification outside of Bitcoin mining companies makes this fund a bit more robust and with its 0.5% expense ratio, this ETF is a cost-effective way to give your portfolio some crypto exposure as the industry begins to recover.
iShares Blockchain and Tech ETF
The last ETF to make the list, while not as hot as the other two, is still up 84% this year. With a more diversified approach and healthy blend of tech, blockchain, and Bitcoin miners, the iShares Blockchain and Tech ETF (NYSEMKT: IBLC) provides a suite of exposure to companies on the forefront of innovation.
Along with the typical Bitcoin miners and ETF-favorite Coinbase, this fund invests in other high-performing companies such as Block (the company behind popular payment solution CashApp), Nvidia (popular for its microchips used in Bitcoin mining equipment), and even the likes of IBM and PayPal, which are pursuing new crypto-based business models.
With a relatively low 0.47% expense ratio, this ETF is an easy way to ensure you aren't overly exposed to volatility of the crypto market while also offering exposure to various other tech companies that are embracing crypto.
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RJ Fulton has positions in Bitcoin and Coinbase Global. The Motley Fool has positions in and recommends Bitcoin, Block, Coinbase Global, Nvidia, and PayPal. The Motley Fool recommends the following options: short June 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.