Blockchain ETFs Remove the Downside of Excessive Volatility in Crypto ETFs

Crypto ETFs are comparatively new in the market whereas Blockchain ETFs seem to be a seasoned player. But before delving into the comparison, the idea about both these concepts should be made clear. The ETFs backed by Blockchain primarily deal with the stock market prices of those companies that have put their investment in Blockchain technology. It is noteworthy that Blockchain technology has surpassed all scrutiny tests by regulatory agencies whereas cryptocurrencies are in constant battle with several scrutiny tests given their active role in fraudulent activities such as money laundering.

Overview of Blockchain ETFs and Crypto/Bitcoin ETFs :

Blockchain does not belong to any single entity, it is an entire technology. The universe of investments backed by Blockchain is quite large and has expanded over more than any single product or company. As the CEO of Amplify ETFs says, “Bitcoin needs blockchain but blockchain doesn’t need bitcoin.” The diversified nature of Blockchain encouraged IBM to form an alliance with Maersk logistic company to apply Blockchain technology to the freight industry. The global and open nature of Blockchain technology invites Blockchain Development Companies from the USA as well as Asian and European companies to invest in Blockchain exchange-traded funds. The various other sectors that are profited by Blockchain technology are Digital App Development Company, Biotechnology, Agricultural sector, etc. A certain methodology named ‘Blockchain Score’ is assigned to company stocks and the factors deciding this score are the Company’s contribution to the Blockchain ecosystem, the various investments in research activities, innovative ideas, and the outcome. These factors help in deciding the potential of any blockchain company in the long run.

Now to speak about Crypto ETFs, it works like any other exchange-traded fund but the focus stays mainly on crypto assets. Crypto EFTs are mostly backed by traditional assets and they appear in two categories- physical asset-backed and future contracts backed. In the first category just like purchasing shares, asset management companies should buy actual coins, following which funds representing the value of that crypto-asset must be set up and listing it for trade purposes on the stock exchange. The increase of the value of this investment depends on the increase of values of digital coins from the fund. On the other hand future contracts based on crypto is not dependent on actual coins. A price gets predefined for an asset so that it can be traded in the future within that specific value. The underlying risk is lower than physical asset-backed crypto because no protection has to be given to the physical assets in this case. Cryptocurrency Exchange Development Companies have made it easier to buy and sell cryptocurrencies by setting up digital wallets and letting investors achieve benefits from the assets without making new brokerage accounts. The greatest feature and benefit of crypto ETFs is that one need not open multiple accounts for several crypto exchanges; instead one single investment from the existing brokerage account can count as sufficient for providing exposure to several crypto assets. However, crypto ETF is not without volatility because of which investors face trouble in handling the ups and downs of this market.

Blockchain ETFs vs. Crypto ETFs : 

The fundamental difference between the two lies in the acceptance of people. Blockchain ETF has already secured its place in the mainstream market but Crypto ETF still struggles to gain a hold due to several government restrictions. Today the blockchain ETF has made a global stand by fetching a place among the top trading regulatory markets, some of which are Siren NASDAQ NexGen Economy ETF, Amplify Transformation Data Sharing ETF, Capital Link NextGen Protocol ETF, etc. On the other hand, crypto ETF shows no sign of getting launched in the standard stock market. There is a dearth of experts and advisory boards currently who can lead and direct the regulatory bodies regarding its future potential. Most of the companies related to crypto ETF funds are still going through scrutiny and have a long path to go for being approved. According to the research article by Markets and Markets,

“The global blockchain market size is expected to grow from US$3.0 billion in 2020 to US$39.7 billion by 2025, at an impressive compound annual Growth rate (CAGR) of 67.3% during 2020-2025.”

To maintain a large number of cryptocurrencies, one requires opening multiple accounts which is undoubtedly a tiring affair and quite time-consuming. The security of crypto ETF is not quite satisfactory as several trading accounts have already been blocked on grounds of suspicious trading, money laundering, etc. Crypto ETF differs according to the fees, structure, and availability. Surprisingly the craze of crypto ETF is mostly found in the youth belonging to the age group of 18-25 years old and at present some popular crypto ETFs are Proshares Bitcoin Strategy ETF, Grayscale Bitcoin Trust, and Bitwise 10 Crypto Index Fund, etc. There is still a lot of room left for improvement for both these ETFs. There are certain weak links that need to be worked upon in both cases. If you are still wondering how and where to invest then Monkhub can help you to make the right decision. It is a blockchain development company that aims to assist companies from different domains in developing groundbreaking applications with revolutionary technologies.