The combined news of Federal Reserve Chair Jerome Powell’s speech that confirmed half-point interest rate increases in upcoming meetings and a commitment to an aggressive stance towards inflation alongside the inflationary hits to major retail giants Walmart and Target have seen markets plunge once more, with crypto again alongside for the ride. For investors that believe in the fundamentals of blockchain, it could be a buying opportunity, providing the low is near.
Bitcoin, the largest cryptocurrency by market cap, has been hovering around $30,000 for the last week after falling drastically from May 5 prices of right around $40,000. Crypto has proven to be highly susceptible to macro pressures and typically moves in tandem with equity markets during major macro events.
For investors that are seeking opportunities to gain exposure to the crypto space for the innovation potential the technology carries at discounted prices but do not want the direct exposure of a cryptocurrency, the Amplify Transformational Data Sharing ETF (BLOK) can be a solution for investors. BLOK invests in companies within crypto that seek to capitalize on the potential of blockchain and offers diversified exposure.
“In the near-term, markets will do what they will do regarding valuation, but the blockchain trend will continue to accelerate through whatever crisis is in front of us,” write the authors of the BLOK-Chain Monthly newsletter from Amplify ETFs.
Despite current valuations, Amplify believes that the fundamentals are strong for crypto and blockchain as a whole and reported that there are several venture capital firms waiting to seize the opportunities that dips provide, claiming that “they have much dry powder on the sidelines for ‘down rounds.’”
Investing in Blockchain's Potential at Discount Prices
BLOK currently has $650 million in AUM, is actively managed, and invests in companies directly involved in developing and using blockchain technology. BLOK was also the first blockchain ETF approved by the SEC. It launched in 2018.
The fund invests in companies partnered with or directly investing in companies utilizing and developing blockchain technologies. However, the fund does not invest directly in blockchain technology or cryptocurrencies. Due to current volatility, BLOK has narrowed its investments to primarily North America and developed countries for the time being.
“This does not mean that we expect that the Blockchain is limited to those regions, but rather we are conservative on how we view the need for liquidity and transparency,” the authors wrote.
BLOK spreads its holdings across the size spectrum, investing in all market caps. As of the end of March, top allocations within the blockchain industry included transactional at 34.74%, crypto miners at 22.05%, and venture at 11.56%. BLOK invests across the blockchain landscape in miners, exchanges, and developers.
BLOK has an expense ratio of 0.71% and currently has 46 holdings.
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