Just ahead of a vote on a spot bitcoin ETF, on Tuesday hackers got into the Security and Exchange Commission's account on X/Twitter and said that the ETF had approved those funds. SEC chief Gary Gensler was quick to follow up and announce that the account had been compromised and there was no such approval.
However, according to reports from the Wall Street Journal, companies awaiting the approval don't expect a delay.
The approval is expected to come today. Are crypto ETFs a buy now?
The number of applications for a bitcoin spot ETF rose in 2023 and sent bitcoin surging. The cryptocurrency broke above $45,000 to start the new year.
Applicants for a bitcoin ETF include top mutual funds like BlackRock as well as more innovation-focused offerings such as Cathie Wood's Ark Invest. Meanwhile, the number of digital coins is growing at a rapid pace and it can be difficult for investors to find the best coins.
Current cryptocurrency ETFs are popular because they help investors get around the challenges of investing in digital currencies. Some of the best crypto ETFs are Bitwise Crypto Industry, Amplify Transformational Data Sharing and Global X Blockchain & Bitcoin Strategy.
Another challenge for investors investing directly in cryptocurrencies is having to learn about crypto wallets and exchanges. Wallets are like private accounts that hold cryptocurrencies, while crypto exchanges only allow crypto trades.
Crypto ETFs
Through crypto ETFs, you can trade through the regular U.S. exchanges, just like you would with a stock. Remember that several crypto ETFs that trade in U.S. markets hold derivatives rather than actual coins.
But crypto ETFs behave like exchange-listed stocks and other ETFs that hold stocks. So the trading principles that apply to stock ETFs apply to crypto ETFs as well.
Some crypto ETFs also hold blockchain companies. Blockchain is the technology behind cryptocurrencies and enables financial transactions to be permanently recorded on a peer-to-peer digital network.
The best guide for choosing cryptocurrency ETFs is the list of factors in IBD's stock picking strategy and chart analysis. A strong performance will set a successful ETF apart. Growth in supply can be tracked through the ETF's market capitalization, while the daily average volume indicates whether the ETF is attracting enough liquidity.
It is always a good idea to pick a leader over a laggard. Leaders are companies that have shown strong growth in recent quarters. For cryptos, this means a higher rate of adoption along with significant price appreciation. Bitcoin and ethereum are top coins and ETFs that trade bitcoin futures, and ethereum futures have been rising.
Underlying Price Is Key
The price of the underlying coin is a factor that can affect the performance of these ETFs and could depend on a variety of factors. Some of these are similar to the ones affecting stocks, such as fluctuating supply.
Others, such as technology upgrades that affect the price of coins, don't affect ETF prices. Coins are also versatile and have several uses that can affect their pricing. Bitcoin is seen as a store of value, whereas ethereum is known for its staking feature.
As in the case of stocks, the market is an important factor. Further, understanding the market direction is vital. Even a stock with strong earnings and forecasts can underperform when the market direction slopes down. On the other hand, a company that has been trading above chart support levels may break out to new highs due to the momentum of an upward-trending market.
Regardless of recommended exposure to markets, investors should be cautious because cryptocurrencies are volatile assets and continue to have high risks.
The best cryptocurrency ETFs are those that are breaking out or are above their 50-day moving average.
Best Crypto ETFs To Watch
ProShares Bitcoin Strategy ETF was the first U.S. bitcoin-linked ETF and holds bitcoin futures contracts. Shares broke out of a double-bottom base and are in a profit zone from their 17.70 entry.
Its Relative Strength Rating has soared to 96 from 14 a year ago. The best-possible score is 99.
The Amplify Transformational Data Sharing ETF invests in blockchain companies. Top holdings include MicroStrategy, Coinbase, Roblox and Accenture.
BLOK has pulled back and is just above a buy zone from a buy point of 27.39. Its Relative Strength Rating from Investor's Business Daily has rocketed to 94 from 14 over the past year.
Bitwise Crypto Industry Innovators ETF has erased a 21% gain from a buy point of 11.34, according to IBD MarketSmith. But the stock has broken out of that selling spree and remains near a buy point. The fund invests in MicroStrategy, Coinbase, Marathon Digital Holdings, Riot Blockchain and other prominent players in crypto assets.
The Valkyrie Bitcoin Miners ETF reversed lower after breaking out to new highs at 19.38. But it is holding its 21-day moving average.
The fund holds several companies with connections to bitcoin mining, such as Advanced Micro Devices, CleanSpark, Bitfarms, Hive Blockchain and Riot Blockchain.
