Crypto ETF: Here are the reasons for the surprising gains in 2023

The cryptocurrency rally in early 2023 is causing the prices of many cryptocurrency ETFs to skyrocket.

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Crypto winter may be behind us, at least according to market sentiment. In fact, investors bought again because they believe inflation has peaked. It was precisely the insane increase in consumer prices around the world that led central banks to aggressively raise interest rates in 2022. This set the stage for the onset of a recession, driving traders away from the riskier asset market. , such as cryptocurrencies.

Since peaking at $68,990 in November 2021, Bitcoin has plummeted over the past year, losing around three-quarters of its capitalization. However, since the beginning of 2023, prices have recovered around 40% of their value. “This is why people invest in cryptocurrencies,” says Kenneth Lamont, senior analyst at Morningstar. “For many investors who buy cryptocurrencies, this is really a high-risk bet. It’s high risk and potentially high reward,” he pointed out.

Crypto ETFs: These Are the Most Progressing

But which cryptocurrency ETFs benefited the most from this digital currency clash in early 2023? The best performer was attributed to the $3.9 million Valkyrie Bitcoin Miners (WGMI) fund, which returned 101% year-to-date, according to Morningstar data. However, ETF shares are still down about two-thirds since February 2022. WGMI’s top holdings are cryptocurrency miners Bitfarms, Marathon Digital Holdings and Digihost Technology, whose share prices are up 280% this year.

Not far behind in terms of financial results is VanEck Digital Asset Mining (DAM) with a gain of 77%. The fund owns shares in cryptocurrency miners Riot Platforms and CleanSpark, as well as Chinese hardware maker Canaan. Compared to its March 2022 highs, DAM is still losing more than three-quarters of its value. The VanEck Digital Transformation (DAPP) ETF is up 66.8% year-to-date thanks to holdings such as payments firm Jack Dorsey’s Block and cryptocurrency exchange Coinbase Global. Excellent gains were also seen for the Global X Blockchain ETF (BKCH), which is up 60% since January 1, 2023. The same performance is also notable for the Bitwise Crypto Industry Innovators (BITQ) ETF and the iShares Blockchain and Tech (IBLC) ). ) .

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