The Global X Blockchain & Bitcoin Strategy ETF has positions in bitcoin futures, alongside its sister fund, which invests in companies exposed to the blockchain industry. The fund is down in the last 12 months but has seen a rebound since the turn of the year, as inflation shows signs of peaking.
- The Global X Blockchain & Bitcoin Strategy has positions in bitcoin futures and the Global X Blockchain ETF.
- After a tough 2022, Blockchain shares have rebounded this year.
- Indirect holdings Block and Coinbase have positive and mixed analyst outlooks.
The Global X Blockchain & Bitcoin Strategy ETF [BITS] offers investors exposure to the direct value of bitcoin, while also taking considerable positions in companies positioned to benefit from the growth of cryptocurrencies and the adoption of blockchain technology.
The fund is split into two main holdings, with 52.39% of the total value being held in bitcoin futures as of 16 March. The fund does not directly invest in companies within the blockchain industry, with the remaining 47.62% of the total fund value being exposed to the Global X Blockchain ETF [BKCH].
The Global X Blockchain & Bitcoin Strategy ETF has struggled in the last 12 months as the price of bitcoin has come under pressure, with the value of the fund falling over 52.5%. The main cause of this pull-back was investors increasingly seeking safe, stable, and consistent returns, which cryptocurrencies are not typically thought to offer.
Despite this, the first few months of 2023 have been impressive for the fund and the wider crypto and blockchain industry.
The price of bitcoin has soared 69.4% since the beginning of the year, despite being down 32% in the past year, and the Global X Blockchain & Bitcoin Strategy ETF has followed suit, with gains of 64% year-to-date. The price of bitcoin has surged over fears of instability in the banking system, which have encouraged investors to shift towards the cryptocurrency.
Global X Blockchain ETF fund deep in the green
With nearly half of the Blockchain & Bitcoin Strategy ETF being invested in its sister Global X Blockchain Strategy ETF, the latter fund’s performance has a considerable impact on the former’s.
The Blockchain fund’s largest holding, Block Inc [SQ], makes up over 17.34% of assets under management (AUM) as of 16 March. The fintech company has several different divisions including its Spiral and TBD businesses, which are helping make bitcoin easier to access.
The Block share price has risen 17.7% since the beginning of the year as the outlook for cryptocurrencies strengthens. However, this has not reversed the losses seen in 2022, with the shares still down over 45% in the last 12 months.
The Global X Blockchain Strategy ETF’s second largest holding, Coinbase [COIN], makes up 13.31% of the total fund value. The shares have historically performed very poorly, being down over 70% since their debut back in 2021.
However, as is the case with Block, 2023 has offered relief, with the shares up 112% since the turn of the year. Rising bitcoin prices have helped one of the world’s largest crypto exchanges, while the company works on cutting costs as it seeks profitability.
Positive outlook
With over half of the Global X Blockchain and Bitcoin Strategy ETF being exposed to bitcoin futures, the performance of the cryptocurrency is vital. Signs that inflation may be reaching a peak have helped bitcoin’s performance, helping to pave the way for further bitcoin investment.
Analysts have a positive outlook on Block shares. Out of 48 analysts polled by Refinitiv, 11 gave ‘buy’ ratings, 25 ‘outperform’, nine ‘hold’, and three ‘underperform’. A median of 40 forecasts gave a 12-month price target of $95.00, and suggests an upside of 28 4% from the recent closing price of the shares.
Analysts are a little more split on Coinbase shares, however. Out of 30 analysts, five gave ‘buy’ ratings, four ‘outperform’, 15 ‘hold’, and six ‘underperform’. A median 12-month price target of $63.00 among 24 analysts suggests 16% downside on the recent closing price of the shares.
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