Introduction
Despite the hype surrounding cryptocurrency and other digital assets, the debut of cryptocurrency-related ETFs is not a recipe for success. Several ETFs have suffered disastrous debuts, with Global X Blockchain ETF (BKCH) tumbling over seventy percent, Melanion BTC Equities Universe Ucits ETF (FR0014002IH8) crashing eighty-six percent, and ProShares Bitcoin Strategy ETF (BTC) losing more than 70 percent. Authentic websites like bitcoin-revolution.software allow you to purchase bitcoin if you’re interested in using it to make some money.
Global X Blockchain ETF (BKCH) has plummeted 77%
Global X Blockchain ETF (BKK) is an exchange-traded fund that invests in companies that can benefit from the increased adoption of blockchain technology. Its portfolio includes companies involved in digital mining assets, developing blockchain applications, and manufacturing blockchain hardware. The fund aims to provide investment results corresponding to the Solactive Blockchain Index.
The Global X Blockchain ETF (BKK) has been hit hard by a market downturn. The fund lost more than 7% on its first day and nearly 77% of its value. This was one of the worst debuts of any exchange-traded fund in history. Yet, other exchange-traded funds have experienced even steeper declines.
Melanion BTC Equities Universe Ucits ETF (FR0014002IH8) has lost 86.2 percent.
The Melanion BTC Equities Universe Units ETF is a new UCITS ETF that invests in companies involved in cryptocurrency. The fund was launched in October 2021 and has since lost 76.9 percent, according to data from Bloomberg. Its performance is comparable to the Global X Blockchain ETF, which lost 76.7 percent in its first year.
Investors in the fund can’t withdraw any money during the current bear market. But they can make up for the loss by buying some more Bitcoin. The ETF offers passive exposure to digital currency. Its value is calculated by taking the net dividends of the fund’s shares and reinvesting them.
It has a track record for having the worst first-year performance of any exchange-traded fund in history. Its launch coincided with the hottest investment theme of the year, with bitcoin’s price spiking to over 285. But Morningstar Direct’s data shows that bad first years are not fatal.
ProShares Bitcoin Strategy ETF has lost 86.2 percent.
The ProShares Bitcoin Strategy ETF debuted on October 20, 2021, and amassed almost $1 billion in its first two days. The launch was hailed by Bitcoin enthusiasts and turned the digital currency into an investment strategy. The fund has since lost over eighty percent of its initial investment and is now the sixth worst-performing ETF of all time. However, investors are not giving up hope – the fund continues to receive inflows despite the sharp decline in its price.
The fund’s performance is not surprising, given the volatility of bitcoin. But the losses may be even more alarming given that the fund’s advisors are still mainly in the dark about the currency. The Vanguard Value Fund, for example, lost money at an unprecedented scale.
Because bitcoin is unregulated, it is prone to fraud and manipulation. Its price is affected by influencers and the media and is highly volatile. Moreover, margin requirements, collateral requirements, and other limits limit its performance.
iShares Future Metaverse Tech and Communications ETF has lost over 70 percent
The iShares Future Metaverse Tech and Communication ETF is a newly launched exchange-traded fund focusing on virtual reality and the metaverse. The fund tracks the Morningstar Global Metaverse & Virtual Interaction Select Index. A metaverse is a digital world that’s three-dimensional and interactive. As it develops, the technology behind the virtual world will be used in various industries.
The ETF is heavily concentrated in the communications sector and has been hit by many recent negative news stories. Alphabet, Snap, and Microsoft have all suffered. The communications sector is struggling, and it’s affected Alphabet and Google, which have also fallen in value. The two companies together lost nearly 7% of their value on Friday.
The market has reacted negatively to the news that Jerome Powell, the chair of the Federal Reserve, threw a dumpster full of money. That action triggered almost a 100 percent monthly outflow. The movement of the U.S. central bank has prompted Europe to follow suit, driving the developed market economies into recession. This is leading to more volatility in the financial markets. The central banks kept rates low while inflation was high, but now they’re raising them when inflation falls.
Conclusion
Cryptocurrency exchange-traded funds have seen some of the worst debuts in the industry’s history. According to Morningstar Direct data, five of the worst debuts of all time occurred in cryptocurrency ETFs. The data excludes inverse funds and leveraged funds.
The cryptocurrency market is volatile, so investors should be aware of this before investing. Cryptocurrency ETFs are tracked by their assets rather than a basket, so the value of individual assets can fluctuate greatly. For example, the ProShares Bitcoin Strategy ETF, approved in the U.S. earlier this year, lost $1.2 billion in one year, making it the worst-performing cryptocurrency ETF in history.