Blockchain has been a hot topic which has resulted in steadily increasing value for traditional companies over the last few months. Companies such as Long Island Iced Tea have pivoted to include blockchain in their business model, resulting in increased stock value following their announcements.
Throughout 2016 and 2017 there were a few attempts to list bitcoin-based Exchange Traded Funds (ETFs), with one of the most well-publicized being the Winklevoss ETF, which was rejected in March of 2017. On January 17th, however, ETFs for blockchain related companies were allowed to list.
Amplify Transformational Data Sharing ETF and Reality Shares Nasdaq NexGen Economy ETF are Reuters reported that their plan is to buy shares in companies such as Overstock and Accenture plc. They cannot, however, purchase shares in companies that are not directly involved with blockchain technology as part of their business model.
According to CoinDesk, both funds went live with trading at 9:30 a.m. EST. They are both only investing in companies over $200 million capitalization and more than $1 million in daily volume for more than six months, consecutively.
When listed, how were the funds received?
CoinDesk reported that Reality Shares' Nasdaq NextGen Economy ETF (BLCN) opened at $24.20 and Amplify's Transformational Data Sharing ETF (BLOK) started closer to $20. Despite the recent correction in bitcoin value, the market is still hungry for blockchain technology and investment in companies which champion innovation in the ecosystem.
Late in 2017, CBOE and CME began offering bitcoin futures in an effort to provide traditional investors an opportunity to cash in on the growth and advancement of blockchain as an industry, specifically as it pertains to gains in bitcoin, the staple cryptocurrency, which most other cryptos are valued against.
How does institutional investment in the space affect the market?
Institutional investors have been chomping at the bit to inject their extra funds into this highly lucrative ecosystem. The funds are likely to increase the speed at which blockchain-based companies can continue to deliver innovative solutions.
In conjunction with the recent offering of funds and options, we recently noted that Weiss Ratings LLC has undertaken the task of creating a consistent rating scheme for cryptocurrencies. In their initial release on Jan. 24th, 2018, they are covering the top 20 cryptocurrencies.
ICOs have provided billions in funds to a few thousand projects within the crypto space, and institutional investors can bring significant amounts of funding to the table, but at the cost of regulation and inevitably some stifling of innovation.
These funds are, however, making headway in bringing crypto and blockchain technology into the mainstream to educate the public. As the technology spreads beyond early adopters, blockchain-based investments will likely stabilize with the exception of emerging technological advancements in the space.