DEC 27, 2021
Rising Crypto Use Bullish for New Blockchain ETF
DEC 02, 2021
A recent study indicates that nearly 58% of multinational companies are using at least one form of cryptocurrency for cross-border payments.
That rising level of crypto adoption is significant for blockchain technologies and related investments, including the newly minted Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).
BLKC, which debuted in October, follows the Alerian Galaxy Global Blockchain Equity, Trusts and ETPs Index. That benchmark “is comprised of stocks of companies that are materially engaged in the development of blockchain technology, cryptocurrency mining, cryptocurrency buying, or enabling technologies and exchange-traded products,” according to Invesco.
Importantly, financial firms are realizing that clients want access to crypto. Blockchain plays a pivotal role in smoothing that transition and increasing access, underscoring potentially immediate utility for BLKC.
“Sixty-one percent of financial institutions (FIs) realize that offering cryptocurrency access is highly important to clients, but just 10 percent support any type of cryptocurrency. Cryptocurrency, Blockchain And Cross-Border Payments draws from a survey of 250 cross-border businesses and 250 FIs to outline where banks and FinTechs are falling short on supporting cryptocurrencies and how they can close this gap,” says Pymnts in a study conducted with Circle.
The study confirms that 57.6% of multinational companies are using at least one digital coin in cross-border transactions and 56% rely on blockchain technology for cross-border transactions.
However, there’s work to be done, and that work could highlight long-term allure with BLKC. The Pymnts survey indicates that 90% of financial institutions don’t provide crypto access of any type to customers. As younger, more nimble fintech companies continue encroaching on territory previously dominated by old guard financial firms, companies in the latter category may be compelled to up their blockchain and crypto games.
“Offering cryptocurrency and blockchain solutions to their customers requires [financial institutions] to consider a host of technological, commercial and regulatory variables, and they easily can find themselves at a loss about what to prioritize,” Pymnts says.
BLKC holds 63 stocks, nearly 54% of which are tech companies. About 26% are financial services firms.
While it’s a blockchain fund, BLKC has a crypto-correlated vibe to it because its largest holding is the Grayscale Bitcoin Trust (BTC). That product accounts for 14.14% of BLKC’s roster. None of the new ETF’s equity components exceed weights of 1.67%. Roughly 56% of the fund’s holdings are classified as growth stocks.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.