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David England: Looking at the popular digital field
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David England: Looking at the popular digital field

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Last week, I began a multi-week series introducing new sectors and companies not being noticed and featured very popular ESG Funds.

Today, I focus on the controversial, but popular Crypto Currency space. Why controversial? Either investors or traders believe in Cryptocurrency or they don’t. When it comes to interest in this sector, I see very little grey area.

David England: Looking at what isn't being noticed

Why the popularity with CryptoCurrency related funds? According to botcoinexchange.com, bitcoins are not subject to government control, are digitally secured, and in an environment where state violence and political unrest cannot gain access. Being a digital currency, they are secured using protected digital identity and economics and are more accessible than the traditional banking system.

My thoughts: The jury is still out on some of these points.

Let’s identify the larger Crypto-related exchange-traded funds, trading on our U.S. exchanges.

BLCN-Reality Shares Nasdaq NexGen Economy tracks an index of global companies involved in developing, researching, or using blockchain technologies.

GBTC-Grayscale Bitcoin Trust (BTC) is an exchange-traded fund launched and managed by Grayscale Investments, LLC. The fund invests in bitcoins. It invests through derivatives such as futures, swaps, and other CFTC-regulated derivatives that reference digital currencies. The fund seeks to track the performance of the TradeBlock XBX Index.

David England: Is bigger necessarily better?

BLOK-Amplify Transformational Data Sharing ETF invests in companies developing or using what it calls “transformational data sharing technologies” mainly focusing on Blockchain, the technology that drives Bitcoin.

KOIN-Innovation Shares NextGen Protocol ETF seeking investment results that, before fees and expenses, track the performance of the Innovation Labs Blockchain Innovators Index.

To see the performance of these select ETFs compared to the performance of the U.S. markets ($SPX), I designed a chart beginning on March 24 to real-time.

Crypto-Digital Currency Related Funds

The BLCN-Reality Shares Nasdaq NexGen Economy ETF took top honors with an impressive 94% return. BLOK-Amplify Transformational Data Sharing ETF is up 87%. GBTC-Grayscale Bitcoin Trust is up 81%, followed by KOIN-Innovation Shares NextGen Protocol ETF up 61%. The benchmark index, the U.S. S&P 500, is up more than 56%.

Here are the key points: During this timeframe, all four ETFs had impressive returns, all outperforming the SPX. It was interesting to see that three funds outperformed the SPX by more than 30%. Although I used the SPX as the benchmark index, some traders compare this group with the performance of the U.S. dollar. My data showed very little difference in performance between the two so I choose SPX since more readers are familiar with it. Finally, like with the ESG Funds, I am seeing increasing volume within this group meaning more institutions are moving funds into this increasingly popular sector.

Next, I will identify the top companies in the top-performing BLCN-Reality Shares Nasdaq NexGen Economy ETF. They are as follows: OSTK-Overstock.com, SQ-Square Inc., DOCU-DocuSign Inc., NVDA-Nvidia Corp., and JD-JD.com. While there are several innovative companies in this fund, I am limited to the top five performers due to space limitations.

To see the performance of these top companies compared to the BLCN, I designed a chart beginning on March 24 to real-time.

BLCN Holdings Perfomance

OSTK-Overstock.com took top honors with a huge 2,061% return. SQ-Square was next up 297%, DOCU-DocuSign was up 157%, then NVDA-NVIDIA up 140%. The laggard was JD.com up a nice 105%. The benchmark fund BLCN-the green shaded area was up 94%.

Here are the action points: During this timeframe, all five companies outperformed the index BLCN. The leader, Overstock.com ran well over 2,500% before profit trading hit. Seasoned traders do not buy and hold. Once a security peaks, they take profits off the table then watch for new entry points. This is what is going on now with Overstock.

Another key point: Similar to the EFG funds, while researching some of the funds and companies associate within these funds, many questions arose to the “why” of being categorized in this group. You will be the final decision maker on if they qualify or simply included to beef up fund performance.

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Finally, take the time to do your due diligence on each fund and its holdings. Spend time to research the rest of the top companies to see if one may be next to run like Overstock. Once the companies are identified, set alerts to let you know when one breaks out. Then use the Simple Simon buy system to help with decisions.

I see tremendous opportunities within this space, especially when more institutions come on board.

In full disclosure, I do not hold any securities listed.

Plan your work, work your plan, and share your harvest!

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