Blockchain and Crypto
Published by Radif Partners · Updated
Coinbase, Marathon Digital, exposure to the crypto and blockchain ecosystem
This page compares 3 funds in the Blockchain and Crypto category, with ongoing charges from 0.65% to 2.00% and a median of 0.95%. The gap between the cheapest and the dearest is worth roughly €1350 over ten years on €10,000 invested: for a comparable index, that is the most reliable difference between two funds, because it rests on no assumption about markets. 3 of the 3 funds are accumulating and 2 replicate their index by holding its securities, the others using a swap. The largest fund in the list is BTCE, which matters less for returns than for the risk of closure: a fund that stays small usually ends up merged. Past performance is not used to rank this list: over the horizons published it says more about the index being tracked than about how the fund is run.
3
1.20%
-23.4%
0.65%
+-5.7%
A blockchain fund is not exposure to cryptocurrencies
The most common confusion about this category concerns the nature of the exposure. A UCITS fund cannot hold cryptocurrencies directly: the directive bars those assets for want of eligible-instrument status. What these funds hold is equities: exchanges, mining companies, chipmakers, banks and payment companies engaged in distributed-ledger technology. Correlation with the bitcoin price is strong, often above eighty per cent through rising phases, but it is neither contractual nor guaranteed, and the amplitude differs.
That structure creates a risk of its own. Mining companies carry debt, their profitability depends on the price of electricity and of bitcoin, and several went bankrupt in the 2022 fall: a capitalisation-weighted index then carried them nearly all the way down. Exchanges depend on a regulatory framework still in motion, part of which the European MiCA regulation now settles. For a portfolio, the category's volatility, often double that of a world index, means sizing the position as a percentage of the total before choosing it.
What the funds in this category show
Where the money actually sits
The category holds 3 funds and 5.3B in combined assets, and those assets are not spread evenly. ETC Group Physical Bitcoin (BTCE), run by ETC Group, holds 2.5B on its own, and the three largest, ETC Group Physical Bitcoin (BTCE), ProShares Bitcoin Strategy ETF (BITO) and Invesco Blockchain UCITS ETF Acc (BCHN), account for 100.0 % of the total. At the other end, Invesco Blockchain UCITS ETF Acc (BCHN) manages only 1.1B. Size is no guarantee of quality, but it decides two very concrete things: the spread between buying and selling price you pay on every order, and the odds that the fund still exists in ten years.
The fee gap, in money
Ongoing charges run from 0.65 % for Invesco Blockchain UCITS ETF Acc (BCHN) to 2.00 % for ETC Group Physical Bitcoin (BTCE), a gap of 1.35 points, against a category average of 1.20 %. On £10,000 held for ten years that gap is roughly 1350 in extra charges, before counting the return that money would itself have earned. It is the one variable in the comparison known in advance: past performance does not repeat, fees repeat every year.
Two funds in one category do not hold the same basket
The 3 funds listed track 3 different indices, among them Bitcoin, Bitcoin Futures and CoinShares Blockchain Global Equity. The largest tracks Bitcoin. That spread is why two funds filed under the same theme can differ by several points over a year: they hold different securities, weight them differently and rebalance on different dates. Each fund page names its index, and that is where a serious comparison starts.
Replication and domicile
2 funds hold the constituents of their index directly, 1 use a swap, including ProShares Bitcoin Strategy ETF (BITO) from ProShares. Synthetic replication often tracks more closely and reaches markets that are hard to hold directly, at the price of a counterparty risk that is regulated but real. Physical replication is easier to understand and allows securities lending, which earns the fund income and adds its own risk.
1 of the 3 funds are domiciled in DE, the rest in US and IE. Domicile sets the withholding tax the fund itself suffers on the dividends it receives, a cost absent from the stated fee but present in the return, and it also sets your own tax treatment depending on where you live.
Accumulate or take the income
All 3 funds in the category share one distribution policy, that of ETC Group Physical Bitcoin (BTCE). With no alternative inside the category, an investor who wants the other treatment has to use a broader index and accept a diluted theme.
Age and critical size
The oldest fund in the category, ETC Group Physical Bitcoin (BTCE), launched on 2020-06-09, giving 6 years of history, and the newest, Invesco Blockchain UCITS ETF Acc (BCHN), on 2022-03-08. A long record shows how the fund behaved in a fall, which no one-year number can. A fund launched two years ago has lived through a single market regime.
None of the 3 funds manages under 100 million, the smallest being Invesco Blockchain UCITS ETF Acc (BCHN). The category is therefore clear of closure risk for want of size, the risk that forces a sale on the issuer's timetable rather than the holder's.
Frequently asked questions
What are blockchain and crypto ETFs?
Blockchain ETFs invest in companies involved in cryptocurrency, blockchain infrastructure, and digital assets. This includes crypto exchanges, mining companies, and payment processors. Check the figure in the key information document of the exact share class your broker offers, since two classes of the same fund can differ on charges and on distribution policy.
Are blockchain ETFs regulated in Europe?
UCITS-compliant blockchain ETFs invest in publicly listed companies (not directly in crypto). Some European ETPs (Exchange Traded Products) do track Bitcoin or Ethereum directly. What matters more than the ranking is whether the underlying index suits your horizon and your tolerance for a fall of thirty per cent, which no score can decide for you.
How volatile are blockchain ETFs?
Blockchain ETFs are among the most volatile thematic ETFs, with annualized volatility often exceeding 50%. They can experience drawdowns of 60-80% during crypto bear markets. Past performance over these horizons says more about the index than about the fund, which is why the comparison here weighs cost, size and tracking quality instead.
Should I invest in blockchain ETFs?
Blockchain ETFs are speculative investments suitable only for high-risk-tolerance investors. Limit allocation to 1-5% of your portfolio and be prepared for extreme volatility. Over a ten-year horizon the ongoing charge weighs more than any difference in past performance: 0.20% against 0.50% on €10,000 is about €300, compounded.