Given the current cryptocurrency craze, Coinbase Global’s
COIN
made a successful debut on the Nasdaq last week, raising about 31% on its first trading day on Apr 14. It is the first major crypto company to go public with valuation of $65 billion and will be the biggest beneficiary of the cryptocurrency revival.
Coinbase, the biggest public pure-play cryptocurrency platform, had 56 million verified users, with $1.8 billion in revenues in the first quarter, according to
CNBC
. About $223 billion in crypto assets were stored on its platform through the end of Q1 2021. This is more than 11.3% of all cryptocurrencies in existence currently, and triple the cryptocurrency market share that Coinbase possessed three years ago (read:
Should You Invest in Bitcoin, Coinbase or Blockchain ETFs?
).
Coinbase swung to a profit of $322.3 million in 2020 versus a net loss of $30.4 million in 2019. For the first quarter of fiscal 2021, Coinbase estimated it would post net income of $730-$800 million compared to net income of just $32.26 million in the first three months of 2020.
Coinbase: A Good Bet?
The future of Coinbase seems solid given the ongoing digital currency boom. Overall, cryptocurrency market capitalization hit an all-time peak of $2 trillion early this month buoyed by strong demand from both institutional and retail investors on hopes that it will become a mainstream investment and payments vehicle. The most-popular digital currency, Bitcoin, has more than doubled this year while ethereum has gained nearly 190%. Big companies including Tesla
TSLA
and BNY Mellon have also stepped up their support to cryptocurrencies.
Additionally, digitization will likely drive growth in the digital assets space. This is especially true as the need for secure and rapid electronic movement of assets or payments will lead to the higher adoption of digital asset systems. MarketsandMarkets expects the cryptocurrency market to witness a
CAGR of 7.1%
from $1.6 billion in 2021 to $2.2 billion by 2026 (read:
Go Digital With This New ETF (DAPP) From VanEck
).
Coinbase IPO is a major step toward the mainstream adoption of cryptocurrency and other companies are expected to follow the suit.
ETFs in Focus
That said, investors are jumping into the space to cash in on the opportunity with the newly minted company. For them, we have highlighted six ETFs that have fast filled the cryptocurrency exchange and could be excellent choices to tap the ongoing boom.
Renaissance IPO ETF
IPO
This fund provides exposure to the largest and most-liquid, newly listed companies by tracking the Renaissance IPO Index. New companies seek inclusion on the fifth day of trading. The fund currently holds 64 stocks in its basket, with Coinbase occupying the third position at 6.8% exposure. Technology is the top sector accounting for 51.6% share while healthcare and consumer discretionary round off the next two spots with a double-digit allocation each. The fund has amassed $649.1 million in its asset base while it trades in a solid volume of about 423,000 shares. It charges 60 bps in annual fees (read:
Record Q1 for Global IPOs? ETFs in Focus
).
First Trust US Equity Opportunities ETF
FPX
This ETF focuses on the largest, best-performing and most-liquid U.S. IPOs, and follows the IPOX-100 U.S. Index. It holds 100 securities in its basket with COIN accounting for 1.6% share. The fund has accumulated $2 billion in AUM and witnesses volume of about 122,000 shares per day. It charges 58 bps in fees a year.
Amplify Transformational Data Sharing ETF
BLOK
The ETF is actively managed, providing investors global exposure to a basket of the leading companies engaged in the development and utilization of blockchain technologies. It has AUM of $1.3 billion in its asset base and trades in an average daily volume of 1.3 million shares. The product holds a basket of 50 stocks with American firms dominating about 68.4% of the portfolio, followed by Asia Pacific (22.9%). Coinbase makes up for 2% of the portfolio. The ETF has an expense ratio of 0.71% (read:
Coinbase Debuts, Bitcoin & Blockchain ETFs Soar
).
Ark Innovation ETF
ARKK
This is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 58 securities in its basket with Coinbase accounting for 1.7% share in the basket. Healthcare and information technology take the largest share at 30.5% and 28.7%, respectively, while communication services and consumer discretionary round off the next two spots. The fund charges 75 bps in annual fees and trades in an average daily volume of 14 million shares.
ARK Next Generation Internet ETF
ARKW
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 54 stocks in its basket with COIN taking 1.75% share in the basket. The ETF has amassed $6.7 billion in its asset base and charges 79 bps in annual fees. It trades in an average daily volume of 2 million shares.
ARK Fintech Innovation ETF
ARKF
This ETF invests in a company having the theme of Fintech innovation. The Adviser defines Fintech innovation as the introduction of a technologically enabled new product or service that potentially changes the way the financial sector works, which ARK believes includes transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer facing platforms and new intermediaries. The ETF holds 46 stocks with Coinbase making up 1.3% of the assets. The fund charges 75 bps in annual fees and trades in an average daily volume of 3.3 million shares. It is home to 46 securities and has managed assets worth $4.1 billion (read:
Thematic Investing on the Rise: ARK ETFs Leading the Pack
).
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