The Horizons Blockchain Technology and Hardware Index exchange traded fund (ETF) will be launching on the Toronto Stock Exchange on 21 June 2018 under the ticker symbol BKCH. The co-CEO of Horizons ETF’s Management Canada Inc, Steve Hawkins, says this ETF will be different from others since it will focus on the hardware and services infrastructure that supports blockchain technology.
Hawkins said in a Bloomberg interview that “we know people will have to invest in the infrastructure to build out blockchain” and “It’s going to be these ancillary services to blockchain technology where the winners are going to be at the end of the day”. Further, he explained that investors would be encouraged to look into global blockchain infrastructure, instead of riskier startup development.
The BKCH ETF will be based on the Solactive Blockchain Technology and Hardware Index, divided into equal thirds: companies that are focusing on the development of blockchain technology, semiconductor industry which builds cryptocurrency mining hardware, and companies that directly supply other necessary hardware for large-scale cryptocurrency mining operations. A few known stocks that will be part of BKCH are Blockchain Technologies Ltd which develops blockchain applications, semiconductor producer Nvidia Corp, and service provider Digital Trust Realty Inc.
This hasn’t been the best year for ETFs focused on blockchain due to the steep decline in Bitcoin’s price from USD 20,000 to less than USD 7,000 today. The Blockchain Technologies ETF from Harvest Portfolios is down 25% since it launched in February 2018, and the Evolve Blockchain ETF has fallen 20% since March 2018. That being said, there are signs that the Bitcoin market is near its bottom and this may end up being a good time to launch a blockchain ETF.
The Toronto Stock Exchange is the 9th largest stock exchange in the world with a market cap of USD 2.284 trillion as of March 2017. This market cap is eight times greater than the entire cryptocurrency market cap of USD 290 billion, and therefore it is a positive sign for the cryptocurrency markets that a stock exchange with such a large client base is listing a blockchain oriented ETF. This may lead to increased investment in companies that are developing blockchain hardware and technology.
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