Defiance Unveils Reverse Blockchain Industry ETF | ETF strategy
Defiance ETFs has introduced the world’s first ETF that enables investors to take a bearish position on companies involved in the blockchain and crypto ecosystems.
Sylvia Jablonski, CEO and CIO of Defiance ETFs.
Listed on Nasdaqit Defiance Daily Short Digitalizing the Economy ETF (IBIT US) comes with a management fee of 0.95%.
However, the estimated total annual expenses are much higher, quoted as an eye-watering 4.70%.
The blockchain, a decentralized, distributed ledger that securely records digital transactions, is expected to be one of the most disruptive innovations in recent history due to its potential to impact business models across virtually every segment of the economy.
According to an analysis by Markets and Markets, the blockchain industry is expected to grow from $4.9 billion by the end of 2021 to $67.4 billion by 2026, representing a compound annual growth rate of 68.4%.
However, the technology has also been met with caution due to its hidden vulnerabilities as well as the unusually high level of hype surrounding it. The value of crypto-related businesses, platforms and currencies has also fallen dramatically in 2022.
Amid this potential for volatility, IBIT provides sophisticated investors with an effective tool to better manage their thematic exposure to the blockchain industry by hedging their positions in anticipation of market downturns.
Sylvia Jablonski, CEO and CIO of Defiance ETFs, said: “We remain very bullish on the growth of crypto and the digital asset ecosystem over the next few years. However, given the recent onset of the crypto winter – the flood of layoffs and revenue losses – we believe shorting positions such as Coinbase, Galaxy and Robinhood, along with those involved in the metaverse, such as Meta and Roblox, will provide downside protection in the current environment.”
Investment approach
IBIT provides the inverse (-100%) daily return of $580 million Amplify Transformational Data ETF (BLOK US).
BLOK provides actively managed exposure to global companies involved in the development and use of blockchain technologies. Only securities with market capitalization over $100 million and average daily trading volume over $25 million will be selected for inclusion.
Eligible firms include those actively engaged in blockchain-related R&D, profiting from the demand for blockchain applications, partnering with or investing in blockchain companies, or serving as a member of multiple blockchain consortia.
The portfolio aims for at least a 70% allocation to ‘core’ companies, defined as those that derive significant revenue from blockchain-related businesses or those that are among the five largest investors in blockchain companies.
The security committee is driven by current industry news, as well as the company’s fundamental factors such as price in relation to earnings and potential revenue growth.
