It was announced earlier this week that the Toronto Stock Exchange would be listing another blockchain related Exchange-Traded Fund (ETF). Live since Thursday, the fund is known as the ‘Horizon Blockchain Technology & Hardware Index’.
This new fund differs from previous blockchain related ETF’s, as it shifts its focus primarily on to companies that make blockchain feasible. Rather than investing strictly in blockchain based companies, Horizon will be investing in the companies that provide the hardware and services needed by the industry.
They have recognized not only the potential of the industry, but also its youth and volatility. Any given blockchain company could go belly up in today’s uncertain markets. One constant however, is that every company needs the hardware to use, and access to service providers. With this mindset, Horizon will be looking at companies such as NVidia, Hive, and more. In a recent interview with Bloomberg, CEO Steve Hawkins of Horizons stated, “We don’t know which individual blockchain companies are going to work, we have no idea what the extent of the blockchain applications will be, but we do know people will have to invest in the infrastructure to build out blockchain. It’s going to be these ancillary services to the blockchain technology where the winners are going to be at the end of the day.”
Horizons fresh approach to blockchain ETFs comes after watching the performance of two others throughout 2018. The Toronto Stock Exchange currently also hosts the ‘Blockchain Technologies ETF’, and the ‘Evolve Blockchain ETF’. This pair of funds has seen losses between 20 and 25% in the last 6 months. This shouldn’t be overly surprising as the entire cryptocurrency market has been mired in an extended bear run (although this may be nearing an end). Despite a recent decline in price, hashing power of the Bitcoin network has never been more robust. Many high profile analysts believe this is the strongest indicator of the true direction of cryptocurrencies.
Only time will tell if Horizons perspective holds true. The market is indeed young and volatile, and rival ETFs have indeed posted large losses on the year. However, those that have been following cryptocurrencies longer than that, know that this can change within a matter of weeks. Turning those yearly losses into huge gains.
In time, look for even more offerings related to blockchain. In the 5 short months since we saw Harvest Portfolios offer the first ever Canadian blockchain ETF, this is now the 3rd. As Canadians continue to be receptive to the technology, and as long as our government recognizes the potential boon it may be to many industries, there should be no shortage of new offerings in the future.