Here’s a Useful Fund For Investing In Blockchain Without Buying Bitcoin

“Buy the rumour, sell the news” is an old market saying – and we got a classic of the genre yesterday.

It was a huge day in the evolution of bitcoin. From its origins on obscure chat boards, the open-source experiment of a few renegade computer programmers, to mainstream investment vehicle.

And then yesterday, for the first time, a nation – El Salvador – made bitcoin legal tender. The bitcoin price was steadily running up on the story – from $30,000 to $53,000. Then “Bitcoin Day” arrived and wallop: it sells off $7,000 to $46,000. The bitcoin price “should” have risen. It didn’t; it rose on the rumour and sold on the news.

How many times? It’s happened before and it will happen again.

How to bet on cryptocurrencies without having to own cryptocurrencies

Traditional investors have long been searching for a vehicle by which they can own bitcoin through their Sipp or Isa, via a regular broker account. The older generation in particular don’t want to get involved with wallets and keys and storing coins on hard drives in safes and all the rest of it. They just want to be able to buy and sell bitcoin through their regular broker, with which they are familiar.

In response to this demand there have been numerous attempts to establish bitcoin ETFs, but every attempt has run into some sort of regulatory issue. The most successful were probably the Greyscale Bitcoin Trust, listed in the US, or Coinshares Swedish listed XBT Bitcoin Tracker One. Neither is quite the same as owning bitcoin, but they do track the price.

But another vehicle has come to my attention and I thought I’d flag it up for you today, as I think it might be quite useful. That is the VanEck Vectors Digital Assets Equity UCITS ETF (LSE: DAGB).

It invests in companies that, to use its own lingo, “are driving the blockchain revolution”. That is to say in miners, exchanges, payment providers, service providers and companies that hold and trade crypto and crypto patents.

If I were to draw a parallel, I’d say that, rather than buying gold, it’s like holding a basket of gold mining companies or a gold mining ETF.

The ETF is listed in London, and it’s been going since the beginning of May. There’s a dollar denominated version whose ticker is DAPP – and a sterling version, which is probably most useful to us, with the ticker DAGB (there are also euro-denominated versions listed in Germany (DAVV) and Italy (DAPP), and a Swiss franc denominated version listed in Switzerland (also DAPP)).

It’s still small – very small – but as awareness grows it has the potential to grow too. It holds 25 companies in total, with 75%-plus weighting to the US and Canada and 12% to China, and it rebalances on a quarterly basis. I’ll post the holdings below, but in case you’re not familiar with them, I’ll outline what the major ones do.

It’s biggest holding is Marathon Digital Holdings (Nasdaq: MARA) a Nasdaq-listed bitcoin miner. Then there’s Jack Dorsey of Twitter fame’s payment company Square (NYSE: SQ) and Coinbase (Nasdaq:COIN), the recently-listed wallet-provider and exchange.

Other miners it owns include Riot (Nasdaq: RIOT), Hive (Vancouver: HIVE) and Argo (LSE: ARB), while other notable holdings include Silvergate (NYSE: SI), the bank for fintech and cryptocurrency businesses, and Michael Saylor’s Microstrategy (Nasdaq: MSTR).

Saylor has in the past year totally got the bitcoin bug and become one of the most vocal and articulate cheerleaders for the space. His company, Microstrategy, has gone from being a software company to a bitcoin holding vehicle, owning more than $5bn in bitcoin. He’s raised debt to do it so it is a highly leveraged bitcoin play.

Anyway, here are the main holdings:

Holding	Ticker	Shares	Market value (US$)	% of net assets
Marathon Digital Holdings Inc	Nasdaq: MARA	37,858	1,491,227	9.15
Square Inc	NYSE: SQ	5,380	1,430,165	8.77
Coinbase Global Inc	Nasdaq: COIN	5,042	1,345,256	8.25
Hut 8 Mining Corp	Toronto: HUT	125,423	1,261,675	7.74
Silvergate Capital Corp	NYSE: SI	7,986	947,299	5.81
Microstrategy Inc	Nasdaq: MSTR	1,378	892,958	5.48
Hive Blockchain Technologies Ltd	Vancouver: HIVE	257,250	857,161	5.26
Voyager Digital Ltd	Toronto: VOYG	53,621	799,965	4.91
Riot Blockchain Inc	Nasdaq: RIOT	24,755	794,883	4.88
Bitfarms Ltd/Canada	Vancouver: BITF	128,704	763,973	4.69
Galaxy Digital Holdings Ltd	Toronto: GLXY	34,963	732,189	4.49
Taiwan Semiconductor Manufacturing	Nasdaq: TSM	5,431	677,246	4.15
Canaan Inc	Nasdaq: CAN	64,785	620,640	3.81
Northern Data Ag	Frankfurt: NB2	6,290	568,498	3.49
Argo Blockchain Plc	LSE: ARB	288,705	533,312	3.27
Bit Digital Inc	Nasdaq: BTBT	45,480	533,026	3.27
Ebang International Holdings Inc	Nasdaq: EBON	157,795	397,643	2.44
BC Technology Group Ltd	Hong Kong: 863	179,501	372,212	2.28
Coinshares International Ltd	Stockholm COIN	26,030	257,865	1.58
Diginex Ltd	Nasdaq: EQOS	40,141	222,381	1.36
DMG Blockchain Solutions Inc	Vancouver: DMGI	201,595	205,823	1.26
Huobi Technology Holdings Ltd	Hong Kong: 1611	113,001	204,956	1.26
Bigg Digital Assets Inc	Toronto BIGG	183,875	180,455	1.11
Future Fintech Group Inc	Nasdaq: FTFT	58,088	156,838	0.96
Bitcoin Group Se	Frankfurt: ADE	1,222	61,230	0.38
Other/Cash	—	—	-4,083	-0.03

Bitcoin is supposed to be outside of the traditional financial system so it sounds funny saying that I own DAGB in my Sipp, but I do. I’m not, however, recommending that you go out and buy it straight away. I see it more as a useful vehicle to be aware of.

My overriding theory that we are in a period of “frustrating consolidation” for bitcoin remains in play, so I would try to wait for the sell off to get really harsh before you buy: buy the dips, as they say. But this should be a good vehicle to play the bitcoin game, should you see fit.

Regulating the unregulatable

In other news, I see that a bit of a crypto storm is now brewing in Brussels, where the European Parliament is about to try and regulate cryptocurrencies. Good luck with that! What could possibly go wrong when regulators are trying to regulate something they don’t understand, one of the purposes of which is to obviate bureaucracy?

The polling company Redfield and Wilton has run a poll and found that the overwhelming majority of Europeans want cryptocurrencies regulated by their own countries and not at the EU level, with many seeing EU regulation as a power grab. Greece, The Netherlands and Latvia are the most anti-EU regulation, while Spain and Portugal are the most pro. Make of that what you will.

Daylight Robbery – How Tax Shaped The Past And Will Change The Future is now out in paperback at Amazon and all good bookstores with the audiobook, read by Dominic, on Audible and elsewhere.