Digital Asset ETFs: Not Crypto Enough? 

Measuring the cryptocurrency exposure of digital asset ETFs

July 2021. Reading Time: 10 Minutes. Author: Nicolas Rabener.


  • Digital asset ETFs have outperformed tech stocks in recent years
  • However, they provide no exposure to cryptocurrencies
  • Their returns are explained by market beta and equity factors


Cathie Wood, the founder and CEO of Ark Invest, an ETF manager, is the latest entrant to launching a Bitcoin ETF in the US. The Winklevoss twins of Facebook fame have been trying this for years, but have been turned down by the SEC each time. Oddly enough, this has not deterred Ms. Wood or other firms, and the SEC has received at least six further Bitcoin ETF applications waiting to be reviewed.

The lack of easy access to Bitcoin via an ETF in the US has created opportunities for others. The Grayscale Bitcoin Trust (GBTC) is a listed trust that tracks Bitcoin and has more than $20 billion of assets under management. Other asset managers have launched ETFs that invest in companies that seem involved in cryptocurrencies. 

However, just because a company operates in the blockchain industry does not mean it provides exposure to cryptocurrencies. In a similar fashion, there is a difference between gold miners and the gold price, or master limited partnerships (MLPs) and the oil price.

In this research note, we will investigate the exposure of digital asset ETFs to cryptocurrencies.


Although an investment in cryptocurrencies is usually justified as a hedge against the inflation that plague fiat currencies or general disdain for the traditional financial system, most investors are likely simply performance chasing. The returns of the S&P seem rather unexciting compared to Bitcoin’s CAGR of roughly 100% since 2014. It’s tough to resist such a siren song (read Quant Strategies in the Cryptocurrency Space).

However, the price of cryptocurrencies is anything but stable and there have been multiple 50% drawdowns in recent years. Bitcoin and other coins become popular with retail investors in 2017 after a meteoric rise, but then cryptocurrencies crashed and went into what is