The meteoric surge in the price of Bitcoin in recent years has fueled mainstream acceptance of cryptocurrencies as a legitimate investment class. At the same time, a quieter revolution is unfolding around the potential of crypto's underlying blockchain technology, which promises to transform how information is shared through more transparent, efficient, and secure networks.
One exchange-traded fund (ETF) well-positioned to benefit from these dynamics is the Amplify Transformational Data Sharing ETF (BLOK 4.63%). The fund invests in the leading companies leveraging crypto and the related technology into a significant long-term growth opportunity. The strategy has already paid off. The fund has delivered a spectacular 214% return in the past five years, more than double the 85% gain in the S&P 500 index.
Can that level of outperformance continue going forward and could the BLOK ETF help mint the next crop of stock market millionaires? Here's what you need to know.
NYSEMKT: BLOK
Key Data Points
What is the BLOK ETF?
Investors have access to a vast array of ETFs, each targeting various sectors and strategies. While the Amplify Transformational Data Sharing ETF may not be a household name, this $938 million fund offers a distinctive approach to thematic investing that deserves a closer look.
In this case, the BLOK ETF is actively managed, meaning it is not intended to replicate a particular index but instead is comprised of crypto stocks selected by the portfolio manager. According to the fund's methodology, companies are included based on their involvement in blockchain-based transformational data-sharing technologies. That covers active research and development of blockchain applications or just profiting from the growing ecosystem of cryptocurrencies.
Image source: Getty Images.
The current portfolio consists of 51 holdings spanning multiple industries and business models.
High-profile holdings include Coinbase and Block, companies that are leading the charge in blockchain transactions, payments, and crypto trading. Then there's MicroStrategy, which is recognized for its substantial balance sheet of Bitcoin holdings, highlighting the fund's exposure to cryptocurrencies. This is complemented by positions in spot Bitcoin ETFs like the VanEck Bitcoin ETF, which tracks the spot price of Bitcoin.
Bitcoin mining operations are well-represented too, with positions in companies like Mara and Riot Platforms. Rounding out the portfolio, you'll find established tech and financial services giants like Nvidia and BlackRock, creating a smart balance between industry leaders and emerging players adding a layer of diversification that helps balance risk compared to buying individual stocks.
Strong momentum into 2025
There is some building optimism that the potential of blockchain technology is still in the early stages of being explored.
Notably, the new Donald Trump White House administration has signaled a willingness to support the maturing crypto industry, including an effort to form a presidential cryptocurrency advisory council. This group could ultimately advocate for clearer regulatory frameworks for crypto and better integration with the traditional financial systems.
BlackRock, one of the world's largest investment management, has separately emerged as a vocal proponent of blockchain technologies. CEO Larry Fink recently advocated for the Securities and Exchange Commission to green light the tokenization of stocks and bonds. This move would facilitate the conversion of financial assets into digital tokens on blockchain networks, unleashing a new data transformation sharing use case.
The developments have powered the BLOK ETF to a solid 13% return year to date. In my view, all the pieces are in place for continued momentum.
Final thoughts
The BLOK ETF is an excellent way to invest across the most important companies driving blockchain innovation. I predict there's more upside ahead. That being said, as with any investment, some caution is warranted. One risk to watch out for is a scenario in which cryptocurrency values hit a prolonged slump, pressuring the bullish outlook on the underlying companies within the BLOK portfolio. Also worth noting is the fund's 0.76% expense ratio, which runs on the high side even if justified given its impressive track record.
As for whether this strategy could make you a millionaire? I believe the fund has what it takes to beat the broader stock market over the long run through its collection of growth-oriented stocks. Adding the BLOK ETF as part of a diversified portfolio could help boost your market returns.
