In February Harvest Portfolios Group launched Blockchain Technologies ETF (TSX:HBLK), which invests in equity securities exposed to the development and implementation of blockchain and distributed ledger technologies. The fund jumped in its first two weeks of trading, but downward pressure on bitcoin and cryptocurrencies has pulverized the market. Blockchain Technologies was down 3.59% at the bottom of the noon hour on March 22.
Bitcoin and other cryptocurrencies were bleeding value while the Dow Jones Industrial Average dropped as much as 400 points in morning trading. Does it make sense to buy this ETF right now, or is it a falling knife?
The top holding in the fund is Overstock.com Inc. (NASDAQ:OSTK), an online retailer based in Utah. In early January Overstock announced a pivot to focus on blockchain technology which initially sent the stock soaring. It hit an all-time high of $89.80 in early January but has since almost halved its value. Shares have now dropped 25.2% in 2018 thus far and it was priced at $46.10 in early afternoon trading on March 22.
The second-largest holding in the fund is Cognizant Technology Solutions Corp. (NASDAQ:CTSH), an information technology services provider. Cognizant has been monitoring the potential of blockchain technology from an early stage, and has explored the technology in facilitating P2P payments, asset trading, document storage, and other uses. Its stock has climbed 17.3% in 2018 thus far.
Blockchain stocks and cryptocurrencies will likely face further volatility in 2018 as nations look to crackdown on exchanges and a multitude of companies sprout up to cash in on speculation. The potential of the technology is enticing for those looking long-term, but investors will need to exercise patience after the mania peaked in December and January.
