Worst ETFs of the week: Cryptocurrencies and VIX

Cryptocurrencies continue to plunge

The price of cryptocurrencies (and crypto ETFs) has been collapsing for several weeks. This most recent fall started with China banning financial institutions and financial services companies (including payment providers) from offering cryptocurrency-related services. The announcement was a reversal of fortune for cryptocurrencies which had ended 2020 with multi-digit growth. Even though digital currencies rebounded two weeks ago, this rally did not last, and the sharp decline has continued last week.

It seems like the volatility in the crypto market is sticking around for a while. Indeed, new information (good or bad) is constantly springing up around, preventing a real stabilization of the crypto market.

Before the announcement of the Chinese government, Elon Musk had said that Tesla will no longer accept Bitcoin as a payment for its cars. However, he then added that Tesla may accept Bitcoin payments as long as more than 50% of mining used clean energy. On the other hand, three weeks ago, the country of El Salvador became the first one in the world to adopt Bitcoin as legal tender. The list of examples does not end there, and they all confirm that crypto volatility is not about to weaken.

Bottom 10 ETFs of the Week: Cryptocurrencies and VIX

Europe:

• 21Shares Polkadot ETP: -28,83%
• 21Shares Ripple XRP ETP: -20,85%
• Ether Tracker Euro ETC: -20,24%
• CoinShares Physical Ethereum: -19,71%
• 21Shares Ethereum ETP: -19,26%
• 21Shares Bitcoin Cash ETP: -18,98%
• WisdomTree Ethereum ETP: -18,43%
• 21Shares Crypto Basket Index ETP: -18,38%
• 21Shares Tezos ETP: -17,63%
• LTCetc - ETC Group Physical Litecoin: -17,04%

Americas:

• Evolve Ether ETF: -17,95%
• ProShares VIX Short-Term Futures ETF: -16,08%
• Horizons BetaPro S&P 500 Vix Short-Term Futures ETF: -14,86%
• 3iQ CoinShares Ether ETF: -14,14%
• CI Galaxy Ethereum ETF: -14,14%
• Purpose Ether ETF: -14,02%
• Evolve Bitcoin ETF: -10,12%
• CI Galaxy Bitcoin ETF: -8,87%       
• Purpose Bitcoin USD ETF Non-Currency Hedged: -8,72%
• Teucrium CORN Fund: -6,63%

Last week, it was The Bank for International Settlements' turn to take a swing at cryptocurrencies. The Bank for International Settlement (BIS) is a financial institution based in Switzerland and owned by the world's Central Banks. BIS is often described as “the central bankers' central bank”, and it has a critical influence over financial markets.

This institution has declared on Wednesday that cryptocurrencies work against the public good. Furthermore, the BIS also suggested that Central Banks can and should begin to create and issue their own cryptocurrencies in order to counter other digital currencies already tradable on the markets. The Central Bank-Issued Digital Money, also called CBDC, would have many advantages of cryptocurrencies but without certain disadvantages, such as a strong volatility, said the BIS research director. Those announcements have been serious threats for the crypto market that considerably plunged last week.

The largest loss is for an ETF that tracks the Polkadot cryptocurrency. This digital currency is backed by a next-generation protocol that unites a network of several interconnected blockchains. The blockchain is the technology behind every cryptocurrency (if you want to know more about crypto and crypto ETFs read our education article here).

Among the worst 10 performers of last week, most of ETFs are tracking the largest cryptocurrencies such as Bitcoin, Ethereum, Ripple, and Litecoin. Amongst them, Tezos, an uncommon crypto that you might not be familiar with. Tezos is a Blockchain composed of a cryptocurrency, the Tez, which is specialized in developing smart contracts. A smart contract is a digital contract with the agreement’s terms between the seller and the buyer being written into lines of codes. This contract is linked to a blockchain network. The code drives the execution of the smart contract, and each transaction is irreversible and trackable.

Finally, this week we find VIX ETFs in the bottom performers. The VIX is the name given to the Chicago Board Options Exchange's CBOE Volatility Index, which is a popular measure of the volatility of the S&P 500 index.

Two weeks ago, VIX ETFs were in the Top 10 because of the Friday, June 18th market session which has been extremely volatile. During this bleak day all the indices were in the red, and therefore the VIX ETFs performed strongly. However, this week is the opposite as the indices have been in the green all week. The volatility in the markets decreased, and VIX ETFs lost all their gains from two weeks ago, ending up in the bottom performers.

Find and compare over 7,000 ETFs with our free tools:

• ETF Screener
• ESG Observatory