Top 10 ETF Gainers for January: Crypto ETFs Lead

The worst exchange-traded fund performers of 2022 have seen a reversal this year that is putting them at the top of the leaderboard in terms of performance. All 10 of the best-performing ETFs in 2023 as of Jan. 31 invest in equities of companies involved in the cryptocurrency or digital assets space.

These 10 top-performing ETFs are up between 40% and 98% as of Jan. 31 this year, according to Bloomberg data. The positive performance could be driven by optimism about the prospects for cryptocurrency going forward, or the belief that interest rate hikes will get smaller and end, or at least pause after the February Fed meeting.

Bitcoin started out 2022 trading above $46,000, but collapsed to trade below $16,000. It has since rebounded above $23,000, which seems to have helped lift equity funds tied to the cryptocurrency space.

“Digital assets have sold off significantly more than the broader market, so we hit a point where we exhausted most of the selling pressure,” said Spencer Bogart, general partner at Blockchain Capital, in an email.

“Meanwhile, there is a very significant sum of dry powder [capital] among industry-focused funds that is earmarked for deployment to these opportunities. This led to a situation over the past few weeks where buyers finally outsized sellers, leading to a bounce in digital asset prices.”

Still, these funds remain beaten down after the bloodbath that was 2022, so they are struggling for assets. Six of them have assets below $10 million. The largest fund on the list is the Global X Blockchain ETF, with $59.4 million; it’s up 64.05% year to date.

Fund flows have been mostly flat, with only two funds, WGMI and BKCH, pulling in more than $1 million so far in 2023.