Although the institutionalization of Bitcoin via ETFs in 2024 and 2025 was supposed to stabilize the asset, it did not. When the global macro environment gets nervous, these ETFs face mechanical bailouts that can turn a simple drop into a liquidation event. It’s the same old Wall Street story. This story sounds too good to be true, and it turns out it is.

IBIT is an asset with high liquidity risk. It offers no return or profit, and its value is entirely derived from the next person’s willingness to pay more for a digital currency. In the current environment of high interest rates and tighter financial conditions, Bitcoin is being treated as a liquidity-sensitive bet rather than a mature safe haven. For many, the thrill of owning a digital currency that produces nothing is starting to wear off.

As currencies struggle, blockchain ETFs act as the pick-and-shovel providers of this era. BLOK and BKCH don’t just contain coins. They own the companies that are building part of the future of finance.

These funds represent a transition from speculation to utility. BLOK, for example, is an actively managed fund that has a diversified mix of companies. Of its 56 holdings, the top 10 represent just 35% of assets. This is a necessary diversification in a volatile part of the market.

These are companies that generate real revenue, have balance sheets and pay employees. Its value is tied to the adoption of blockchain technology, such as transaction security and identity verification, rather than just the daily price variation of a single token.

The equity side of the crypto market will get more of my attention. BLOK and BKCH are not likely to ride out an ongoing Bitcoin crash, but they can ride it out.

This is actually a great case study for the new ROAR scoring platform for research and portfolio building. Next, I took a portfolio that uses only two ETFs, IBIT and BLOK, splitting them between them so that both are owned at all times, but in a relative allocation governed by my ROAR Score.

Both ETFs have a low ROAR score (20), implying above-average risk. However, if the assumption is that IBIT is the more volatile of the two, and BLOK can offset some of its volatility, the last 12 months would have added significant value and preserved a lot of capital despite Bitcoin’s rout. I ran the portfolio with just IBIT as a benchmark, to see how I would have done better with the ROAR approach to distribute between IBIT and BLOK during that time.

IBIT alone was down 29% in the last 12 months. But the two-ETF portfolio was down just 8%. With $10,000 invested, this is useful ($2,100 improved). With a $100,000 portfolio? $21,000 better.

Risk management is important. And in such a risky market, especially for crypto, the best reason to manage risk is simple: if you believe in the long-term prospects of crypto, blockchain, or both, staying in the game is the first goal.

Rob Isbitts created the ROAR scorebased on his more than 40 years of experience in technical analysis. ROAR helps do-it-yourself investors manage risk and build their own portfolios. Your weekly letter to the investor can be accessed at ETFYourself.com. To copy Rob’s portfolios, see the new PiTrade application. And for a change of pace, here’s his new blog on racehorse ownership as an alternative asset HorseClaiming.com.

As of the date of publication, Rob Isbitts had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com