Coinbase Global Inc. (NASDAQ:COIN) will be added to the S&P 500 Index on May 19 in place of Discover Financial Services (NYSE:DFS), which is being taken over by Capital One Financial. Following the news, Coinbase shares are up more than 27%.
Coinbase is the first digital-asset firm to be included in the S&P 500, marking a major breakthrough toward the cryptocurrency sector’s inclusion in mainstream finance. For the investors, the action presents the ideal time to tap into exposure by way of ETFs that hold significant stakes in the crypto exchange.
ETFs Riding The Coinbase Rally
As Coinbase gains on its S&P 500 listing, a number of ETFs with significant exposure to the company have also seen a surge. Here are some prominent ETFs making a move:
First Trust SkyBridge Crypto Industry & Digital Economy ETF (NYSE:CRPT)
This fund focuses on companies that are leading the way in crypto and digital assets. The second-largest holding is Coinbase, at a 17.5% allocation. The expense ratio is 0.85%. The fund shot up more than 7% this week.
Fidelity Crypto Industry and Digital Payments ETF (NASDAQ:FDIG)
FDIG provides exposure to digital payment systems and crypto-related stocks. The leading position is held by Coinbase with a 12.5% portfolio share. It charges a 0.40% expense ratio. The fund gained more than 8% this week, riding on Coinbase’s climb.
YieldMax Crypto Industry & Tech Portfolio Option Income ETF (NYSE:LFGY)
For yield-hungry investors, LFGY brings a twist. The fund applies a covered call approach to crypto- and tech-oriented stocks to create monthly income without sacrificing exposure to the space. It might be attractive for investors who want to catch the Coinbase wave without sacrificing yield. With a 0.99% expense ratio, this fund gained 2.5% this week.
What Coinbase’s Inclusion Signals
The inclusion in the S&P 500 opens Coinbase up to a vast new investor base, namely, passive funds that track the benchmark index. As these funds rebalance to accommodate COIN, analysts project billions in capital inflows. Bernstein estimates Coinbase could see as much as $16 billion in fresh investment, much of it from passive index-tracking vehicles.
Furthermore, Coinbase is said to be negotiating to buy Deribit, a crypto derivatives exchange based in Dubai, for $2.9 billion. If agreed, the transaction would be the largest in crypto history and massively expand Coinbase’s presence in international crypto derivatives markets. Deribit is presently the global largest trading venue for Bitcoin options in terms of open interest and volume.
Outlook
Coinbase’s inclusion in the top S&P 500 isn’t symbolic, it’s a game-changer for the mainstream visibility and institutional adoption of crypto-oriented companies. Investors who want to ride the trend have available to them ETFs with high Coinbase exposure, which are diversified and accessible.
As legacy finance warms to digital assets, Coinbase’s path could mark a new beginning—not only for crypto, but also for the ETF space centered around it.
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