COMMENTARY Another month and another new all-time high for the equity markets as measured by the S&P 500 and Nasdaq 100. While the spotlight predominantly fell on the "Magnificent 7" as the calendar ushered in 2024, a quiet transformation was happening beneath the surface. Market breadth is no longer just concentrated in 7 high flying stocks as indices like the Equal Weight S&P 500 and S&P 400 Mid Cap finally surpassed previous highs set in 2021. Even though inflation, the Fed, elections, and geopolitical tensions continue to be closely watched by investors, the equity market has continued to take it in stride.

First Quarter 2024 Trends are Strong BLOK rallied 8.35% in March, bringing the YTD and first quarter NAV return to 21.72% (see performance). The Fund was unusually active relative to our historic patterns. In an effort to maintain the Fund’s high correlation with Bitcoin, while also remaining focused on the core mandate (investing in public companies that are dedicated to building out the infrastructure around blockchain and “Public Digital Property”), we steadily trimmed stocks like MicroStrategy, Coinbase, and Cleanspark, which appeared ahead of themselves. This activity was relatively systematic in nature as it followed established risk controls and our discipline to remain diversified in our approach. Bitcoin Halving Historic Outcomes The Bitcoin halving is scheduled to take place on or around April 19th and it is sure to inspire and surprise! If Bitcoin price follows past trends and rises to new highs, miners will distinguish themselves through the efficiency with which their management teams have scaled their business, but it will certainly not be without drama. This is why we have chosen to diversify across strategic approaches to business, management teams, and geography. In fact, we fully expect to be surprised both on the upside and the downside by the many different variables to this business. However, while the media may make a big deal about the much-anticipated “post-halving rally,” the smart management teams are already looking out to 2028. Bitcoin Mined Per Block Over Time Source: CME group, Bitcoin Halving 2024 – This Time It's Different', April 2024. Historically, each halving has brought extraordinary rallies in the months preceding and following the change in supply. Like a small-cap company that expands its market capitalization, we expect the liquidity in the asset class to reduce some of the volatility as institutions tend to absorb the dips. Notably, in the 365 calendar days after the November 28, 2012 halving, when the reward was cut from 50 BTC to 25 BTC, bitcoin prices rose 8,447%. In the year following the July 9, 2016, halving, bitcoin prices rose a more modest but still impressive 283%, and block reward was reduced to 12.5 BTC. In the 12 months after the May 11, 2020, halving, where reward was cut to 6.25 BTC per block, bitcoin price jumped 527%. Obviously, as the warning goes, past performance is not indicative of future outcomes, so please do not ask us to come up with a forecast on price. Bottom line, before we talk $100,000, we must clear $75,000, and who knows whether we’ll go lower before we go higher. However, the math looks very compelling. As a result of the halving, the bitcoin network in aggregate will only produce $27 million in bitcoin a day after April 19th (the basic math is $60,000 price times 450 bitcoin). This ends up providing much of the supply beyond regular trading activity from wallets and traders. Please do not confuse us as maximalists in the way of bitcoin. As portfolio managers, we believe there are times to overweight the asset class and times to be more modest. However...

Audio Commentary by Tim Seymour

Chicago, April 26, 2024—Amplify ETFs announces April income distributions for its ETFs.

Chicago, April 26, 2024—Amplify ETFs announces April income distributions for its ETFs.

Audio Commentary by Tim Seymour

COMMENTARY April brought the first negative month of performance in 2024 for the equity markets, measured by the S&P 500. While it’s hard to pinpoint a single catalyst, the combination of hotter economic data and escalating tension between Israel and Iran are certainly key contributors. Moreover, the month saw 10 of the 11 GICS sectors produce a negative return with only Utilities, generally a defensive sector, eking out a positive return. Healthy markets don’t go up in a straight line so the pullback should allow participants to digest incoming economic data and the imminent earning releases from the first quarter.

Audio Commentary by Tim Seymour

Marching Through May After a Volatile April BLOK retraced much of its gain in April with a decline of 15.03% (NAV return), closing the month up 3.42% YTD (see standardized performance). The pullback in the Fund’s performance followed a significant broad sentiment change towards risk off as almost half of the Fund’s 56 positions were down greater than 10%. Even steady companies in the portfolio like IBM and Accenture were repriced down almost 13% due to concerns about slowing IT spending. Volatility, of course, is difficult to time, so our best defense remains our focused approach to diversification, the pursuit of new companies focused on implementing blockchain technology, and continuing to trim our winners when they reach our levels. In many ways, we see this pullback as an opportunity to capture volatility. We continue to see expanding evidence around progress regarding adoption of blockchain, tokenization, and digital assets. Specific examples include: 1. The Miners: The very much anticipated fourth Bitcoin network “Halving” was executed as planned. As a cherry on top, there was an upside surprise, with a brief explosion around transactional fee volumes which provided a short-term boost in revenues.1 Just because the Halving worked without a hitch does not mean its technological success should be taken for granted, especially given the volatility of the risk/reward. To this point, we believe the correlation to Bitcoin price will work much like a coiled spring in the upcoming price rally. 2. Trillion-Dollar Asset Manager Race: Two of the largest trillion-dollar global asset managers are now offering US Government Money Funds on the Blockchain, both with about $370 million. It may be a horse race between Blackrock (BUIDL) and Franklin Templeton (BENJI) for now, but if clients benefit, it would be reasonable to assume that other asset managers will follow.2 We believe this is an initial step to push forward the technology applications on traditional rails (aka mutual funds) while pursuing a true stablecoin effort. These two firms are not thinking millions. Currently, there is about $167 billion in true stablecoin assets ($1 pegged) sitting blockchain rails.3 By 2028, forecasters expect the stablecoin market to reach $2.8 trillion. Blackrock’s collaboration with Circle (USDC) in a seamless offering using blockchain is just the beginning.4 We would note that both Blackrock and Fidelity have invested in Circle since 2022 and there is an active Form S-1 on file.5,6 3. Venture Capital: After bottoming in Q4 2023, Galaxy Digital’s venture capital spending targeted at Blockchain started to tick back up in Q1 2024, with a 50% sequential increase quarter-over-quarter (QoQ) to 603 deals, and a 29% increase in dollars invested at $2.49 billion.7 We hear venture capital activity is certainly picking up, and there remains dry powder still in the funds from 2021 and 2022. To be fair, because large generalist funds have backed away, capital remains difficult to raise. We believe this will only mean business plans need to have more clarity than during the peak cycle periods, and the quality of the deals will just be stronger. People looking for further evidence of progress should also know that there will certainly be an overlap between AI and Blockchain. 4. Bitcoin Miners Earnings: We would also like to highlight that...

BLOK Portfolio Manager Mike Venuto shares his thoughts on BLOK ETF portfolio changes and the blockchain industry in this 1st quarter report of 2024. Discussion includes: recent launch of bitcoin ETFs, the bitcoin halving, applications of blockchain technology and more.