BLOK-Chain Monthly August 2025

Building the Superhighway One Blockchain at a Time

Performance Highlights

BLOK is up 36.57% year-to-date (YTD) with July adding 3.38% to performance. (NAV returns, view standardized performance). More importantly, we believe momentum remains in the early stages of a transformational shift — the growing bridge between Traditional Finance (TradFi) and Decentralized Finance (DeFi). Evidence of this trend is clear in ETF flows, renewed initial public offering (IPO) activity, and, perhaps most telling, the increasingly thoughtful conversations we have with financial advisors who approach this space with healthy skepticism.

The performance data quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For most recent month-end performance, visit BLOKETF.com.

Conversations with Financial Advisors

We respect the skepticism! The role of a financial advisor is complex, especially with hindsight being 20/20. In our opinion, there is growing speculation that financial advisors, who collectively oversee around $144.6 trillion, could influence greater Bitcoin adoption in the future. However, we believe that RIAs will approach these decisions with caution, given the diverse and unique needs of their 68 million clients.¹ We also recognize that healthy skepticism is arguably an indication that the asset class and/or technology evolution remains in an early stage.

Now for the elephant in the room! The central question we frequently hear from skeptical financial advisors about Bitcoin price action is around valuation, and the risks associated with rationalizing the need for crypto as a store of value at a price of $10,000, $120,000, or as a price target of $500,000. In truth, this debate is much like trying to convince a traditional value investor to buy a technology stock that has the potential for “exponential growth.” The fact is that investing in disruptive technology makes many investors uncomfortable. Advancement in technology frequently challenges the status quo. This, of course, is the stated thesis that Bitcoin offers, with its “hard money” characteristics over the declining value of the “established U.S. Dollar.” But this “narrative” is difficult to digest for many financial advisors, because for many it is an oversimplification. The truth is also that certain explanations like “Digital Gold” or a “Store of Value” sound like a slogan which at different times may or may not line up. We tend to prefer a longer technical explanation for Bitcoin as a Blockchain: “Call it a technology ledger that is powered by energy that is secured by a network of decentralized computers. These computers operationally confirm the mathematic truth around the immutable formula that offers value based upon the integrity of a limited supply.”

Our main point is that investors and financial advisors should look closer at the adoption of Blockchain beyond just the Bitcoin definition. We believe that investors should look at Blockchain as a technology platform and cryptology (“crypto”) as the known developer language. To this point, while the financial services industry appears to be a leading industry adopting Blockchain technology we see other industries set to follow as the regulatory and infrastructure proves to be successful.

We don’t mean to be dismissive, but here are some of our answers to those skeptical FAs:

Size the risk in the same way that we as the portfolio managers for BLOK size the individual holdings in the diversified portfolio.

Bitcoin and “price” grab the headlines, but blockchain technology is about the operating platform. Imagine the world without the transformation that came from platforms like the Internet, Microsoft DOS or Windows and, of course, our favorite – imagine the world without ETFs?

BLOK is focused on providing the foundational tools and infrastructure, and this opportunity has recently grown even larger. In many ways, we are still in the very early stages of this development—perhaps just 8 months or even 1 month into the momentum. We’re 8 months in if we mark the beginning as the day the new administration took office, and we are just 1 month in if we mark the beginning as the day the Crypto Task Force submitted the regulatory framework to the president.

Blockchain is a technological advancement that has the potential to become widely adopted in the financial world, much like ETFs, due to its ability to reduce costs, increase transparency, and enhance liquidity. Pure and simple, Blockchain is an automation that is defined by a ledger which improves accountability. There may be nuances between Blockchains but ignoring the opportunity that lies ahead because of skepticism around Bitcoin headlines is like making a bet that highways will not be built because the horse and buggy does not need a smoother path.

Why are you not skeptical about the Magnificent 7, a group of seven dominant and influential technology companies in the U.S. stock market, which is at the center of the S&P500 performance. These stocks require near perfect business execution and an expanding price earning multiple to deliver past performance returns. Note BLOK’s overlap by weight to the Nasdaq 100 and the S&P500 indices have remained low.

Capital is Finding a Bridge Between TradFi and DeFi

Led by white shoe traditional bankers like JP Morgan, Morgan Stanley, and Goldman Sachs, capital markets have been re-invigored by IPOs. July saw the most IPOs so far in 2025 with 26 listings, according to Renaissance Capital.²

Overall, the US IPO market showed a rebound in the first half of 2025 with 165 IPOs, a 76% increase year-over-year, according to Stout.3 This suggests a potentially improving environment despite ongoing market volatility.

A notable trend is the continued rise of special purpose acquisition companies (SPACs), accounting for 37% of IPOs in first half of 2025, with Cantor leading the charge.

Globally, the first half of 2025 recorded 539 global IPO deals, raising $61.4 billion, a 17% increase in proceeds year-over-year according to Ernst & Young.4

Halfway through August, the IPO market has already roughly doubled the amount of activity typically seen during the month, with 12 new issues worth at least $50 million raising some $4.2 billion in capital. This includes sales of 10 million shares by Circle Internet Group which only came public on June 5th. In 2025, in our category there have been 6-8 companies that have come public through the traditional IPO route, and this amount excludes 30-50 Treasury and SPACs that have also tapped the capital markets.

Transactions and Repositing:

Almost 8 years of experience has taught us to sometimes hold dry powder when everyone else is rushing in. This set us up in June to incrementally add exposure to positions in Fiserve (FI), Metaplanet (3350 JP), Coinbase Global (COIN), Circle Internet Group (CRCL), Paypal (PYPL) and Shift4 (FOUR) during the month of July. We trimmed Block Inc (XYZ) into its addition to the S&P 500. While the news was exciting and further validated how Blockchain and innovation is filtering through the indexes, the temporary spike was worth capitalizing on....