At first glance, video games and the cryptocurrency Bitcoin (CRYPTO: BTC) don't seem to have too much in common. After all, one of those things is a commonly used entertainment medium. The other, a digital token used as a currency, but more commonly these days, as an investment. Yet both of these things do indeed have something in common, if we view them through the prism of ASX exchange-traded funds (ETFs).
It's becoming increasingly well known that if you want to invest in a sector, market, or trend on the ASX, there's probably an ETF for it. This is true for everything from Korean stocks and American government bonds to platinum bullion or oil futures.
As it happens, you can invest in both video games and Bitcoin through ASX ETFs too.
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Investors doubling their money with Bitcoin and gaming stocks
An example of an ASX Bitcoin ETF is the DigitalX Bitcoin ETF (ASX: BTXX), a fund that enables investors to indirectly own the digital coins and benefit from any increases in price. This fund holds a stockpile of Bitcoin itself, of which 80% is kept in cold storage. Buying units in this fund equates to buying a stake in this Bitcoin stockpile.
Meanwhile, ASX investors can also get themselves a slice of some of the leading video game companies of the world through the BetaShares Video Games and Esports ETF (ASX: GAME).
This exchange-traded fund holds an underlying portfolio of stocks. These currently include the likes of Roblox Corp, Nintendo, Electronic Arts, Take-Two Interactive, and Tencent Holdings.
So what do these two ETFs have in common? Well, both have effectively doubled investors' money over the past 12 months, delivering returns of around 100%.
Yep, BTXX units were going for just $19.55 each this time last year. Today, those same units will set an investor back $38.75 at the time of writing. That's a gain worth 98.2%.
It's a similar story with GAME units. This ETF was asking $9.90 per unit back in August of 2024. Today, buying those units will cost an investor $19.26. That's a rise worth 94.55%.
Too late to buy these ASX ETFs?
Given the magnitude of these gains, many investors are probably wondering whether it's too late to get in on these hot trends.
Well, that's the big question. While it's true that both Bitcoin and gaming stocks have been hot investments in recent months, I always caution against trying to jump on a hot trend after it has left the station.
I am not an expert in Bitcoin, and so cannot offer any commentary on whether it will continue to rise as enthusiastically as it has over the past 12 months. I would only say that prudent investors should think carefully about investing more than a fraction of their overall investment portfolios into Bitcoin-denominated assets.
When it comes to gaming stocks, there's no doubt this is a high-growth industry. But investors should examine the fundamentals of the underlying holdings, like Nintendo and Take-Two, and determine whether they represent good value or are in a sentiment bubble. Remember, it's not normal for any successful long-term investment to jump close to 100% in just 12 months. It is usually a mistake to think that kind of growth can continue indefinitely.
