Will Blockbuster Rally of Bitcoin Last? ETFs in Focus
Zacks Investment Research | Aug 03, 2020 03:00AM ET
Since hitting its recent low of $3,867 on Mar 13, bitcoin has jumped three folds with year-to-date gains of about 65%, per a Wall Street Journal article. The cryptocurrency is now hovering over the $11,000 mark. In fact, the cryptocurrency has skyrocketed way more than 100% since this year’s low touched in mid-March. With the current pricing, Bitcoin is edging toward the one-year high of $11,956 hit last August.
article published on Wall Street Journal .
No wonder, bitcoin too gained in the investing boom. Moreover, an article published on GLD has rallied this year as gold hit an all-time high thanks mainly to safe-haven demand and extremely low U.S. interest rate levels. A few years back, an analyst had said, “the cryptocurrency could be referred to as digital gold, as it shares many of the characteristics that makes the precious metal a great store of value.”
Cryptocurrency is also being fast accepted by big corporate houses and governments. For instance, JPMorgan Chase & Co. (NYSE:JPM) has introduced JPM Coin — a digital coin designed to make instantaneous payments using the blockchain technology. AT&T Inc. (NYSE:T) has also started accepting crypto payments.
Square’s Cash App witnessed bitcoin revenues during the first quarter of the year soaring 367% year over year, surpassing revenues from the fiat currencies. Facebook (NASDAQ:FB) also proposed the launch of a crypto project — Libra. China's central bank led research into central bank digital currencies (CBDC) with its multi-phase Project Ubin.
Per analysts, a dovish Fed, negative real interest rates and per an industry expert . He sees bitcoin as the solution to the ongoing crisis.
Will the Rally in Bitcoin Last?
The number of daily transactions on the bitcoin blockchain has hardly crossed 350,000 at any point in the past year, per Wall Street Journal. This means investors’ interest is still low. So, to make the rally sustainable, more participation and acceptance is needed.
Though there is a group of analysts who have faith in the rally, we believe this is a bet for investors who have a strong stomach for risks. Any market crash amid the COVID-19 crisis may pull the currency down. More nation and corporation-wise acceptance will be able to keep it steady and help it to beat the fiat currency.
How to Invest?
Investors can choose to invest in bitcoin-related but much stable investing options like blockchain ETFs. Per a market source, “the blockchain in Bitcoin literally acts [as] a ledger; it keeps track of the balances for all users and updates them as money changes hands.”
So, if investors cannot lay their hands on a bitcoin ETF now, they can definitely familiarize with the concept through blockchain ETFs like Reality Shares Nasdaq NexGen Economy ETF (BLOK and First Trust Indxx Innovative Transaction & Process ETF (LEGR).
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Also, ETFs offering exposure to the blockchain ecosystem via semiconductor companies that make chips required for bitcoin mining can be played. The most-popular funds include iShares PHLX Semiconductor ETF Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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