Helped in part by calamity in the global banking system and the collapse of several domestic financial institutions in recent weeks, bitcoin and other cryptocurrencies are surging.
That could be a sign that bitcoin is achieving a status long hoped for by its supporters: a safe-haven asset on par with gold that investors can turn to in times of broader market turmoil. While it remains to be seen if that label sticks, there are other positives emerging for the largest digital currency and, potentially, some of its more viable peers.
That could be good news for exchange traded funds such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC). The Crypto Fear and Greed Index is one sign pointing to more upside for the digital currency and, possibly, assets such as BLKC and SATO.
As of late Monday, the index resided at 68 — the highest level since bitcoin hit its record high of north of $69,000 on November 10, 2021. In simple terms, the Crypto Fear and Greed Index gauges emotions and sentiment toward bitcoin and other cryptocurrencies. While the highest possible score is 100, the reading of 68 is squarely in the “greed” area.
“There are also two ‘extremes,’ called extreme fear (occurs below a value of 25) and extreme greed (above 75). Historically, these zones have been important for the price of BTC, as cyclical bottoms and tops have generally taken shape when the market has held these sentiments,” reported NewsBTC.
A variety of outcomes are possible if bitcoin enters extreme greed territory, some of which are potentially positive for BLKC and SATO. First, there’s the obvious of the cryptocurrency’s price continuing to rise, which should benefit crypto-correlated equities, including BLKC and SATO members firms. Second, some investors may opt for allocations to crypto-related stocks rather than direct crypto exposure.
Still, there are some considerations for investors, including bitcoin’s ability to hold above $25,000 and the pace at which the index shifted from fear to greed.
“However, BTC got out of the fear zone fast, and as the crypto rallied in the past two days, the indicator also shot up. The sentiment towards greed has improved thanks to the price of BTC rocketing today, as the asset has now crossed the $25,000 level,” added NewBTC.
For more news, information, and analysis, visit the Crypto Channel.
VettaFi LLC (“VettaFi”) is the index provider for BLKC and SATO, for which it receives an index licensing fee. However, BLKC and SATO are not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of BLKC and SATO.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.