Bitcoin Wobbles, Highlights Benefits of Diversified Crypto Investing

For bitcoin believers, it’s “once more unto the breach” as the popular cryptocurrency slides below $44,000, believed by some to be a critical level to hold to prevent further slippage below $40,000, reported CoinTelegraph. The drop comes as a surprise despite positive news for bitcoin recently and could indicate underlying issues or simply be a reflection of broader market concerns.

Bitcoin’s latest slide comes at a time when major buy-ins from MicroStrategy and Terra should have lifted bitcoin, but analysts believe that given the current macro-environment that encourages a risk-off approach from investors, it would take major macro changes to lift the space.

A reversal of the U.S. 10-Year Treasury yield could provide breathing room and opportunity for risk assets, believes Jeroen Blokland, portfolio manager at Robeco, but with Fed minutes indicating tightening of balance sheets and more aggressive rate hikes sooner, that respite could still be down the road.

For others, the slide could indicate unknown issues and proves worrisome. The failure of bitcoin prices to respond in a strong, positive manner to announcements of major buy-ins by MicroStrategy followed by Terra could be the result of other factors at work.

“Something is off and the coming days will show what is happening,” said trader Crypto Ed.

Diversifying in Crypto Assets Could Mitigate Volatility

For investors who want access to the growing crypto space with diversified exposure, the Amplify Transformational Data Sharing ETF (BLOK) can be a great solution. Investing in a diversity of crypto assets such as miners, exchanges, and companies utilizing blockchain technology can potentially provide some volatility mitigation as they have different correlations to cryptocurrencies.

BLOK currently has $1 billion in AUM, is actively managed, and invests in companies directly involved in developing and using blockchain technology. BLOK was also the first blockchain ETF approved by the SEC and launched in 2018.

The fund invests in companies partnered with or directly investing in companies utilizing and developing blockchain technologies. However, the fund does not invest directly in blockchain technology or cryptocurrencies.

BLOK spreads its holdings across the size spectrum, investing in all market caps. As of the end of December, top allocations within the blockchain industry included transactional at 38.0%, crypto miners at 23.0%, and venture at 11%. BLOK invests across the blockchain landscape, in miners, exchanges, and developers.

BLOK has an expense ratio of 0.71% and currently has 46 holdings.

For more news, information, and strategy, visit the Crypto Channel.