Experienced investors know that correlations, regardless of what the asset classes in question are, cut both ways. They’re great on the way up, but punitive on the way down. It’s a lesson that must be acknowledged, but for now and possibly further out, crypto-correlated equities could represent opportunity for market participants.
Thanks to exchange traded funds such as the Amplify Transformational Data Sharing ETF (BLOK), investors don’t have to engage in burdensome stock-picking in the tricky world of crypto-linked equities.
The advantages offered by BLOK, including its status as an actively managed fund, are notable at a time when bitcoin is perking up. As the largest cryptocurrency by market capitalization, bitcoin has a way of affecting many crypto-correlated stocks, including some BLOK holdings.
Betting on Crypto-Correlated ETF BLOK as Bitcoin Rises
When it comes to exposure to crypto-correlated stocks, BLOK is an attractive option owing to its breadth. The Amplify ETF doesn’t limit its focus to one segment, such as bitcoin miners, exchange operators, or companies that hold the digital currency on its balance.
As positions in stocks such as MicroStrategy (MSTR), Marathon Digital Holdings (MARA), and Coinbase (COIN) confirm, BLOK checks a lot of boxes when it comes to equities with legitimate cryptocurrency links.
Following the recent debuts of spot bitcoin ETFs, bitcoin retreated, but has shown some signs of life in recent days. That price action has prompted some market observers to think that now probably isn’t the time to turn bearish on crypto-correlated equities. It could actually be appropriate to consider some of those names, including BLOK components.
“Even if Bitcoin ETF inflows disappoint, this is not the time to turn bearish as the macro environment will remain a tailwind in 2024, and the US election cycle will see a constructive fiscal response that will lift asset prices higher,” wrote Markus Thielen, head of research at 10x Research, in a recent note.
For those looking to be bearish bitcoin and BLOK holdings, that moment may have passed. In turn, that could set the stage for near-term upside for the $1.05 billion ETF that features 55 holdings.
“The time to turn bearish was in early January when we called for a correction back to 36,000/38,000 when Bitcoin traded at 44,000. We would use any further dip to start buying again,” concluded Thielen.
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