Bitcoin has pulled back over the past several days. But even with that retrenchment, the largest crypto currency is on pace for one of its best annual showings on record.
Interestingly, some crypto-correlated stocks and the exchange traded funds that hold them are notching performances in excess of bitcoin itself. Take the case of the Invesco Alerian Galaxy Crypto Economy ETF (SATO). The fund’s largest holding is the Grayscale Bitcoin Trust (GBTC), and the rest of its roster comprises stocks that fit the bill as crypto-correlated, including bitcoin miners.
Cementing its status as a beneficiary of bitcoin’s 2023 resurgence, SATO is higher by a staggering 213.24% year to date. That’s despite a 10.66% decline on Monday, one hastened by the aforementioned pullback by bitcoin itself.
Crypto ETF SATO Performance Starting to Look Familiar
With crypto stocks overshooting bitcoin’s 2023 performance, an interesting though overlooked comparison is now relevant. That is the history of gold miners often outperforming the yellow metal during rallies.
Of course, that can be a double-edged sword. It has been for gold miners, which have often slumped more than gold when spot prices retreat. It’s just one day. and a single day doesn’t make a trend. But SATO may be vulnerable to similar behavior as it dipped more on Monday than did bitcoin. Still, the ETF’s utility during bitcoin rallies is undeniable. That’s something to consider ahead of 2024.
Plus, SATO’s leverage to bitcoin price action is sourced via multiple avenues. Consider the fund’s 4.44% allocation to crypto exchange operator Coinbase (COIN). That exposure has recently been a benefit to SATO investors.
“Coinbase, for instance, is more broadly exposed to the digital asset landscape, with a fee-based brokerage business reliant on trade in many smaller tokens besides Bitcoin, such as Ether and Dogecoin,” reported Jack Denton for Barron’s.
MicroStrategy (MSTR) is another SATO holding with considerable leverage to bitcoin. The software firm, which accounts for 3.41% of the ETF’s roster, has amassed a multibillion bitcoin war chest, making the stock a de facto play on the digital currency.
“MicroStrategy, for its part, seems like a particularly well-positioned pure-play on Bitcoin with its billions of dollars in token holdings. The company was founded by one of the most high-profile Bitcoin bulls, Michael Saylor, who continues to lead the group as its executive chairman. MicroStrategy has been buying up Bitcoin at a seemingly relentless pace, meaning its holdings are sitting pretty amid the recent crypto rally, and the stock represents a wager on Saylor’s crypto bet and market timing,” according to Barron’s.
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