Cryptocurrencies are seeing a broad sell-off lead by bitcoin, which has fallen below $60,000 at its low point. This highlights consideration for using an active management strategy to help ease the volatility.
The fall comes as major stock market indexes are heading in the opposite direction, riding the rally off the recent infrastructure bill signed into law by U.S. president Joe Biden. The strength comes despite fears of inflation hitting the capital markets as consumer prices continue to rise.
Bitcoin, ether, and other cryptocurrencies have been viewed as suitable counterbalances for inflation lately, particularly after a bullish run in the month of October and 2021 overall. Despite the recent weakness, bitcoin is up over 100% for the year.
In recent times, more investors have been hopping on board the digital asset train with cryptocurrencies as a first entry point into the decentralized finance world. New investors, however, may be realizing that their tolerance for volatility is being tested early in this latest pull-back.
With access to real time market data readily available via smartphones, it can be difficult to employ a set-it-and-forget-it strategy when it comes to cryptocurrencies. Investors must resist the urge to look at their portfolio balances, but it can be easier said than done.
Getting Active With Crypto
This is where an actively managed fund that focuses on bitcoin futures can help risk-averse investors. A fund like the Valkyrie Bitcoin Strategy ETF (BTF) focuses on bullishness in the leading cryptocurrency without the constant market fluctuations associated with digital currencies.
“The Fund will not directly invest in bitcoin. Under normal circumstances, the Fund will seek to purchase a number of bitcoin futures contracts so that the total notional value (i.e., the total value of the bitcoin underlying the futures contracts) of the bitcoin underlying the futures contracts held by the Fund is as close to 100% of the net assets of the Fund as possible,” the product website notes.
Highlights of BTF:
- Exposure: BTF offers ingress to the digital currency world via bitcoin, the largest cryptocurrency based on market capitalization.
- Access: BTF provides traditional finance access through an actively managed fund.
- Security: Digital currencies can be exposed to hacks on public exchanges, but BTF offers security via a regulated futures market.
- Expertise: Navigating the cryptocurrency space requires market knowledge and technical expertise on the way that bitcoin behaves relative to market cycles.
For more news, information, and strategy, visit the Crypto Channel.