Though still needing to more than double to reclaim its all-time high, bitcoin posted a strong showing in July, providing some relief to weary crypto investors.
That bullishness, albeit modest, provided support for a notable rally among bitcoin miners, including stocks residing in exchange traded funds such as the VanEck Digital Assets Mining ETF (DAM). Indeed, some bitcoin miners are still mired in deep bear markets, but recent momentum for the group, including some DAM components, is stoking hope that the bear market is drawing to a close.
“The market is clearly rewarding the most quality names and there are clear signals of relative strength among the leaders. While public miners all essentially have the same objective, to mine BTC for the lowest possible cost, these companies are not all created equal,” according to a recent report from Blockware Intelligence.
DAM, which tracks the MVIS Global Digital Assets Mining Index, debuted in March and is home to 24 stocks. While the VanEck ETF is heavily allocated to pure-play bitcoin miners, it has more diversity than meets the eye and reaches further into the crypto ecosystem than its name implies. For example, Coinbase (NASDAQ:COIN) and Block (NYSE:SQ) combine for almost 9.7% of the fund’s roster.
The diversity among bitcoin miners found in DAM is meaningful because the current bear market for these names is helping investors identify long-term contenders and pretenders. Fortunately, plenty of the former are among DAM’s holdings.
“The market will tell us which names are the most attractive to investors through price action. The names showing the highest levels of RS are those that institutional investors are accumulating the most aggressively. One key thing to look for in this group are names that are back up near last week’s highs. This quick and aggressive rebound shows that institutions are actively accumulating those names,” added Blockware Intelligence.
The research firm adds that Marathon Digital Holdings (NASDAQ:MARA), Riot Blockchain (NASDAQ:RIOT), Hive Blockchain Technologies (NASDAQ:HIVE), and Hut 8 Mining (NYSE:HUT) are among the bitcoin miners currently displaying attractive relative strength traits. Those stocks combine for more than 28% of DAM’s portfolio.
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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.