Among 2022’s most vexing investment scenarios are bitcoin’s status as a risk asset and the cryptocurrency’s often intimate correlations to equities, meaning the digital currency isn’t providing any shelter from sliding stock prices.
More recently, there are inklings that bitcoin — the largest digital currency — could begin decoupling from other asset classes. Whether that results in positive or negative price action for the cryptocurrency remains to be seen. Either way, the VanEck Bitcoin Strategy ETF (XBTF) is among the exchange traded funds that are worth monitoring over the near term.
XBTF, which debuted last November, is actively managed and provides bitcoin exposure via futures. The strategy could prove effective as some market observers are forecasting a bitcoin rally in the fourth quarter.
“Bitcoin investors have reason to be cheerful after the cryptocurrency has snapped the longest weekly downtrend in its history,” said deVere Group CEO Nigel Green. “The price recovery has started, probably much to the chagrin of crypto cynics and Bitcoin bashers.”
XBTF offers investors some perks worth considering, particularly with bitcoin prices sitting relatively low today. For starters, active management can be beneficial when it comes to futures-based strategies, and the team managing XBTF has extensive futures market experience.
“I believe that we’ll soon see a bull run that will lead to a significant bounce in the fourth quarter of the year for the world’s leading digital currency,” added Green.
Adding to the case for XBTF is its low fee — 0.65% per year, or $65 on a $10,000 investment. That’s among the most favorable in the futures-based bitcoin ETF arena. One more favorable attribute: XBTF is structured as a C-corporation. That’s a more tax-efficient structure.
Another issue to consider is that bitcoin could eventually prove to be a credible inflation strategy. Indeed, it’s failed at that objective this year, but deVere’s Green believes that scenario will change for the better.
“Another key reason, says Nigel Green, for Bitcoin to have a strong recovery is that investors are using it as a hedge against red-hot inflation as they look to protect their purchasing power by moving out of cash and into store of value investments,” according to deVere. “Bitcoin is regarded as a credible hedge against inflation because of its scarcity – a limited supply of 21 million means that higher demand will push prices up. Also because of its accessibility – as an asset it has value and is accepted by the market – and its durability, as Bitcoin will continue to attract more demand over time.”
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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.