There are more than 10,400 cryptocurrencies on the market today, and investors familiar with this asset class know that this number is fluid. Many digital currencies, particular those in the altcoin realm, are here-today-gone-tomorrow assets.
Looked at another way, there are a select few digital currencies that are safe, relatively speaking, and during times of elevated stress in the crypto market, investors typically flock to perceived safe havens. That could provide some support for exchange traded funds such as the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).
Home to 58 holdings, BLKC is a unique play on crypto price gyrations, particularly those of the largest names, potentially making it an appealing near-term idea at a time when digital assets investors are eschewing dubious altcoins.
“The dominance of bitcoin (BTC), ether (ETH) and stablecoins in the crypto market surged to its highest level since February 2021 as investors fled from smaller tokens after last week’s U.S. regulatory clampdown,” reported Krisztian Sandor for CoinDesk. “The combined market capitalization of the two largest digital assets and stablecoins compose 80.5% of the total cryptocurrency market valued at some $1 trillion, digital asset research firm K33 Research noted in a report Tuesday.”
Avoid Altcoins With BLKC
Other data points confirm the rising dominance of bitcoin and, to a lesser extent, ether at the expense of volatile altcoins. That could benefit BLKC because of the ETF’s 58 holdings, those with crypto ties are mostly correlated to bitcoin, not fly-by-night altcoins. That could be an important trait at a time when regulators are clamping down on more speculative cryptocurrencies.
“Altcoins – an umbrella term for alternative cryptocurrencies – suffered a dramatic sell-off last week as the U.S. Securities and Exchange Commission (SEC) deemed multiple tokens securities in lawsuits against crypto exchanges Binance, Binance.US and Coinbase. Top 10 crypto assets such as Binance’s BNB, Cardano’s ADA and Solana’s SOL – all tagged as securities in the lawsuits – lost as much as 30% of their value over the week,” added CoinDesk.
BLKC offers investors other benefits. First, the blockchain industry is about much more than digital currencies, possessing myriad applications in traditional industries, including financial services and healthcare. Second, BLKC itself is relatively safe, as highlighted by the fact that more than 63% of its holdings are large- and mega-cap stocks, including some with direct ties to the scintillating generative artificial intelligence (AI) space.
For investors assessing BLKC through the lens of crypto, it’s worth noting that some analysts believe the dominance of bitcoin and ether will increase over the next year, potentially providing some ballast to BLKC.
For more news, information, and analysis, visit the Crypto Channel.