Cryptocurrency is frequently referred to as the “wild west” of investing, and September has certainly been on the wild side. Between El Salvador adopting Bitcoin as a legal currency and promptly causing it to tumble early in the month and China making cryptocurrency transactions illegal and also promptly causing Bitcoin to tumble just a few days ago, the space might seem a bit too wild for some investors.
It’s worth remembering, though, that the “wild west” did develop into a stable economic juggernaut. In fact, California by itself became the 5th largest economy in the world. Though no Bitcoin or cryptocurrency ETFs exist yet that provide direct exposure, there are investments products such as the VanEck Digital Transformation ETF (DAPP) that wield the ETF wrapper and can get investors exposure to the cryptocurrency ecosystem.
DAPP focuses on companies that are at the forefront of digital asset infrastructure. These companies are miners, wallets, hardware companies, software companies, exchanges, and other services that make digital assets a possibility and drive their growth. These are companies like Galaxy Digital Holdings, which has partnered with Invesco to build digital asset investment products, and mining company Hut8.
Though it might be challenging for risk-adverse investors to pull the trigger on a cryptocurrency directly, these digital infrastructure companies are going to have utility beyond what they do in the space. Companies like Square Inc. (SQ) have services outside of the blockchain. DAPP can act as a useful stepping stone for the crypto-curious investor who wants exposure to a growing corner of the market.
Regardless of whether Cardano is going to manage to jockey past Ethereum or if Dogecoin will continue to grow, the need for digital infrastructure is only going to expand. As Morgan Stanley’s head of emerging markets and chief global strategist Richir Scharma said back in February, “We see fundamental reasons to believe that — regardless of where the price of bitcoin goes next — cryptocurrencies are here to stay as a serious asset class.”
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