Amid a major bloodletting in the cryptocurrency market, crypto-correlated and fintech equities are mightily slumping.
Indeed, slumping bitcoin prices are predictably weighing on miners of the digital currency, and headlines about crypto brokerage firms, such as Coinbase (NASDAQ: COIN), are currently ominous. In other words, at this juncture, a long-term view of exchange traded funds such as the Fidelity Crytpo Industry and Digital Payments ETF (FDIG) is likely required.
FDIG follows the Fidelity Crypto Industry and Digital Payments — obviously a growth-centric benchmark as highlighted by its significant exposure to the likes of Block (NYSE: SQ) and Coinbase, among others. Translation: FDIG and its components are faltering today, but that doesn’t diminish the fund’s position as being at the corner of important long-term disruptive trends.
“New innovation has continued to accelerate economic transformation and technological dissemination. Rising real income, broader information access, and globalization have steepened adoption timelines from multi-decade periods to just half of a decade in this latest revolution,” according to Goldman Sachs research. “We think this momentum can continue to build, with incumbents both further disrupting markets and also giving rise to synergies among new creators.”
In addition to its bitcoin miners exposure, FDIG taps into disruption with other holdings such as Block, StoneCo (NYSE: STNE), and Shopify (NYSE: SHOP), among others. In the case of Block, the company formerly known as Square, the firm has significant crypto inroads, but there’s much more to its broader investment thesis. That includes the impressive growth of Cash App, buy now pay later exposure, and more.
While shares of Shopify are struggling this year due to weakness among e-commerce equities, the company remains an important player in online shopping and fintech spaces by way of enviable platform positioning and its leverage to expanding digital consumerism.
“Likewise, expanding tech may benefit both physical and digital consumerism, as the sharing economy deepens across everyday living and the creator economy grows. While leaning into tech innovation may be intuitive, we think the speed and depth of its application will allow for many selective global opportunities,” added Goldman Sachs.
Some of the risk associated with investing in futuristic finance stocks is offset in FDIG via the fund’s exposure to blue chips Mastercard (NYSE: MA) and Visa (NYSE: V), the latter of which is a member of the Dow Jones Industrial Average. Those are profitable, cash-rich companies and they combine for about 5.6% of the FDIG 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.