Bitcoin, the largest cryptocurrency by market capitalization, is in a severe funk. Late Friday July 9, Bitcoin traded around $33,700. It was trading north of $63,000 just 90 days before that.

That slump is weighing on some stocks market participants view as equity-based plays on crypto assets. However, the ARK Fintech Innovation ETF (NYSEARCA: ARKF) is proving resilient, notching a gain of 6.63% for the month ending July 9.

While the actively managed ARKF doesn’t directly own Bitcoin, or any other digital coin for that matter, several of its components are viewed as backdoor crypto plays. Those include Square (NYSE: SQ), ARKF’s top holding at a weight of 10.2%. As Daren Fonda reports for Barron’s, Square’s recent announcement that it wants to develop a Bitcoin hardware wallet is another sign the fintech company “is turning into a proxy” for the digital currency.

“Square has already invested directly in Bitcoin for its balance sheet, and it has transformed its Cash App into a mobile Bitcoin wallet, processing $3.5 billion in Bitcoin transactions in the first quarter,” according to Barron’s.

ARKF 1 Year Performance

ARKF: Taking Crypto Good with Crypto Bad

Obviously, Bitcoin’s 2021 struggles aren’t a positive for Square – or any company holding the cryptocurrency on its balance sheet. However, investors should realize there’s more to the story as it pertains to ARKF’s biggest holding.

“MoffettNathanson’s Lisa Ellis also came out with a bullish note on Square on Friday. She reiterated a Buy and $300 target on the stock, raising her 2021 and 2022 earnings estimates to $1.61 and $2.05 a share, respectively,” according to Barron’s.

Square isn’t the only ARKF component with some leverage to the crypto universe. PayPal (NASDAQ: PYPL), the ETF’s third-largest holding at a weight of almost 5%, allows users to buy and sell Bitcoin, Bitcoin cash, Ethereum, and Litecoin. As is the case with Square, PayPal is known for much more than providing access to digital currencies.

Crypto exchange operator (NASDAQ: COIN) is ARKF’s ninth-largest component at a weight of 3.54%. Interestingly, that stock is up 13.18% over the past month – a period of weakness for Bitcoin.

A quick review of ARKF’s full roster, which includes the likes of high-flying Facebook (NASDAQ: FB), Pinterest (NYSE: PINS), and Docusign (NASDAQ: DOCU) indicates the fund doesn’t need Bitcoin to surge.

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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.