The Global X FinTech ETF (NasdaqGM: FINX) is higher by nearly 41% year-to-date, confirming the fintech thesis is alive and well. Bitcoin stands to boost it further.
FINX seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Global Fintech Thematic Index. The underlying index is designed to provide exposure to exchange-listed companies in developed markets that provide financial technology products and services, including companies involved in mobile payments, peer-to-peer (P2P) and marketplace lending, financial analytics software, and alternative currencies, as defined by the index provider.
Bitcoin, the largest digital currency by market value, is on a stellar run this year, recently flirting with all-time highs. That’s good news for FINX components, such as PayPal (NASDAQ: PYPL) and Square (NYSE: SQ).
“Surging prices of Bitcoin aren’t just fueling gains for traders. The cryptocurrency could also lift revenue for payment apps like Square and PayPal that are getting a cut of Bitcoin transactions,” reports Daren Fonda for Barron’s.
A Rising (Bitcoin) Tide Takes All Boats with it
FINX components are shifting financial services and economic transactions to technology infrastructure platforms, creating simplicity and accessibility while driving down costs. Square, the largest holding in FINX, has an impressive Bitcoin footprint of its own.
Square exposure is meaningful on multiple levels, including the fact that customers actually like the company. That’s a rarity when it comes to financial institutions because many folks simply don’t like their banks. Analysts are full of praise too.
“Mizuho Securities’ Dan Dolev raised his price target on PayPal Holdings stock (ticker: PYPL) to $290 from $270 on Monday. Bitcoin-related revenue could boost PayPal’s overall sales growth to 20% in 2021, above consensus estimates of 18.7%, he writes,” according to Barron’s. “Nearly a fifth of PayPal customers, or 17%, have traded Bitcoin on its app, Dolev writes, based on a survey of 380 users. Bitcoin traders reported more than three times the usage of PayPal products and services than nontraders—maintaining higher cash balances, using PayPal’s debit card, and paying for goods with PayPal QR codes, he notes.”
Making FINX’s PayPal and Square exposure all the more compelling is that Cash App and digital wallets are not being appropriately factored into fintech share prices.
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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.