It may be time to call it a crypto summer, as it’s continually a hot topic of conversation. ETF Trends CIO and Director of Research Dave Nadig joined Oliver Renick on TD Ameritrade Network’s “Morning Trade Live” to discuss the latest activity in ETFs, including how the SEC is regulating crypto and what the future holds for online versus brick-and-mortar buying trends.
Regarding Bitcoin and the progress toward creating a dedicated ETF, as Nadig has continually stated, the volatility naturally makes people nervous, but it is still doing quite well overall looking at how 2021 compares to the S&P 500. Yet the SEC is also concerned possible manipulation.
There are external regulatory shocks that justify certain aspects of Bitcoin’s volatility, but the SEC is taking a long look at this, as it wants to feel comfortable with how crypto functions before approving an ETF product. However, there is around $60 billion in trusts and ETPs already in cryptocurrencies, which is really making the SEC late to the party, let alone behind on what questions are most appropriate to ask regarding proper concerns.
As it stands, Nadig remains sure the SEC will make a ruling that will lead to a Bitcoin ETF being officially approved by the fall of this year or in the first quarter of 2022.
Market Performance Expectations
Nadig sees an intra-equity rotation in the aftermath of the Fed’s guidance last week. There’s a lot of tech-driven growth and defensive equity, which focuses on small caps being defensive, and a lot of interest in mid caps as well. Sector-wise, investors looking at energy and financials also fit into that rotation.
“That focus on risk-management and de-risking the equity portion of your portfolio is something we’re going to continue to see.”
As Nadig also makes clear, for advisors, this is not a market where they can get away running bond ladders. So, it comes down to staying safe when it’s necessary to remain in equities. In terms of where the interest will go as a result, Nadig believes tech will continue to grow, and various firms with defensive products will also be able to pick up steam.
Gotta Get Down on Prime Day
With Amazon Prime Day upon consumers, Nadig explored how 2020 has pulled e-commerce ahead of schedule. With that said, it’s not as though things are going to slide all the way back now that the world is reopening steadily. Instead, it comes down to how certain firms are going to respond moving forward.
Nadig highlighted funds like the ProShares Trust Online Retail ETF (ONLN), which has allocations to big retail firms as the model relies heavily on e-commerce. Nadig pointed to the Amplify Online Retail ETF (IBUY), which features a broader range of retail companies that show no sign of pulling back.
“I don’t think any of those (e-commerce) trends are going back. A few things in their bull run like Peloton might have gotten a little overdone, but we’re not going back to a world where you get in a car and got to a store for everything you get.”
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