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Everything is going great for bitcoin, with the constant corporate support. The cryptocurrency, infamous for its high volatility, crossed the $58,350 mark on Feb 21, only to slip later on. But the currency jumped back above $50,000 on Feb 23, thanks to supportive comments from Ark Investment Management’s Cathie Wood and Square’s (SQ - Free Report) purchase of bitcoin (read: Is ARK ETFs' Stellar Journey Over?).
The cryptocurrency, after a monstrous surge this year, dropped to $45,000 in recent sessions that raised doubts over the strength of the mammoth rally. As of Feb 21, the currency was up about 76% over the past month. It also recorded a jump of about 200% last year.
However, Cathie Wood, famous for the success of Ark Investment’s winning products, lately said in a Bloomberg interview that she’s “very positive on Bitcoin, very happy to see a healthy correction here.” Square also said lately that it bought approximately 3,318 bitcoins (worth about $170 million), adding to its October 2020 purchase of 4,709 bitcoins. This boosted investor sentiments toward the extremely-controversial cryptocurrency.
Bitcoin Rally Here to Stay
Although bitcoin retreated early in the week after Tesla (TSLA)’s Chief Executive Officer Elon Musk warned about its valuation, the pullback so far has been “relatively modest,” Bespoke Investment Group wrote in a blog post, as quoted on Bloomberg. Bitcoin believers see it as an emerging asset class while critics do not see any inherent value in it.
Musk in his recent tweets said bitcoin prices “seem high,” having earlier called it a “less dumb” version of cash. Meanwhile, Microsoft Corp. co-founder Bill Gates warned about the downside effect of this euphoria. Treasury Secretary Janet Yellen has said bitcoin is an “extremely inefficient way of conducting transactions,” as quoted on the abovementioned Bloomberg article.
Still, big companies are stepping up in support of cryptocurrencies of late. Last week, the world’s largest asset manager, Blackrock (BLK), started investing in bitcoin. BlackRock said “people are looking for storehouses of value. People are looking for places that could appreciate under the assumption that inflation moves higher and that debts are building, so we’ve started to dabble a bit into it,” as quoted on bitcoin.com.
The cryptocurrency also gained this height by virtue of Tesla’s investment of $1.5 billion, which made it the biggest company to support the cryptocurrency. Tesla would start accepting payment for its electric vehicles in the currency.
Recently, Mastercard announced that it will let certain cryptocurrencies directly on its network and BNY Mellon started a crypto unit to provide clients with bitcoin services. BitPay, a bitcoin and cryptocurrency payment provider, also announced in mid-February that U.S. cardholders can add their BitPay Prepaid Mastercard to Apple Wallet, making it more user-friendly to buy everyday items using the cryptocurrency payment service.Before this, PayPal Holdings Inc (PYPL - Free Report) had announced a similar move (read: All About Bitcoin's Mainstream Acceptance & Blockchain ETF).
Bottom Line
In short, we expect strength in bitcoin not likely to be lost in the near term, if such mainstream acceptance keeps coming. Yes, we may see corrections, but a crash in prices is not likely. Investors, who still fear extreme volatility in bitcoin, can invest in “Crypto Innovators.”
“The term 'Crypto Innovators' generally refers to companies that service and transact in the segment of the economy dealing with crypto assets and distributed ledger technology (e.g., blockchain technology),” per the Bitwise filing.
The filing went on to elaborate that Crypto Innovators include “parties that operate crypto asset trading platforms, custodians and wallets; financial services providers leveraging crypto assets and/or blockchain technology, or other financial institutions principally servicing clientele involved in the crypto ecosystem; distributed ledger infrastructure and transaction validation services (e.g., crypto asset “miners”); and technology hardware, software and solutions providers to participants of the crypto ecosystem.”
Hence, investors can definitely familiarize with the concept through blockchain ETFs like Amplify Transformational Data Sharing ETF (BLOK - Free Report) and First Trust Indxx Innovative Transaction & Process ETF (LEGR - Free Report) . Investors can also bet on fintech ETF Global X Fintech ETF (FINX - Free Report) .
Also, ETFs offering exposure to the blockchain ecosystem via semiconductor companies that make chips for bitcoin mining can be played. The most popular funds in this arena include iShares PHLX Semiconductor ETF (SOXX - Free Report) and VanEck Vectors Semiconductor ETF (SMH - Free Report) .
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More Good News for Bitcoin: ETFs in Focus
Everything is going great for bitcoin, with the constant corporate support. The cryptocurrency, infamous for its high volatility, crossed the $58,350 mark on Feb 21, only to slip later on. But the currency jumped back above $50,000 on Feb 23, thanks to supportive comments from Ark Investment Management’s Cathie Wood and Square’s (SQ - Free Report) purchase of bitcoin (read: Is ARK ETFs' Stellar Journey Over?).
The cryptocurrency, after a monstrous surge this year, dropped to $45,000 in recent sessions that raised doubts over the strength of the mammoth rally. As of Feb 21, the currency was up about 76% over the past month. It also recorded a jump of about 200% last year.
However, Cathie Wood, famous for the success of Ark Investment’s winning products, lately said in a Bloomberg interview that she’s “very positive on Bitcoin, very happy to see a healthy correction here.” Square also said lately that it bought approximately 3,318 bitcoins (worth about $170 million), adding to its October 2020 purchase of 4,709 bitcoins. This boosted investor sentiments toward the extremely-controversial cryptocurrency.
Bitcoin Rally Here to Stay
Although bitcoin retreated early in the week after Tesla (TSLA)’s Chief Executive Officer Elon Musk warned about its valuation, the pullback so far has been “relatively modest,” Bespoke Investment Group wrote in a blog post, as quoted on Bloomberg. Bitcoin believers see it as an emerging asset class while critics do not see any inherent value in it.
Musk in his recent tweets said bitcoin prices “seem high,” having earlier called it a “less dumb” version of cash. Meanwhile, Microsoft Corp. co-founder Bill Gates warned about the downside effect of this euphoria. Treasury Secretary Janet Yellen has said bitcoin is an “extremely inefficient way of conducting transactions,” as quoted on the abovementioned Bloomberg article.
Still, big companies are stepping up in support of cryptocurrencies of late. Last week, the world’s largest asset manager, Blackrock (BLK), started investing in bitcoin. BlackRock said “people are looking for storehouses of value. People are looking for places that could appreciate under the assumption that inflation moves higher and that debts are building, so we’ve started to dabble a bit into it,” as quoted on bitcoin.com.
The cryptocurrency also gained this height by virtue of Tesla’s investment of $1.5 billion, which made it the biggest company to support the cryptocurrency. Tesla would start accepting payment for its electric vehicles in the currency.
Recently, Mastercard announced that it will let certain cryptocurrencies directly on its network and BNY Mellon started a crypto unit to provide clients with bitcoin services. BitPay, a bitcoin and cryptocurrency payment provider, also announced in mid-February that U.S. cardholders can add their BitPay Prepaid Mastercard to Apple Wallet, making it more user-friendly to buy everyday items using the cryptocurrency payment service.Before this, PayPal Holdings Inc (PYPL - Free Report) had announced a similar move (read: All About Bitcoin's Mainstream Acceptance & Blockchain ETF).
Bottom Line
In short, we expect strength in bitcoin not likely to be lost in the near term, if such mainstream acceptance keeps coming. Yes, we may see corrections, but a crash in prices is not likely. Investors, who still fear extreme volatility in bitcoin, can invest in “Crypto Innovators.”
“The term 'Crypto Innovators' generally refers to companies that service and transact in the segment of the economy dealing with crypto assets and distributed ledger technology (e.g., blockchain technology),” per the Bitwise filing.
The filing went on to elaborate that Crypto Innovators include “parties that operate crypto asset trading platforms, custodians and wallets; financial services providers leveraging crypto assets and/or blockchain technology, or other financial institutions principally servicing clientele involved in the crypto ecosystem; distributed ledger infrastructure and transaction validation services (e.g., crypto asset “miners”); and technology hardware, software and solutions providers to participants of the crypto ecosystem.”
Hence, investors can definitely familiarize with the concept through blockchain ETFs like Amplify Transformational Data Sharing ETF (BLOK - Free Report) and First Trust Indxx Innovative Transaction & Process ETF (LEGR - Free Report) . Investors can also bet on fintech ETF Global X Fintech ETF (FINX - Free Report) .
Also, ETFs offering exposure to the blockchain ecosystem via semiconductor companies that make chips for bitcoin mining can be played. The most popular funds in this arena include iShares PHLX Semiconductor ETF (SOXX - Free Report) and VanEck Vectors Semiconductor ETF (SMH - Free Report) .
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>