3 Reasons Behind the Recent Bounce in Bitcoin: ETFs in Focus
Finally, Bitcoin has got back its days.The cryptocurrency is now hovering below the $11,000 mark, representing a year-to-date gain of 57.3%. In fact, the cryptocurrency has skyrocketed about 122% since this year’s low touched on Mar 16. With the current pricing, Bitcoin is edging toward the one-year high of $11,956 hit last August. Not only Bitcoin, cryptocurrency like Ethereum has also touched year-to-date highs.
Many industry experts have been scratching their heads to understand the logic behind the monstrous rally behind Bitcoin, that too in such a trying time like this. Global central banks and governments are pouring cash like anything to keep the respective economies going amid the coronavirus scare.
Is Bitcoin Perceived as Digital Gold?
An article published on CNBCnoted that Bitcoin is emerging as a safe-haven asset like gold. SPDR Gold Shares GLD has rallied this year as gold hit an all-time high thanks mainly to safe-haven demand and extremely low U.S. interest rate levels. A few years back an analyst indicated that “the cryptocurrency could be referred to as digital gold, as it shares many of the characteristics that makes the precious metal a great store of value.”
Cryptocurrency is also being fast accepted by big corporate houses. For instance, JPMorgan Chase & Co. (JPM) has introduced JPM Coin – a digital coin designed to make instantaneous payments using blockchain technology. AT&T Inc. (T) has also began accepting crypto payments via a partnership with BitPay. Microsoft is also accepting bitcoin payments on its online store.
Square’s Cash App witnessed bitcoin revenues during the first quarter of the year soaring 367% to $306 million from $65 million a year ago. Quarter on quarter, the figure is up 71%. Q1 revenues surpassed that of fiat currencies.
“The increase was due to growth in the number of active bitcoin customers, as well as growth in customer demand.” per Square. PayPal too intends to offer crypto purchasing through its PayPal and Venmo apps, per an article published on Forbes.
Per analysts, a dovish Fed, negative real interest rates and the search for a new reserve currency have boosted demand for bitcoins of late. An article published on CNBC a few years back cited, “bitcoin is a very volatile asset” but doesn’t have a strong correlation with other asset classes.
How to Invest?
Though bitcoin ETFs are not available right now, investors can choose to invest in the related but much stable investing options like blockchain ETFs. Per a market source, “the blockchain in Bitcoin literally acts [as] a ledger; it keeps track of the balances for all users and updates them as money changes hands.”
So, if investors cannot lay their hands on a bitcoin ETF now, they can definitely familiarize with the concept through blockchain ETFs like Reality Shares Nasdaq NexGen Economy ETF (BLCN, Amplify Transformational Data Sharing ETF (BLOK and First Trust Indxx Innovative Transaction & Process ETF (LEGR.
Also, ETFs offering exposure to the blockchain ecosystem via semiconductor companies that make chips required for bitcoin mining can be played. The most-popular funds include iShares PHLX Semiconductor ETF (SOXX) and VanEck Vectors Semiconductor ETF (SMH).
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SPDR Gold Shares (GLD): ETF Research Reports
iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
Reality Shares Nasdaq NexGen Economy ETF (BLCN): ETF Research Reports
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
First Trust Indxx Innovative Transaction Process ETF (LEGR): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.