Spot crypto prices have been rocky since Russia began a full scale war with Ukraine. Prices fell on Thursday, wiping out $150 billion of wealth, but have recovered somewhat today.
“The current geopolitical situation will inevitably have an effect on the already elevated prices in the commodities market and aggravate the already-serious supply chain issues which, in turn, could elevate inflation,” said Anto Paroian, chief operating officer at digital asset investment fund ARK36, to CNBC. “This means that the Fed and other central banks may really have no room to reverse their hawkish course and we can expect risk assets and cryptocurrencies to go deeper into the bear market territory.” Some experts speculate that bitcoin could tumble as low as $20,000.
Fortunately, this gives investors some opportunities. Many crypto miners can be profitable despite lower bitcoin prices. The VanEck Digital Transformation ETF (DAPP) holds several mining firms, including HUT 8 (HUT) and Bitfarms (BITF), which recently secured $32 million in equipment financing. “This equipment financing agreement provides another source of non-dilutive capital, enabling us to finance equipment from our established mining operations so that we can invest growth capital into miner purchases and our new farms under construction,” said Jeff Lucas, CFO of Bitfarms. “With bitcoin (BTC) miner purchases making up the majority of our capital needs, this $32 million equipment financing frees up working capital and supports our flexible and non-recourse financing options, which also include our recently announced $100 million BTC collateralized loan facility.”
With the spot prices for bitcoin likely to be volatile in the short- and mid-term, an investment in equities could still yield profit. Because there is some correlation between bitcoin price and equities, investors can get a bargain right now as the market attempts to digest geopolitical news.
Another one of DAPP’s major holdings is Coinbase, which saw a surge in trading yesterday. “The sequential increase in retail Trading Volume was driven primarily by higher levels of volatility as well as strong consumer interest in a wider variety of crypto assets,” the company said in a statement. As crypto continues its march toward mainstream acceptance, miners and exchanges could continue to thrive despite the volatility of crypto assets.
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