Bitcoin needs to more than double to reclaim its all-time high, and while that’s asking a lot, some market observers believe it’s possible and that new highs are on the way.
Should those predictions prove accurate, an array of equity-based and equity-heavy exchange traded funds stand to benefit, including the Invesco Alerian Galaxy Crypto Economy ETF (SATO ). SATO, which turns a year old in October, is an ideal avenue for investors looking to efficiently gain exposure to bitcoin and to stocks that are considered to be “crypto-correlated.”
That says that SATO’s portfolio mix is highly levered to bitcoin price action, indicating that if the largest cryptocurrency by market value materially recovers, SATO could deliver upside. Some experts are bullish on a bitcoin recovery.
“There’s been a groundswell of interest from institutional investors in Bitcoin and crypto in recent months – and this is set to grow exponentially,” wrote deVere Group CEO Nigel Green. “These experts appreciate the inherent value of digital, borderless, global, tamper-proof, unconfiscatable currency in our increasingly tech-driven world.”
Green believes bitcoin can surge to $70,000 by the end of this year, meaning that the digital currency would roughly triple from current levels. Undoubtedly, that’s an ambitious forecast, but if it’s even close to being accurate, SATO is likely to benefit.
One of the obvious reasons SATO is tethered to bitcoin price action is by way of the ETF’s 12% allocation to the Grayscale Bitcoin Trust BTC (GBTC). While GBTC is an index fund, not an ETF, it is responsive to bitcoin price fluctuations. On that note, the argument that bitcoin is currently undervalued could work in favor SATO and GBTC.
“As regulatory scrutiny of digital assets is being ramped up globally – giving them more confidence – and as prices are currently relatively low, the likes of Bitcoin seem temporarily undervalued in the market,” added Green. “This is why now we are seeing institutional investors coming off the sidelines. They are making significant moves to increase their crypto exposure at lower entry points; sensibly, employing the ‘buy the dip’ mantra.”
SATO is further levered to a potential bitcoin rebound because its other 42 holdings beyond GBTC run the gamut of crypto-correlated equities, including bitcoin miners, crypto exchange operators, semiconductor producers, and fintech firms such as Block (NYSE:SQ) and PayPal (NASDAQ:PYPL). SATO is even home to Dow components Visa (NYSE:V) and Microsoft (NASDAQ:MSFT).
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vettafi.com is owned by VettaFi, which also owns the index provider for SATO. VettaFi is not the sponsor of SATO, but VettaFi’s affiliate receives an index licensing fee from the ETF sponsor.
