Bitcoin bettors got an early Christmas when it hit the six-figure mark in the first week of December 2024. But its ongoing rise to another all-time high this year creates bullish momentum for the Direxion Daily Crypto Industry Bull 2X Shares (LMBO ).
The leading cryptocurrency is much more than a speculative asset these days. As more traditional finance companies continue to accept digital currencies as a viable investment asset, that bodes well for bitcoin’s bullishness.
Further supporting bitcoin as an asset accepted in traditional financial circles is its use as a hedge against inflation. In the current higher-for-longer interest rate environment, the use case for bitcoin aligns it with assets like gold and commodities.
“Over time, bitcoin has proven itself to be a better hedge against inflation than many other asset classes,” said Elliot Johnson, CEO of Bitcoin Treasury Corp.
JP Morgan is one of the big banks adopting blockchain technology, which is the underlying digital infrastructure used to create cryptocurrencies. BNY Mellon is another name in the traditional finance arena that introduced a custodial platform for institutional clients seeking secure storage for crypto and other digital assets. Societe Generale became the first big bank to offer a dollar-backed stablecoin. All these examples created a perfect backdrop for an ETF that includes companies operating within the ever-growing crypto sphere — hence, LMBO.
Double Down on DeFi
Per its fund description, LMBO seeks to match the performance of the Solactive Distributed Ledger & Decentralized Payment Tech Index (SOLDLDPT). Essentially, it contains companies that operate within the crypto sphere rather than digital currencies themselves. More specifically, business operations in the field of distributed ledger or decentralized payment technology, which includes the following business fields: blockchain technology, nonfungible tokens, decentralized finance, and digital asset mining hardware.
In its current top holdings, you won’t see obvious names that might jump out as crypto-specific companies. Instead, you’ll see VISA, Mastercard, Advanced Micro Devices, and Nvidia. Sectorwise, financial services is the top allocation, followed by semiconductors — which makes sense, given the aforementioned names.
The fund gives traders the opportunity to play the crypto space, but only those companies involved with the ancillary services that support the industry. This also helps to limit the volatility of actually trading cryptocurrencies themselves.
For short-term pullbacks in bitcoin that might create selling pressure in these companies, traders can take the inverse trade with the Direxion Daily Crypto Industry Bear 1X Shares (REKT ). LMBO and REKT together add flexibility for traders, allowing traders to profit in up- or down-trending markets.
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