Bitcoin prices have rallied by almost 25% over the last month, trading at about $59,600 as of late Thursday. The bellwether crypto has rallied from lows of under $30,000 in July. There are likely a couple of factors driving the recent gains. Firstly, there has been some anticipation that a Bitcoin futures ETF could be approved by the U.S. Securities and Exchange Commission shortly. Moreover, the chairman of the Federal Reserve clarified that he has no intention to ban cryptocurrencies in the U.S, easing concerns in the market following China’s recent crackdown on cryptocurrency. However, despite the recent rally, Bitcoin and other cryptocurrency assets have proved very volatile.
Investors looking to play the long-term upside in cryptocurrency adoption, without exposing themselves to the big swings in the crypto market, should take a look at our indicative theme on Cryptocurrency Stocks which includes semiconductors, payments, and brokerage companies that have exposure to the cryptocurrency value chain. The theme has gained a solid 30% year-to-date, compared to the S&P 500 which is up by about 18% over the same period. The theme has also been less volatile, with maximum drawdowns over the three years standing at just about -20%. Within the theme, graphics processor major Nvidia has fared the best, with its stock rising by 66% year-to-date. On the other hand, exchange major CME Group has been the weakest performer in our theme, rising by just about 13% over the same period.
[9/27/2021] Bitcoin Falls On China’s Crypto Crackdown. Are These Crypto Stocks Better Picks?
Bitcoin prices have declined by almost 7% since Friday, to levels of around $42,000 a unit although it recovered a bit over the weekend. The cryptocurrency also remains down by about 11% over the past month. The recent volatility comes as China’s central bank announced that all cryptocurrency transactions in the country were illegal. While a ban on crypto trading came into effect in China in 2019, it apparently continued via offshore exchanges. With the latest developments, crypto trading of all forms is likely to be shut down in China, and this likely caused liquidation of cryptos, putting pressure on prices.
While China’s crypto crackdown is a setback, it probably doesn’t change the course for the broader adoption of cryptocurrencies, which have the potential to be one of the most disruptive technologies of our time. Investors who want to play the long-term upside in cryptocurrency adoption, without exposing themselves to this sort of volatility in crypto pricing, should take a look at our indicative theme on Cryptocurrency Stocks which includes semiconductors,…