There’s talk that animal spirits have been renewed in some “meme” stocks. But some market participants may be wondering if a similar scenario is playing out amid the recent cryptocurrency rally. After all, there have been periods when “memecoins” have exhibited leadership traits.
In what could be good news for exchange traded funds such as the Amplify Transformational Data Sharing ETF (BLOK), the recent crypto resurgence is sourcing leadership from larger digital currencies, including the largest – bitcoin. As of late Wednesday, bitcoin was up 7.20% over the past week. It’s quelling the notion that the still-nascent crypto rebound is being led by dubious names.
That’s an important point because in a space with 9,952 assets, there’s plenty of potential for flimsy coins to have their days in the sun. Unfortunately, such scenarios often set investors up for considerable downside risk.
Pros See Bitcoin Leading Next Leg of Crypto Rally
As an equity-based fund, BLOK doesn’t directly own bitcoin or any other cryptocurrency. However, many of the fund’s holdings are highly correlated to bitcoin’s price movements. At the moment, that’s a good thing. Why? Because bitcoin’s 7.20% gain over the past week has sent the actively-managed BLOK higher by 6.84% over the same period.
Another thing is potentially adding to constructive views on BLOK. Some professional investors believe it’s clear that bitcoin is doing the heavy lifting in the recent crypto rally. That sentiment was on display at the Next Block Expo in Warsaw.
“Adrian Zduńczyk, founder of the trading education platform The Birb Nest, said that historical data around previous halvings suggests significant upside for BTC into 2025,” reported Gareth Jenkinson for Cointelegraph. “From 2011 through to the peak of 2013, we observed a 9,000% growth in the price appreciation.”
At the conference, Ben Yorke, ecosystem vice president at exchange platform WooX, noted that the removal of the regulatory overhang that hindered bitcoin is a clear benefit. He cited the debuts of spot bitcoin ETFs in the U.S. and, more recently, Hong Kong as evidence.
“Zduńczyk also highlighted historical trends around U.S. presidential elections driving up performance of traditional markets spilling over into Bitcoin in years past,” according to Cointelegraph.
Specific to BLOK, the ETF’s investors got some good news Tuesday when it was revealed that index giant MSCI is adding MicroStrategy (MSTR) to the widely observed MSCI World Index. That news sent the stock, which accounts for 3.92% of BLOK’s portfolio, higher by almost 16% on Wednesday.
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