It’s been a trying year for bitcoin, other digital currencies, and crypto-correlated stocks, and while the near-term outlook is split between some fledgling optimism and expectations of an extension of the “crypto winter.”
Obviously, weary investors and crypto devotees would prefer to see optimism morph into tangible results because if that happens, benefits could be widespread, including accrual to exchange traded funds such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO) and the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).
Both ETFs feature exposure to the Grayscale Bitcoin Trust BTC (GBTC). From there, the lineups, in differing forms, are chock full of crypto-correlated equities. In other words, BLKC and SATO make for predictable though potent beneficiaries should bitcoin and other digital assets rebound.
Count Morgan Stanley Chief Investment Officer (CIO) Mike Wilson among the market observers that are near-term bullish on bitcoin.
“Following the correlation between the two markets, some market experts give forecasts for future price trends. According to Morgan Stanley’s CIO, Michael J. Wilson, the US will soon have a short-term rally of 16%. The bear market expert noted that the price surge would only be possible without an official recession or earning capitulation,” reports NewsBTC.com.
If a key broader market technical indicator is reached or exceeded, risk assets could come back into fashion, potentially igniting a rally in crypto-correlated stocks, lifting BLKC and SATO in the process.
“According to Wilson, the US stock market will witness a short-term recovery. This offers the possibility of the S&P 500 hitting the 200-weekly moving average (WMA), as per Bloomberg,” according to NewsBTC.com. “Due to the unfavorable macroeconomic conditions and the impacts of the increased interest rates, the index dropped this year. However, the present price movement for Bitcoin has not been too impressive.”
In terms of the S&P 500 notching a significant near-term rally, that would be relevant to BLKC in particular because that ETF’s 60 equity components include plenty of S&P 500 names. Those include Walmart (NYSE:WMT), JPMorgan Chase (NYSE:JPM), International Business Machines (NYSE:IBM), Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC), and Nvidia (NASDAQ:NVDA), among others.
As for bitcoin’s price itself, which can have a profound impact on both BLKC and SATO, it continues hovering around the $20,000 area. Bulls believe that a move to $23,000 could stoke more upside, but some traders are in wait-and-see mode until that happens.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.