The Invesco Alerian Galaxy Crypto Economy ETF (SATO) is just a few months old, but the exchange traded fund could be ready for its moment as bitcoin and other cryptocurrencies attempt to shake off recent lethargy.
A recent poll suggests that investors are bullish on bitcoin, crypto at large, and other digital assets, including non-fungible tokens (NFTs) in 2022. In fact, many of those polled in a recent LinkedIn survey believe that the aforementioned assets will outpace stocks this year.
If that proves accurate, it could be more positive than negative for SATO, even though the new exchange traded fund is an equity-based product. The reason for this is that many of SATO’s 45 holdings fit the bill as crypto-correlated, meaning that they are more correlated to cryptocurrency than are other equities. That’s something to consider in the current environment.
“Stocks, which have always traditionally made up the bulk of successful investors’ portfolios, are falling out of favour it seems as a way to create and build wealth, with digital assets taking over,” says deVere Group CEO Nigel Green. “Also, it’s surprising that it’s believed by investors that ‘other’ cryptocurrencies – and not the headline-grabbing, dominant Bitcoin – will out-run other asset class this year in terms of returns.”
SATO components include companies engaged in cryptocurrency mining, operators of crypto exchanges, and other crypto-inspired platforms. The new ETF’s positioning could set it up for success in 2022. That implies that if crypto market observers are correct, SATO could outperform the broader market, particularly if bitcoin shakes out of its recent slump. The largest digital currency surged 65% last year, while the S&P 500 gained “just” 28%. Inflation could also be a point in SATO’s favor this year.
“Rising prices as supply chain bottlenecks and a shortage of qualified workers continues to push inflation, which is a major concern for global investors as their spending power is being eroded,” adds Green. “Second, rising prices as supply chain bottlenecks and a shortage of qualified workers continues to push inflation, which is a major concern for global investors as their spending power is being eroded.”
Of course, there’s a case for SATO beyond 2022, and it’s rooted in the notion that more investors, particularly those in younger demographics, view digital assets as a legitimate asset class that’s not going anywhere.
“Investors are increasingly confident that digital currencies are the inevitable future of money. In our increasingly tech-driven, globalised world, it makes sense to hold digital, borderless, decentralised currencies and/or other digital assets, such as NFTs,” concludes deVere’s Green.
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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.