SATO could be super if Bitcoin rallies
Bitcoin will need to more than double to regain its all-time high, and while it will take a lot, some market observers believe that it is possible and that new highs are on the way.
Should these predictions prove accurate, a number of equity-based and equity-heavy exchange-traded funds would benefit, including Invesco Alerian Galaxy Crypto Economy ETF (SATO). SATO, which turns one in October, is an ideal avenue for investors looking to effectively gain exposure to bitcoin and stocks considered to be “crypto-correlated.”
It says SATO’s portfolio mix is heavily leveraged to bitcoin price action, indicating that if the largest cryptocurrency by market cap recovers, SATO could deliver upside. Some experts are positive about a bitcoin recovery.
“There has been a surge of interest from institutional investors in Bitcoin and crypto in recent months – and this is set to grow exponentially,” wrote deVere Group CEO Nigel Green. “These experts appreciate the inherent value of digital, borderless, global, tamper-proof, non-confiscatable currency in our increasingly technology-driven world.”
Green believes bitcoin could rise to $70,000 by the end of this year, meaning the digital currency will roughly triple from its current level. It’s an ambitious forecast, no doubt, but if it’s even close to being accurate, SATO is likely to benefit.
One of the obvious reasons why SATO is tied to bitcoin price action is by way of the ETF’s 12% allocation to Grayscale Bitcoin Trust BTC (GBTC). While GBTC is an index fund, not an ETF, it reacts to fluctuations in bitcoin prices. On that note, the argument that bitcoin is currently undervalued could work in favor of SATO and GBTC.
“As regulatory scrutiny of digital assets increases globally – giving them more confidence – and with prices currently relatively low, the likes of Bitcoin appear temporarily undervalued in the market,” Green added. “This is why we are now seeing institutional investors come off the sidelines. They are making significant moves to increase crypto exposure at lower entry points; sensibly, using the ‘buy the dip’ mantra.”
SATO is further leveraged for a potential bitcoin rebound because its other 42 holdings beyond GBTC run the gamut of crypto-correlated stocks, including bitcoin miners, crypto exchange operators, semiconductor manufacturers, and fintech firms like Block (NYSE:SQ) and PayPal (NASDAQ:PYPL). SATO is even home to Dow components Visa (NYSE:V) and Microsoft (NASDAQ:MSFT).
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vettafi.com is owned by VettaFi, which also owns the index provider for SATO. VettaFi is not a sponsor of SATO, but VettaFi’s affiliate receives an index license fee from the ETF sponsor.
