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After the recent rally in the crypto market, which took Bitcoin to its highest level so far this year at the end of March above $48,000, investors have already lost their appetite for the risk. At the beginning of the week, the price occasionally dropped well below the $40,000 mark, but was then able to regain it quite quickly.
The reason for the renewed weakness, which affects almost the entire crypto market besides Bitcoin, is the prospect of even more decisive action by the US Federal Reserve against rapidly rising inflation. Result: riskier assets such as tech stocks or cryptocurrencies are thrown out of deposits and prices fall.
The industry-specific positive signals, which were also given at the Bitcoin 2022 conference in Miami, are hardly heard in this environment. The fact that investors are filling their pockets with large bitcoin holdings at the current level has also not provided any impetus. MicroStrategy (see Investor Info) and Luna Foundation Guard alone have collected thousands of bitcoins over the past few weeks. They are preparing for when the Fed eases off again. Because then, according to Mike Novogratz, boss of the crypto bank Galaxy Digital, Bitcoin and Co only know one direction: “To the moon”.
In the short to medium term, however, macroeconomic factors such as interest rate and inflation concerns related to new highs in the correlation between Bitcoin and the Nasdaq 100 are expected to repeatedly cause turbulence.
Days after MicroStrategy secured a $205 million loan in late March, CEO Michael Saylor has already invested much of it in bitcoin. As it announced last week, MicroStrategy has acquired an additional 4,167 units of the digital currency for a total value of approximately $191 million. The recent acquisition brings MicroStrategy’s Bitcoin holdings to 129,218 units, which is approximately $5.2 billion at current prices. Brave investors who share Saylor’s vision can add a few things to their portfolio, but should keep in mind the risks and high volatility.
With VanEck’s Crypto Leaders ETN, investors can bet on five of the biggest, most important and most liquid cryptocurrencies – conveniently with a single product that is traded on regulated stock exchanges via WKN and ISIN. The MVIS CryptoCompare Crypto Leaders Index serves as the underlying for the fully secure Exchange Trades Notes. Currently this includes Bitcoin, Ethereum, Cardano, Solana and Polkadot. The product is therefore very interesting for investors who want to build a small but diversified crypto position as an addition to their portfolio. In addition to price risk, you also bear issuer risk.
Leverage must be between 2 and 20
Image sources: Wit Olszewski / Shutterstock.com, Finanzen Verlag