Crypto investors split between “strategic builders” and “bystanders” – Bernstein
Investing.com — Investors are largely approaching the cryptocurrency industry as either “strategic builders” or “bystanders” during a recent rally in Bitcoin, according to analysts at Bernstein.
Bitcoin, the world’s most popular digital asset, has surged by more than 400% from lows notched in 2022, and is now within spitting distance of an all-time high of $68,999. Still, trading volumes have been relatively subdued, in a potential indication that trust in cryptocurrencies has been dented by a string of high-profile frauds and bankruptcies.
The gains have instead been driven chiefly by steady capital inflows into Bitcoin following the approval of several U.S. exchange-traded funds that directly track its price.
Data from digital asset manager CoinShares showed Bitcoin-linked investment products saw a fifth straight week of capital inflows in the week to March 4, a total of $1.7 billion. While short positions on the token increased, U.S.-listed ETFs tracking Bitcoin, particularly offerings from BlackRock (NYSE:BLK) and Fidelity, commanded the lion’s share of inflows.
In a note to clients, the Bernstein analysts said that these firms are building their exposure to cryptocurrencies “strategically” as they chase “what is set to be the fastest growing” niche in asset management.
But the majority of traditional equity managers, the Bernstein analysts noted, are choosing to “watch on the sidelines.” They argued that these investors should correct what they called an “abysmal allocation” to crypto-exposed stocks like Bitcoin miners CleanSpark (NASDAQ:CLSK) and Riot Platforms (NASDAQ:RIOT).
“The opportunity in crypto lies in this adoption curve,” the analysts said.
