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Crypto's Ascent: The Case for Becoming the S&P's 12th Sector
"Crypto is going to become the 12th sector of the S&P 500. It's going to happen over the next few years, watch." ~ Kevin O'Leary, AKA "Mr. Wonderful"
If you repeated the above quote to friends a few years ago, most would think you've lost your mind. After all, Bitcoin was once an obscure, illiquid, and untrusted digital currency started on the internet. In its early days, the world's first digital currency was used to buy illicit drugs on the illegal and now defunct "dark web" website "The Silk Road." Later, many adopters fell victim to crypto fraud and exchange hacks. However, as the kids like to say today, "The Internet Remains Undefeated!"
In a world filled with political instability and central banks in a fiat printing frenzy, Bitcoin provides an oasis in the form of a decentralized network, a limited supply, and an immutable and transparent ledger. Of course, without adoption, these characteristics mean little. Adoption is widespread and aggressive - Bitcoin has surpassed all-time highs in thirty countries and is knocking on the door of all-time highs in the U.S.
Stablecoin Adoption
A stablecoin is a type of cryptocurrency designed to maintain a stable value by pegging it to a reserve of assets, often fiat currencies like the US Dollar. It reduces the price volatility usually associated with other cryptocurrencies like Bitcoin. USDC is an example of a stablecoin. USDC was launched five years ago through a partnership between Coinbase and Circle. In a short time, USDC has a market cap of more than $28 billion, and Visa allows the use of USDC to settle transactions on its payment network.
Stablecoin supplies are now at $140 billion, and Reflexivity Research co-founder Will Clemente predicts that stablecoin issuers, in aggregate, will become top five holders of U.S. Treasuries by 2030.
Political Snowballing Effect
Sometimes, it takes a new generation to invoke change. Nayib Bukele (now age 42) assumed office as the President of El Salvador in 2019 after garnering 50% of the vote. In 2021, Bukele made the bold and unprecedented decision to make bitcoin legal tender, and the Latin American nation purchased 400 Bitcoins. Fast forward to El Salvador's 2024 election, and Bukele mopped the floor with his opponents and won 84.65% of the vote to be re-elected president!
Bukele's success is empowering politicians in the U.S. and around the world to be open-minded when it comes to Bitcoin adoption.
MicroStrategy's Success Story: A Blueprint for Fortune 500 Companies
MicroStrategy is a software firm founded by a visionary named Michael Saylor. Though MSTR was a public and profitable company for years, it rose to prominence when it began to invest heavily in Bitcoin as a treasury reserve asset and an alternative to the inflating dollar. While MSTR was underwater on its position at first, the company's conviction in the strategy never wavered, and the company continued to accumulate billions in Bitcoin.
Now, the Bitcoin bet is paying off for investors – in a big way. This week alone, MSTR's Bitcoin holdings produced $500 million in gains in one day, bringing in many multiples of what its software business generates in a year.
With such overwhelming success, it's only a matter of time before other cash-rich companies take the plunge and look to ride on a "Bitcoin rail."
ETF Approval: Institutional Adoption Floodgates Swing Wide Open
It turns out that the much-hyped launch of Bitcoin ETFs will live up to the hype. By begrudgingly approving Bitcoin ETFs, the U.S. Securities and Exchange Commission (SEC), has opened up the floodgates to institutional adoptions. Fidelity, one of the largest asset managers worldwide, is allocating 1-3% of its All-In-One ETF products to crypto. Meanwhile, the Bitwise Bitcoin ETF has been approved for use by several wealth management platforms (with some in excess of $100B in AUM!).
The demand is insatiable now, and Bitcoin is encroaching on the $60,000 mark and previous all-time highs early Wednesday.
Bottom Line
With growing popularity and acceptance and a market cap today of more than $2 trillion, the global cryptocurrency market has a chance to become the 12th sector of the S&P 500 over the next five years.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Coinbase, Visa, MicroStrategy and BITB
For Immediate Release
Chicago, IL – February 29, 2024 – Today, Zacks Investment Ideas feature highlights Coinbase (COIN - Free Report) , Visa (V - Free Report) , MicroStrategy (MSTR - Free Report) and Bitcoin ETF (BITB - Free Report) .
Crypto's Ascent: The Case for Becoming the S&P's 12th Sector
"Crypto is going to become the 12th sector of the S&P 500. It's going to happen over the next few years, watch." ~ Kevin O'Leary, AKA "Mr. Wonderful"
If you repeated the above quote to friends a few years ago, most would think you've lost your mind. After all, Bitcoin was once an obscure, illiquid, and untrusted digital currency started on the internet. In its early days, the world's first digital currency was used to buy illicit drugs on the illegal and now defunct "dark web" website "The Silk Road." Later, many adopters fell victim to crypto fraud and exchange hacks. However, as the kids like to say today, "The Internet Remains Undefeated!"
Bitcoin has experienced a meteoric rise from its early days, and its momentum is reaching a fever pitch in 2024. In fact, as I wrote about earlier this month, Bitcoin has the Perfect Bull Storm. Below are five reasons crypto will become the 12th sector of the S&P 500 over the next few years:
Bitcoin: a Global Phenomenon
In a world filled with political instability and central banks in a fiat printing frenzy, Bitcoin provides an oasis in the form of a decentralized network, a limited supply, and an immutable and transparent ledger. Of course, without adoption, these characteristics mean little. Adoption is widespread and aggressive - Bitcoin has surpassed all-time highs in thirty countries and is knocking on the door of all-time highs in the U.S.
Stablecoin Adoption
A stablecoin is a type of cryptocurrency designed to maintain a stable value by pegging it to a reserve of assets, often fiat currencies like the US Dollar. It reduces the price volatility usually associated with other cryptocurrencies like Bitcoin. USDC is an example of a stablecoin. USDC was launched five years ago through a partnership between Coinbase and Circle. In a short time, USDC has a market cap of more than $28 billion, and Visa allows the use of USDC to settle transactions on its payment network.
Stablecoin supplies are now at $140 billion, and Reflexivity Research co-founder Will Clemente predicts that stablecoin issuers, in aggregate, will become top five holders of U.S. Treasuries by 2030.
Political Snowballing Effect
Sometimes, it takes a new generation to invoke change. Nayib Bukele (now age 42) assumed office as the President of El Salvador in 2019 after garnering 50% of the vote. In 2021, Bukele made the bold and unprecedented decision to make bitcoin legal tender, and the Latin American nation purchased 400 Bitcoins. Fast forward to El Salvador's 2024 election, and Bukele mopped the floor with his opponents and won 84.65% of the vote to be re-elected president!
Bukele's success is empowering politicians in the U.S. and around the world to be open-minded when it comes to Bitcoin adoption.
MicroStrategy's Success Story: A Blueprint for Fortune 500 Companies
MicroStrategy is a software firm founded by a visionary named Michael Saylor. Though MSTR was a public and profitable company for years, it rose to prominence when it began to invest heavily in Bitcoin as a treasury reserve asset and an alternative to the inflating dollar. While MSTR was underwater on its position at first, the company's conviction in the strategy never wavered, and the company continued to accumulate billions in Bitcoin.
Now, the Bitcoin bet is paying off for investors – in a big way. This week alone, MSTR's Bitcoin holdings produced $500 million in gains in one day, bringing in many multiples of what its software business generates in a year.
With such overwhelming success, it's only a matter of time before other cash-rich companies take the plunge and look to ride on a "Bitcoin rail."
ETF Approval: Institutional Adoption Floodgates Swing Wide Open
It turns out that the much-hyped launch of Bitcoin ETFs will live up to the hype. By begrudgingly approving Bitcoin ETFs, the U.S. Securities and Exchange Commission (SEC), has opened up the floodgates to institutional adoptions. Fidelity, one of the largest asset managers worldwide, is allocating 1-3% of its All-In-One ETF products to crypto. Meanwhile, the Bitwise Bitcoin ETF has been approved for use by several wealth management platforms (with some in excess of $100B in AUM!).
The demand is insatiable now, and Bitcoin is encroaching on the $60,000 mark and previous all-time highs early Wednesday.
Bottom Line
With growing popularity and acceptance and a market cap today of more than $2 trillion, the global cryptocurrency market has a chance to become the 12th sector of the S&P 500 over the next five years.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.