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  • Cryptos in a bad trend since November 2021
  • Buy on ugly fixes proven optimal approach
  • Many Investors Uncomfortable With Crypto Wallets
  • BITQ is a crypto stew
  • BITQ expected to follow Bitcoin and crypto prices

Turning a five cent investment into over $31,500 in 12 years is amazing in any market. If you had spent $1 in Bitcoin in 2010 and kept it, today you would have $630,000. Feedback like this is not to be overlooked. And at Bitcoin’s November 2021 high, that $1 would have been worth $1.38 million.

While some high profile enthusiasts are embracing cryptocurrencies as a medium of exchange for the future, critics are calling the asset class bad and worthless. Passions run high on both sides, contributing to price volatility. Meanwhile, more and more analysts and financial advisors are recommending a small exposure to the asset class.

As investors and speculators seek to move a certain percentage of their nest eggs into the booming arena, there are alternatives for how to participate. The most direct route is to buy tokens, but there are over 19,670 cryptocurrencies to choose from. Also, after buying crypto, the next issue is whether to hold it in a wallet in cyberspace or on an exchange that acts as a custodian.

Exchange-traded companies and ETF products that rise and fall with crypto stocks now offer an alternative. These products eliminate custody issues because they can fit into traditional wallets.

I like to call the Bitwise Crypto Industry Innovators ETF (NYSE:) a bitcoin stew because it holds a variety of companies that have long-term exposure to the asset class.

Cryptos in an ugly trend since November 2021

On November 10, 2021 and , the two cryptocurrencies which account for more than 60% of the total asset class’s market capitalization, reached all-time highs. On the day they hit those highs, they closed the session below the previous day’s low, setting up key bearish reversal patterns on the daily charts – an ominous sign.

Source: bar chart

The chart shows Bitcoin’s pattern of lower highs and lower lows. As of May 31, the price was not far from the most recent low of May 12.

Ethereum daily chart.

Source: bar chart

Ethereum followed the same path but fell even more than Bitcoin in percentage terms since mid-November 2021. Ethereum made another low on May 27.

Buying on Ugly Corrections was an optimal approach

The long-term charts show that buying during periods of has been a profitable strategy over the past few years.

Long Term Bitcoin Monthly Chart
Long Term Bitcoin Monthly Chart

Source: bar chart

The long-term Bitcoin chart shows the price trend up and down in the major cryptocurrency.

Long Term Ethereum Monthly Chart
Long Term Ethereum Monthly Chart

Source: bar chart

Ethereum has shown a similar pattern of wide price variation over the past few years.

Many Investors Uncomfortable With Crypto Wallets

One of the hurdles for new entrants into the cryptocurrency space is comfort with storing or holding tokens. Cryptocurrency wallets can store tokens, with owners accessing them through password keys. However, one downside has been the horror stories of lost password keys that caused millions in losses.

Block (NYSE:), formerly called Square, is working on a crypto wallet they’ve dubbed the “rock” that could make future market participants more comfortable with backup procedures.

Meanwhile, many crypto investors and traders choose to leave their tokens with exchanges. Coinbase (NASDAQ:) recently spooked some customers by revealing that they could lose tokens if the exchange files for bankruptcy.

In short, custody and security continue to be barriers to expanding the addressable cryptocurrency market.

BITQ is a crypto stew

Many investors limit their activities to assets they can hold in traditional stock portfolios. The advent of ETF and ETN products has expanded the potential market for alternative investments in recent years.

The VanEck Gold Miners ETF (NYSE:) is an example of a product that has increased participation in the gold market. Prior to GDX, investors and traders had to choose between physical metals, futures, or mining stocks. GDX is a commodity that contains physical gold and correlates well with the ups and downs in the price of the precious metal.

The Bitwise Crypto Industry Innovators ETF (BITQ) product is a bitcoin stew, holding shares in companies that are increasingly moving with cryptocurrency. Enterprise software analytics maker MicroStrategy (NASDAQ:) is the fund’s largest holding, followed by Galaxy Digital Holdings (TSX:), Coinbase, Silvergate Capital (NYSE:) and crypto-equipment maker Canaan mining (NASDAQ:) which completes the top five positions.

Additional BITQ holdings include:

Source: bar chart

At $8.88 per share as of May 31, BITQ had $60.663 million in assets under management. The ETF trades an average of 145,414 shares each day and charges a management fee of 0.85%. The last mixed dividend was $0.65, which translates to a yield of 7.32%.

BITQ expected to follow Bitcoin and Crypto prices

BITQ hit the market on May 12, 2021, at $24.69 per share.

BITQ daily chart.

Source: bar chart

The chart shows a 64% drop to $8.88 on May 31. During the same period, Bitcoin fell from $56,915.26 to $31,600 or 44.5%. BITQ underperformed the leading cryptocurrency as speculative interest waned. A rally in Bitcoin and other cryptos would likely cause BITQ to follow. Time will tell if underperformance during bearish periods translates into outperformance during uptrends.

BITQ is an option for market participants looking for upside exposure to the cryptocurrency asset class. BITQ owns a diverse portfolio of crypto-related companies that trade on exchanges, making it Bitcoin stew.