One way to profit in the stock market is to find where large buy orders are occurring and then follow along. That’s typically done by institutional investors, but the launch of a popular new ETF could also bring a lot of new capital into a niche sector and lead to a big move higher.
That could be the case in the coming days as a new ETF focused on Bitcoin mining companies comes onto the market. With crypto prices starting to rise in recent weeks, the combination could be explosive.
With many mining companies holding onto their mined crypto during the recent selloff, these companies look cheap relative to their growing holdings as well as future earning potential.
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Action to take: Buyers can simply buy the new Valkyrie Bitcoin Mining ETF (WGMI) to own a basket of crypto mining companies. That will take out the company-specific risk of owning any single crypto mining company. The ETF is set to have 80 percent of their net investments from companies that derive at least half their revenue or profits from Bitcoin mining.
Traders may want to consider the ETF and skip the leverage on this one. It will take time for a trading range and options on the ETF to be set, but crypto is a volatile enough space that even those who get the direction right on an options trade can end up losing money thanks to big daily swings.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.