OOne of the drivers of bitcoin’s evolution is the enterprise-level adoption of the largest cryptocurrency, not just as a method of payment, but as a balance sheet asset.
It’s true – a growing number of well-known companies hold bitcoin on their balance sheets or plan to do so. This move could unveil opportunities with certain exchange-traded funds, including the Valkyrie Balance Sheet Opportunities ETF (VBB).
Actively managed, VBB debuted last December. Since bitcoin as a balance sheet asset is still a new phenomenon, the new ETF offers some flexibility. VBB’s list may include “companies that invest in or have a portion of their assets represented by direct holdings of bitcoin, including companies that hold or trade relatively small amounts of bitcoin,” according to Valkyrie.
At the point of flexibility, VBB can allocate up to 20% of its roster to companies that do not meet the aforementioned bitcoin balance sheet mandate as long as the companies in that 20% have some involvement in the digital asset ecosystem.
Unsurprisingly, MicroStrategy Inc (NASDAQ:MSTR) and Tesla Inc (NASDAQ:TSLA), perhaps two of the most well-known bitcoin holders, combine for more than 24% of the ETF’s list. Coinbase (NASDAQ:COIN), the operator of the largest regulated crypto exchange, accounts for nearly 10% of the fund’s weight.
Businesses have valid reasons to consider holding even a small percentage of their cash in bitcoin. Namely, interest rates in the United States are at historic lows, and even when the Federal Reserve begins its tightening cycle, rates will remain low in absolute terms, which means that corporate dollar holdings will not generate virtually no interest, let alone significant earning potential. appreciation. Bitcoin offers upside potential.
“As the price of bitcoin rises, each company’s balance sheet assets increase in value. In fact, even after taking into account movements in the US stock market, the price of bitcoin is a key driver of returns for the publicly traded software company, Microstrategy shares,” according to Valkyrie research.
Overall, VBB owns 19 stocks with weightings ranging from 1.83% to 13.99%. The fund charges 0.75% per year, or $75 on a $10,000 investment.
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