Amid much bloodshed in the cryptocurrency market, correlated crypto and fintech stocks are plummeting sharply.
In fact, the drop in bitcoin prices is predictably affecting miners of the digital currency, and the headlines about cryptocurrency brokerages such as Coinbase (NASDAQ: COIN) are currently ominous. In other words, right now, a long-term view of exchange-traded funds like the Fidelity Crypto Industry and Digital Payments ETFs (FDIG) it is likely to be necessary.
FDIG Follows Fidelity Crypto Industry and Digital Payments — obviously a growth-focused benchmark, as highlighted by its significant exposure to Block (NYSE: SQ) and Coinbase, among others. Translation: FDIG and its constituents are reeling today, but that doesn’t diminish the fund’s position as being in the corner of major long-term disruptive trends.
“New innovation has continued to accelerate economic transformation and technology diffusion. Rising real incomes, broader access to information, and globalization have accelerated adoption timelines from multi-decade periods to just half a decade in this latest revolution,” according to Goldman Sachs research. “We think this momentum can continue to build, with incumbents breaking into markets even further and also creating synergies between new creators.”
In addition to its exposure to bitcoin miners, FDIG is capitalizing on the disruption with other holdings such as Block, StoneCo (NYSE: STNE), and Shopify (NYSE: SHOP), among others. In the case of Block, the company formerly known as Square, the firm has significant strides in crypto, but there is much more to its broader investment thesis. That includes the impressive growth of Cash App, buy now pay later exposure and more.
While Shopify stock is struggling this year due to weakness in e-commerce stocks, the company remains a major player in the online shopping and fintech spaces through enviable platform positioning and influence to expand digital consumerism.
“Similarly, the spread of technology can benefit both physical and digital consumerism, as the sharing economy deepens into everyday life and the creative economy grows. While leaning on technological innovation may be intuitive, we believe the speed and depth of its application will allow for many selective global opportunities,” added Goldman Sachs.
Some of the risk associated with investing in futuristic financial stocks is offset in FDIG through the fund’s exposure to Mastercard (NYSE: MA) and Visa (NYSE: V), the latter of which is a member of the Dow Jones Industrial Average. Those are profitable, cash-rich companies and combine for about 5.6% of the FDIG portfolio.
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The views and forecasts expressed in this document are solely those of Tom Lydon and may not be true. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation of any product.