Cryptocurrency is finally mainstream. Everyone from celebrities to the U.S. president are in the game. So are many, many investors and traders. Some are there for a quick flip, while others are committed to it as essentially an investment lifestyle.
I’m not here to solve the crypto arguments, such as whether it will eventually be a true medium of exchange, a store of value, a fiat currency replacement, or the scam of the century. I just want to make money and not lose big along the way.
But crypto is a different animal. It trades differently, and 24/7. It charts differently (to me, at least), as it is subject to reversals in either direction at any time, and seemingly for any reason. It is as much a supply-demand play as any other asset I know, even gold (GCZ25). And that makes it a nice trading vehicle. For me personally, it’s done in small sizes.
One reason for that is I’m a risk manager above all else. And Bitcoin (BTCUSD), the leading crypto asset, has a habit of dipping 20% with some frequency. In just the past 5 years, it has doubled in a flash, yet also spent nearly 3 years going nowhere. It’s experienced no shortage of volatility along the way.
What Does Crypto Look Like Now?
While crypto assets galore now exist to trade, my focus here will be on three ETFs, all from iShares, which help me track a trio of crypto areas: iShares Bitcoin Trust ETF (IBIT), iShares Ethereum Trust ETF (ETHA), and iShares Blockchain and Tech ETF (IBLC), which invests in stocks related to the cryptocurrency business.
Here are the three of them, side by side. They have delivered different degrees of “awesome” in terms of return over the past 6 months. But that’s in the past. And like all past performances, there’s only one guarantee: that I can’t have it unless I already own it!
So let’s look at the charts and see if there’s any daylight between these. And, if they stand a good chance of continuing their torrid pace.
Starting with Bitcoin, I see an unmistakable downtrend in progress. That could be temporary, part of one of those “pause that refreshes” moments. The 20-day and 50-day moving averages are now heading south, and the PPO at the bottom is just crossed below the 0 line. All conspire to make a “high risk versus reward” situation to me.
Ethereum (ETHUSD) is a similar situation chart-wise. However, it is coming off a triple in price since the April low. Translation: there’s still some explosive upside potential. However, it’s a long way down that mountain.
Crypto Stocks Instead of Tokens? This ETF Offers It.
The best-looking of the three is the only ETF in the trio that contains stocks. Here are the top 10 holdings out of 48 total. They account for about two-thirds of the total assets in IBLC.
The portfolio is not cheap, valuation wise. It sells for more than 10x trailing sales. But I consider it the best chart of the three as it stands currently.
As we see above, IBLC’s chart is not indicating a deeply discounted situation. But the PPO has some budding momentum, having just crossed over to the upside (black line above blue line, and above the zero mark).
Crypto is driven by many factors, including the ones mentioned above. But traders can add an edge to their approach to this “new kid on the blockchain” by including technical analysis, and looking across multiple areas of crypto investing.
