Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
Has crypto industry crossed the Rubicon? Launching crypto theme basket
Peter Garnry
Chief Investment Strategist
Summary: Coinbase's listing yesterday was overall a success despite the close was below the open price, but relative to the initial reference price at $250 per share the direct listing was a success for the world's largest cryptocurrency exchange. We take a look at what it means for the industry and potential regulation, but also the key risks to be aware of in Coinbase. In addition, we are launching a new theme basket focusing on crypto and blockchain companies. This basket provides inspiration and alternatives for investors that want exposure to cryptocurrencies but do not want to own ETNs or physical cryptocurrencies.
When Bitcoin futures launched in December 2017 it was a huge milestone for the industry and the institutional finance industry’s validation of cryptocurrencies. Then followed almost a three-year hibernation of cryptocurrencies before the Bitcoin prices took off again. The price increases have dramatically increased trading activity of cryptocurrencies and mining activity increasing demand for computer chips. It all culminated yesterday with the direct listing of the world’s largest cryptocurrency exchange Coinbase with its shares opening at $381 per shares up 52% from the $250 reference price set in the initial auction before the first trade. Coinbase shares traded as high as $429.54 below trading lower throughout the session closing at $328.28.
The crypto and blockchain theme basket comes with very high risk
With the listing of Coinbase the size a matureness of the crypto industry has finally reached a level where we can introduce a crypto and blockchain theme basket. The basket is our smallest to date consisting of only 18 companies across segments such as trading exchange, crypto services, crypto mining, investment holdings, blockchain applications, and crypto mining equipment.
| Name | Segment | Market Cap (USD mn.) | Sales growth (%) | P/B | Diff to PT (%) | Correlation to BTC price |
| Coinbase Global Inc | Crypto exchange | 65,393 | 139.3 | 64.5 | 52.3 | NM |
| Signature Bank/New York NY | Bank | 13,236 | 1.7 | 2.1 | 9.8 | 0.24 |
| Galaxy Digital Holdings Ltd | Crypto services | 9,025 | NA | 10.6 | -5.1 | 0.49 |
| MicroStrategy Inc | Investment firm | 7,051 | -1.1 | 12.7 | -5.0 | 0.54 |
| Marathon Digital Holdings Inc | Crypto mining | 4,246 | 267.6 | 11.3 | 16.4 | 0.43 |
| Riot Blockchain Inc | Crypto mining | 4,219 | 76.7 | 14.2 | 27.6 | 0.64 |
| Silvergate Capital Corp | Bank | 3,320 | NA | 9.0 | 15.6 | 0.60 |
| Voyager Digital Ltd | Crypto broker | 3,114 | 2,555.5 | 3,711.2 | 50.6 | 0.23 |
| Canaan Inc | Mining equipment | 2,429 | -68.5 | 383.3 | NA | 0.55 |
| Monex Group Inc | Financial institution | 2,383 | 21.1 | 3.2 | -15.2 | 0.51 |
| Hive Blockchain Technologies Ltd | Crypto mining | 1,279 | 12.5 | 22.1 | NA | 0.59 |
| Argo Blockchain PLC | Crypto mining | 1,052 | 1,027.0 | 28.3 | NA | 0.49 |
| Hut 8 Mining Corp | Crypto mining | 769 | -50.3 | 6.9 | 70.5 | 0.43 |
| Bit Digital Inc | Crypto mining | 685 | NA | 14.8 | NA | 0.35 |
| Bitfarms Ltd/Canada | Crypto mining | 636 | 7.0 | 25.3 | 45.7 | 0.57 |
| Bitcoin Group SE | Crypto broker | 349 | -44.4 | 9.6 | NA | 0.53 |
| Future FinTech Group Inc | Blockchain e-commerce | 274 | NA | 8.0 | NA | 0.24 |
| DMG Blockchain Solutions Inc | Investment firm | 198 | NA | 20.5 | NA | 0.33 |
Source: Bloomberg and Saxo Group
The basket does not have a five-year history due to lack of quality names going back five years. Total return has not surprisingly been strong the past year and year-to-date due to the rally in crypto prices, but the basket has recently been a bit under pressure. Since this is an emerging industry and something that is a bit difficult for many investors to grasp, we will soon have a piece out by our crypto analyst going through the different companies in this basket.
The three main risk sources for this basket are new regulation which could severely impact further adoption of cryptocurrencies, valuations across crypto related companies are quite aggressive which makes these stocks more sensitive to changes in sentiment, and finally the Bitcoin price itself is a key risk. The average correlation to Bitcoin prices is around 0.45 which means that the returns of this basket will fluctuate with Bitcoin prices.
Previous notes on equity themes:
The commodity sector and the reflation trade in 2021
Bubble stocks go into ‘hyperdrive’ mode
Introducing Next Generation Medicine basket
Updating our Green Transformation theme basket
Launching Saxo’s E-commerce theme basket as more growth lies ahead
Be careful of bubble stocks and updating bubble methodology
Gaming is a long-term winning industry
Black energy takes the lead as green transformation stocks turn negative
Is the market getting too excited about travel stocks?
India has tremendous upside in the 21st century
It takes $300bn to join the mega cap club
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)