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Cryptocurrency Collides With Direct Indexing

Photo by M. B. M. / Unsplash

Today is Wednesday, August 18, 2021.

When Cryptocurrency Collides With Direct Indexing

Direct indexing, the opportunity for an investor to own the underlying assets of an index, is gaining momentum in the market. Someday, this strategy could be applied to cryptocurrency.

Present Day: Currently, direct indexing allows investors to own individual stocks within an index. It’s a way to build a personalized portfolio that gets a similar return to the index.

Not Just Stocks: This strategy could be replicated among the assets of other index funds, including bonds and precious metals such as gold. But, this could apply to other assets in indexes, such as cryptocurrency in the future.

A Step Back: In the past few years, several cryptocurrency indexes have already launched. Examples include the Nasdaq Crypto Index, the S&P Bitcoin Index, the S&P Etherum Index, and the New York Stock Exchange Bitcoin Index. The Hashdex Crytpo ETF, which is based on the Bermuda Stock Exchange, tries to track the Nasdaq Crypto Index.

Final Thoughts: Given the rising popularity of direct indexing and cryptocurrency among investors, it is only a matter of time before both areas cross paths.


Notable Earnings Today: Target (NYSEL TGT), Lowe`s Companies (NYSE: LOW), TJX Companies (NYSE: TJX), Nvidia Corporation (Nasdaq: NVDA), Cisco Systems (Nasdaq: CSCO), Red Robin Gourmet Burgers (Nasdaq: RRGB).

Notable IPOs Today: Northern Lights Acquisition Corp. Class A Common Stock (Nasdaq: NLIT).

Notable Equity Crowdfunding Campaigns Ending Today: N/A

Notable Economic Events Today: Building Permits (8:30 a.m.), Housing Starts (8:30 a.m.), FOMC Minutes (2:00 p.m.).

Alibaba Establishes NFT Market

E-commerce giant Alibaba Group Holding (NYSE: BABA) launched an online marketplace for non-fungible tokens, or NFTs, where artists can sell digital rights to content via a Chinese copyright protection blockchain.

Definition: An NFT is a unique digital asset that represents real-world assets, including collectibles, art, music and videos.

Peak 2021: The NFT market has surged in popularity. A Reuters study found that NFT sales reached $2.5 billion in the first half of 2021, way better than the $13.7 million in sales during the first half of 2020.

Stock: Despite the positive NFT news, Alibaba’s stock dropped over 4% Monday.

Trend: Tencent (OTCMKTS: TCEHY), the other big tech company in China, launched an NFT platform two weeks ago.

Final Thoughts: NFTs seem more legitimate now that large companies are jumping on the bandwagon.

Palantir Invests $50 Million in Gold Bars

Software company Palantir Technologies (NYSE: PLTR) purchased $50.7 million in 100-ounce gold bars, according to a regulatory filing last week.

Reasoning: In an interview with Bloomberg, Palantir COO Shyam Sankar reportedly commented that “you have to be prepared for a future with more black swan events,” which means an event that is unpredictable.

Bigger Picture: The company previously said that it would consider holding other assets such as cryptocurrency on its balance sheet.

Options: So, Palantir essentially purchased gold bars as a hedge in case of bad economic conditions. Investors often buy assets such as gold for the same reason. However, instead of buying gold bars, investors usually turn to gold funds.

Final Thoughts: In the past week, Palantir’s stock is up about 5%. During that same time, the price of gold jumped nearly 8%.

Trends to Watch

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