5 crypto-focused stocks to watch as digital assets explode

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Digital assets and cryptos are taking off, and it’s either ‘get on board or be left behind’. That’s according to JP Lee, ETF product manager at VanEck, who sees great potential for the space. Here are five stocks to watch as the digital asset revolution continues. See more stories on the Insider business page.

Cryptocurrencies and digital assets have exploded in value and popularity over the past 18 months. And it’s not too late for investors to take advantage of the trend anyway.

“The train has left the station and you have to either ‘get on board or be left behind’,” JP Lee, ETF product manager at VanEck, told Insider in a recent interview.

Digital assets like bitcoin and ethereum caught the attention of the general public during the pandemic as the world went online and the Federal Reserve rapidly increased the money supply.

Interest in cryptocurrencies intensified after a pair of CEOs who double as bitcoin bulls, MicroStrategy’s Michael Saylor and Tesla’s Elon Musk, added bitcoin to their companies’ balance sheets. Amazon and Walmart have also reportedly taken steps to embrace cryptocurrencies.

As crypto gained support from investors, institutions and businesses, asset managers, brokerage houses and the biggest banks on Wall Street had no choice but to follow suit.

“JP Morgan, Morgan Stanley, Goldman Sachs, Schwab, Fidelity, Vanguard, everyone who five years ago was like, ‘We’re not going to touch this’, now they say’ OK, well, we we have to play ball, or else this whole generation of ideas, actions, investments, will operate in a different sphere from ours, ”said Lee. “They have to play ball or else they risk letting this thing get so far away from them that they are no longer part of the conversation.”

Digital assets have a wide range of use cases, but some aspire to build a decentralized financial system that promises to be a safe haven from financial institutions like banks and governments. Some attribute mistrust of financial intermediaries to the 2008 financial crisis.

“There is this huge shift in the way young people view investments and the world that is different from older generations,” Lee said. “So if you’re at the top of the head in one of these traditional financial companies, you have to follow what people are doing or they’ll just just build it up themselves.”

Cryptos can present real opportunities that until now have been moot, Lee said, adding that their greatest strengths are their inherent qualities such as transparency and the ability to be audited.

But digital assets are in many ways a Rorschach test, people see what they want to see, whether it’s a new type of asset that can transform business and transactions, or just a fancy fashion and a bubble where people pay tens of millions of dollars for digital. art.

“It’s a generational thing,” Lee said. “If you are under 40, you automatically and inherently understand that something that is purely a digital item, a digital asset, can be of value. If you are over 40, sometimes it takes more education to understand what we’re actually talking about. “

Growth in digital assets is still “super, super early,” but investors should consider diversifying their portfolios by investing in stocks with exposure to the digital economy, Lee said.

VanEck’s Vectors Digital Transformation ETF (DAPP) allows clients to increase their exposure to the digital economy without opening a separate account on a crypto exchange. The exchange-traded fund is down about 18% since launching in mid-April at the height of the crypto boom, but is up 34% since mid-July.

Below are five pure digital asset stocks that are key components of the VanEck Vectors Digital Transformation ETF. All companies must derive at least 50% of their income from digital assets to be included in the ETF. Robinhood (HOOD), a brokerage firm popular with millennials, is not in the fund because only about 40% of its income comes from crypto, Lee said.

Along with each name is the ticker and percentage of weight in the DAPP, along with Lee’s thesis for each company, a slightly edited analysis from Lee via an interview and recent research note, and a direct quote from his note.

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