Bernstein Analysts Recommend Bitcoin Exposure

Investing.com — Bernstein analysts believe investors should build long exposure in Bitcoin through exchange-traded funds (ETFs) or Bitcoin-related equities as the world’s largest cryptocurrency attempts a breakout to record highs ahead of the US election.

Bitcoin's Market Behavior

“Bitcoin is attempting a breakout of the $70K resistance (one more time) and like other risk-on markets, is interpreting rising Trump odds as bullish for crypto,” analysts said in a note.

“Also, with clear policy statements supporting crypto from the Harris campaign, the market seems less worried about downside and finds it attractive to bid here. Bitcoin ETF inflows, crypto equity markets and retail trading sentiment is screaming ‘risk-on’,” they added.

Surge in Bitcoin ETF Inflows

Bitcoin-related ETFs registered $2 billion in fresh purchases last week, pushing the year-to-date (YTD) inflows to a substantial $20.5 billion, with assets under management now exceeding $63 billion.

Bernstein analysts suggest that these inflows drive demand for Bitcoin spot markets as asset managers have shifted their distribution focus toward wealth advisors and wirehouses.

Performance of Bitcoin-focused Miners

According to the firm's note, Bitcoin-focused miners have notably outperformed their AI-focused counterparts in October.

• Shares of Riot Platforms (NASDAQ:RIOT) rose by 37%
• CleanSpark (NASDAQ:CLSK) by 43%
• Marathon Digital Holdings Inc (NASDAQ:MARA) by 21%
• Core Scientific Inc (NASDAQ:CORZ) saw a 7% increase in the last 30 days.

“Outperformance of Bitcoin-focused miners reflects underlying bullish sentiment for the Bitcoin asset class vs. the compute/energy thesis, which investors have favored so far,” Bernstein analysts point out.

Brokerage Trends and Retail Sentiment

Meanwhile, brokerage platform Robinhood (NASDAQ:HOOD) saw a marked increase in trading revenues, further confirming a 'risk-on' retail sentiment.

With expectations of further rate cuts by the Federal Reserve, Robinhood's active trader base expanded by 10% quarter over quarter. The company's equity revenues surged by roughly 50% year over year, while its crypto trading revenues skyrocketed by 160%.

Rise of Meme Coins

Lastly, Bernstein analysts also highlight a resurgence in the popularity of meme coins among retail investors. Over the past six months, the combined market capitalization of meme coins has tripled to around $66 billion.

“This is the fastest growing coin category within crypto and, whether we like it or not, retail ‘normies’ find memes funny, relatable and socially engaging, leading to natural memetic growth of these tokens,” Bernstein’s note states.

DOGE/USD and Investing.com Shiba Inu Index have surged more than 60% and 80% in 2024, respectively.