Has crypto industry crossed the Rubicon? Launching crypto theme basket Has crypto industry crossed the Rubicon? Launching crypto theme basket Has crypto industry crossed the Rubicon? Launching crypto theme basket

Has crypto industry crossed the Rubicon? Launching crypto theme basket

Equities 5 minutes to read
Picture of Peter Garnry
Peter Garnry

Head of Equity Strategy

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.

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Source: Saxo Group

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.

NameSegmentMarket Cap (USD mn.)Sales growth (%)P/BDiff to PT (%)Correlation to BTC price
Coinbase Global IncCrypto exchange65,393139.364.552.3NM
Signature Bank/New York NYBank13,2361.72.19.80.24
Galaxy Digital Holdings LtdCrypto services9,025NA10.6-5.10.49
MicroStrategy IncInvestment firm7,051-1.112.7-5.00.54
Marathon Digital Holdings IncCrypto mining4,246267.611.316.40.43
Riot Blockchain IncCrypto mining4,21976.714.227.60.64
Silvergate Capital CorpBank3,320NA9.015.60.60
Voyager Digital LtdCrypto broker3,1142,555.53,711.250.60.23
Canaan IncMining equipment2,429-68.5383.3NA0.55
Monex Group IncFinancial institution2,38321.13.2-15.20.51
Hive Blockchain Technologies LtdCrypto mining1,27912.522.1NA0.59
Argo Blockchain PLCCrypto mining1,0521,027.028.3NA0.49
Hut 8 Mining CorpCrypto mining769-50.36.970.50.43
Bit Digital IncCrypto mining685NA14.8NA0.35
Bitfarms Ltd/CanadaCrypto mining6367.025.345.70.57
Bitcoin Group SECrypto broker349-44.49.6NA0.53
Future FinTech Group IncBlockchain e-commerce274NA8.0NA0.24
DMG Blockchain Solutions IncInvestment firm198NA20.5NA0.33

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.

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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

Green transformation will drive high growth in batteries

China's future sits in the consumer and technology sectors

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