Buy Bitcoin as 'retail trading sentiment is screaming risk-on': Bernstein

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 is attempting a break out 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.

Bitcoin-related ETFs registered $2 billion in fresh purchases last week, a surge that has pushed 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 are increasingly driving demand for Bitcoin spot markets as asset managers have shifted their distribution focus toward wealth advisors and wirehouses.

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%, and Marathon Digital Holdings Inc (NASDAQ:MARA ) by 21%, compared to Core Scientific Inc (NASDAQ:CORZ ) which 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.

Meanwhile, brokerage platform Robinhood (NASDAQ:HOOD ) saw a marked increase in trading revenues, which further confirms 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 have surged by approximately 50% year over year, and its crypto trading revenues have skyrocketed by 160%.

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. 

Source: Investing.com