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This is a segment from yesterday’s Forward Guidance newsletter. To read full editions, subscribe.
Dominic Rizzo, who manages T. Rowe Price’s new technology-focused ETF, is “a big believer” in crypto, DeFi and stablecoins.
“Over the long run, I think there are going to be plenty of applications that utilize the technologies,” he said. “Unfortunately, right now — as a public market equity investor — there are actually not a lot of ways to get exposure to those trends (that fit my investment frameworks), outside of Coinbase.”
0.89% of the fund’s total holdings are in COIN, as of Tuesday. A drop in the bucket when compared to the roughly 30% combined positions in Nvidia, Apple and Microsoft, sure — but still a component.
T. Rowe Price’s technology ETF invests in companies across the hardware, software, internet and payments segments. Within those categories, Rizzo said Coinbase fits his four-part checklist of being a “linchpin technology”; innovating in a secular growth market; having improving fundamentals; and sporting a reasonable valuation.
Coinbase is “a unique animal,” Rizzo added. Outside of the trading business, he noted its custodian status to most of the US crypto ETFs, as well as its partnership with USDC issuer Circle and its layer-2, Base.
COIN was up 40% year to date, as of Tuesday’s close.
“It comes to this thesis on Coinbase being kind of the ultimate linchpin for the on- and off-ramp of crypto into TradFi and vice versa,” Rizzo explained.
Other crypto-related stocks (MicroStrategy or bitcoin miners, for example) don’t fit that “linchpin” definition, he said — meaning they’re mission-critical to the success of their customers or make users’ lives dramatically better.
Rizzo would like more crypto equity opportunities, and believes more will come.
“We’re trying to make sure we’re on top of it,” he said, “because I think this is such a big trend.”