Clarity Act Failure Could Boost Leveraged ETFs Like CONX
Crypto prices plummeted on Tuesday following the failure of the Clarity Act to advance out of the Senate, dragging down cryptocurrency-related equities. Coinbase Global (COIN) shares fell by 10.1% in a one-day decline that will undoubtedly impact the Direxion Daily COIN Bull 2X ETF (CONX), which aims to deliver 200% of the daily performance of Coinbase shares.
However, experts believe that this downturn may be an opportunity for investors to watch CONX and other leveraged ETFs. According to Morningstar analyst Michael Miller, the share price of COIN is still tied to cryptocurrency market activity, which means that if bitcoin puts in a bottom and starts a new bull market soon, both COIN and CONX would benefit.
Morningstar recently increased its fair value estimate on Coinbase shares to $168 from $150. Miller noted that the increase comes from higher cryptocurrency trading and custody revenue projections as well as an update to the model's time value of money calculation.