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Commerzbank’s curious way to get bitcoin exposure

Recommended shares show low correlation with bitcoin moves.

Want to own bitcoin, but too embarrassed to tell your friends you’ve eschewed traditional assets for a currency with a checkered past as an illicit means of exchange? Too thrifty to buy a bitcoin fund that typically trades at a substantial premium to its net asset value?

Commerzbank may have a solution for you — though it doesn’t appear to be a very efficacious one.

The firm is marketing a structured note that allows investors “to get exposure to bitcoin without actually investing in it directly.” The underlying basket consists of an equal-weighted shares of Shopify, DISH Network and Microsoft.

These companies are “all active in blockchain technology” — according to the product summary for non-US customers. The common thread tying these firms to bitcoin: They facilitate transactions in the digital currency.

The catch is that none of the stocks have displayed anything resembling a meaningfully strong relationship with bitcoin’s price movements during the past three years. The 63-session correlation between the daily change in the digital currency and any of those equities has never exceeded 0.35. A correlation closer to one suggests something trades in lockstep with another.

A spokeswoman for Commerzbank declined to comment.

Surprisingly, chipmakers like Nvidia and Advanced Micro Devices, which have seen demand for their graphics cards buoyed by rising interest in mining cryptocurrencies, aren’t included in this basket.

“Bitcoin has been the top-performing currency in the world in six of the past seven years, climbing from zero to a new high value of about $2,700,” the Aug. 7 client recommendation says. “With bitcoin hitting record high prices recently, there are other ways of investing in the cryptocurrency and the technology behind it without buying it outright.”

If only this were one of those.

© 2017 Bloomberg

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