It wasn’t that long ago when Wall Street shoved ESG down everyone’s throat.
Fresh off the post-COVID boom, asset managers packaged carbon credits, renewables, and “green” investments as if they were the only game in town.
The marketing was slick, the flows were massive… and the results were ugly.
Most of these ESG products have been exposed for what they are: a giant fee racket.
Carbon credits were no exception.
What was pitched as a pristine growth story has since turned into a multi-year disaster.
The KraneShares Global Carbon Credit ETF $KRBN has been cut in half since its peak, and investors have long since walked away.
But now? Something interesting is happening…
Carbon Credits are breaking a multi-year downtrend
The KraneShares Global Carbon Credit ETF provides broad exposure to the most traded carbon credit futures contracts.
Many of the world's largest corporations are active in these markets, but that hasn't made it a good investment.
KRBN has spent the last three years in a brutal downtrend. Every rally attempt has been met with lower highs, lower lows, and relentless selling pressure.
That’s finally starting to change.
For the first time since 2021, prices are attempting to break above the downtrend line that’s kept a lid on this market for years.
This doesn’t mean carbon credits are suddenly a bull market leader. But it does mean the relentless bleed could be ending - and if this breakout holds, it would mark the first constructive technical development in a long time.
A textbook short-term base
Over the short term, the KraneShares Global Carbon Credit ETF is flirting with the resolution of a textbook bearish-to-bullish reversal pattern and new 52-week highs.
It's on the cusp of a brand-new primary uptrend.
However, KRBN itself isn’t a trading vehicle for us.
Liquidity is thin, and carbon credits as a standalone asset aren’t where we want to put risk on the table.
This story matters because it could shed light on the renewable utilities that generate revenue by selling carbon credits to corporations.
If the credits themselves stop bleeding and start trending higher, the companies positioned in this space will have a strong fundamental tailwind.
That’s precisely where we’re finding opportunity right now.
This week’s Commodities Trade of the Week zeroes in on one of the best setups we’ve seen in the group, but only members of ASC Gold Rush have access to it.
