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Crypto stocks are soaring as Bitcoin outlook improves

Writer's picture: Chris Chris

Cryptocurrency-related stocks are doing well as Bitcoin and most altcoins have recovered in the past few days.


Bitcoin has rebounded to $65,700, up by over 34% from its lowest level in August, while the total market cap of all coins has soared to $2.3 trillion. 


The closely watched crypto fear and greed index has jumped to the neutral point at 56 and could re-enter the greed zone of 60 soon. 


Crypto stocks are soaring


Coinbase, the biggest crypto exchange in the US, soared to $196, its highest point since August 27 and 35% above its lowest point in September. 


Bitcoin mining stocks have also done well this month. Marathon Digital, the biggest Bitcoin mining company, rose to $18, substantially higher than last month’s low of $13.17. 

CleanSpark has jumped to $10.8, while Core Scientific (CORZ) has jumped to a record high of $13.4.


CORZ, which almost went bankrupt, has surged because of its recent focus on artificial intelligence (AI). Other Bitcoin miners like Riot Platforms, Cipher Mining, and Iris Energy have all rebounded. 


Most of the gains, however, have happened in MicroStrategy, a company that has accumulated over 252k Bitcoins worth over $16 billion. Its stock has jumped by over 519% in the last twelve months, giving it a market cap of over $40 billion. 


The company’s valuation has surged by over 1,300% since it started accumulating Bitcoins a few years ago. This means that it has outperformed the S&P 500 and Nasdaq 100 indices.


Leveraged ETFs linked to MicroStrategy have also soared. The T-Rex 2X Long MSTR Daily Target ETF (MSTU) and the Defiance Daily Target 1.75X Long MSTR ETF (MSTX) have soared by over 88% and 127% in the last 30 days.


This price action is because these ETFs aim to generate 2x and 1.75x the daily return of the MicroStrategy stock.


Bitcoin to determine the price action


Crypto-focused stocks like Coinbase, and MicroStrategy, and Bitcoin mining firms like Riot and CleanSpark’s next move will depend on Bitcoin’s move. 


There are rising odds that Bitcoin will have a bullish breakout before the year ends. Polymarket traders have placed 62% odds of Bitcoin rising and retesting its all-time high this year. A move above the all-time high, will increase the chances of the coin rising to $100k, according to Michael Novogratz, the billionaire CEO of Galaxy Digital.


Second, investors are getting interested in Bitcoin, as evidenced by the ongoing ETF inflows. All Bitcoin ETFs added over $300 million in assets last week, bringing the total inflows to over $18.8 billion. Many hedge funds like Citadel, Millenium, and Susquehanna have all invested in Bitcoin. 


Blackrock, the biggest asset manager in the world with over $11 trillion in assets, has made the case for Bitcoin. In a white paper, the analysts noted that Bitcoin was one of the best diversifiers in the industry today. 


It is uncorrelated with stocks and is highly liquid since it trades each day. They also noted that Bitcoin outperformed other assets in periods of rising geopolitical issues. They cited its performance in the six months since the start of Covid-19, Russia’s war in Ukraine, and October 7th attack in Israel.


Bitcoin will benefit as the Federal Reserve is set to continue cutting interest rates. It has slashed rates by 0.50%, and analysts see more cuts coming in the last two meetings of the year.

Bitcoin Price
Bitcoin Price

Bitcoin also has strong technicals. As shown above, the coin has formed a falling broadening wedge chart pattern and remained above the 50-day and 200-day Exponential Moving Averages (EMA). Most recently, it avoided forming a death cross, which would have led to more losses.


Bitcoin and crypto stocks


Bitcoin has an important impact on crypto-related stocks for a few reasons. For MicroStrategy, Bitcoin’s surge leads to a higher valuation of the coins in its balance sheet. 


Bitcoin mining companies like MARA, CleanSpark, and Riot also own thousands of coins in their balance sheet. Marathon owns 26,842 coins worth over $1.76 billion, while Riot has 10,420 coins valued at over $682 million. Additionally, higher prices lead to higher margins when they sell their coins. 


Higher Bitcoin prices lead to robust altcoin prices, which in turn leads to higher volume, benefiting exchanges like Coinbase and Binance.


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HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.

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