Certain crypto-related stocks, such as Coinbase Global (COIN), MicroStrategy (MSTR), Riot Blockchain, Inc. (RIOT), and Marathon Digital (MARA), have outperformed the notable rally of Bitcoin (BTC) and other major cryptocurrencies in 2023. This is despite the fact that regulatory bodies in the United States are constantly scrutinizing the cryptocurrency industry.
This is why:
This year, the price of bitcoin has been on an impressive upward trajectory. On the 20th of July, the price of Bitcoin rose nearly 1% in the space of a day, reaching $30,279 at its highest point.
During the course of the last month, the price of the most prominent cryptocurrency has been moving in a range that encompasses the key levels of $30,000 and $31,000.
After positive reactions from the market in response to the Ripple-SEC ruling, the price of Bitcoin surpassed $31,750 and reached a new high for the past 13 months last week. As a result of the ruling, the cryptocurrency token was reclassified as a commodity rather than a security. This was viewed as a positive development for the digital asset industry as a whole.
Additionally, there was a general trend toward an increase in price for Ethereum, which is the second-largest cryptocurrency. In addition, the prices of meme coins such as Dogecoin (DOGE) and Shiba Inu (SHIB) saw significant increases.
Bitcoin has seen remarkable gains of almost 80% so far this year, despite the fact that its price has been volatile, and it is still trading above its 200-day moving average, which indicates that there is potential for further upward movement.
Why is Bitcoin’s price going up so much?
The decision made by the Federal Reserve in June to hold off on raising interest rates has been partially credited with contributing to the meteoric rise in price of bitcoin.
It is anticipated that the central bank will maintain a less aggressive approach to its monetary policies as price pressures have been easing for the 12th consecutive month. This is due to the fact that price pressures have been cooling down for the 12th consecutive month.
This temporary halt to rate hikes is beneficial for high-risk assets, such as digital coins and technology stocks. The rising interest shown by major traditional financial institutions in the cryptocurrency space was the factor that had the most significant impact, however, on the rally in the price of bitcoin.
BlackRock, which is a prominent financial entity, has advocated for the establishment of a spot Bitcoin ETF by regulators, whereas Charles Schwab and other financial players have supported the emergence of a new cryptocurrency exchange that goes by the name EDX Markets.
Crypto stocks that did better than Bitcoin during its rally
It is interesting to note that several stocks related to cryptocurrencies have performed better than Bitcoin in the current year. This is because Bitcoin is the most well-known cryptocurrency.
The increase in the number of institutional players who are adopting digital assets is one factor that has contributed to the rise in the share prices of these crypto-related stocks. In addition, these stocks typically have a higher level of volatility, which means that they perform exceptionally well during upward trends of major tokens but poorly during downward trends of those same tokens.
Coinbase, a cryptocurrency exchange, and MicroStrategy, a business that develops software, have both been among the top performers so far this year. Coinbase has seen year-to-date gains of 186.1%, and MicroStrategy has seen gains of 211.4%.
The share price of Coinbase has been boosted by favorable regulatory developments and new partnerships with prominent financial institutions, particularly in the past month. These factors have had a particularly strong impact.
The earnings growth rate forecast for the current year for the company is at 78.1%. In addition, over the course of the previous 60 days, the Zacks Consensus Estimate for COIN’s current-year earnings has increased by 10.4%. Coinbase is currently a Zacks Rank #3 (Hold) company.
On its balance sheet, MicroStrategy presently has more than $4 billion worth of bitcoin in its possession.
The increase in the company’s profits forecast for this year is approximately 125%. In addition, over the course of the past three months, the Zacks Consensus Estimate for MicroStrategy’s earnings for the current fiscal year has experienced a remarkable increase of over 1000%. The current Zacks Rank for MicroStrategy is #3.
The rise in the cost of conducting transactions has had a beneficial effect on the financial performance of cryptocurrency mining companies, which has led to significant price increases in the companies’ underlying shares.
Additionally, the price of Bitcoin has lagged behind the performance of these mining companies by a sizable margin, which is primarily attributable to the leveraged beta effect.
The stock prices of two prominent cryptocurrency mining companies, Riot Platforms and Marathon Digital, have skyrocketed this year, with Riot Platforms’ price increasing by an astounding 444.8% and Marathon Digital’s price increasing by 398.8%, respectively.
It is anticipated that Riot Platforms and Marathon Digital will, respectively, experience earnings growth rates of 38.9% and 250% over the course of the forthcoming year. The Zacks Rank for both of these companies’ shares is currently #3.