Investment Guide: Leveraging Bitcoin's Rally Through Stocks and ETFs
$Bitcoin (BTC.CC)$ skyrocketed above $89,000, lifting its market value over $1.75 trillion and overtaking silver to rank as the world's eighth-largest asset.
Cryptocurrency-linked stocks also rallied sharply. In the last five trading sessions, $Coinbase (COIN.US)$ and $CleanSpark (CLSK.US)$ surged over 70%, $Riot Platforms (RIOT.US)$ and $MARA Holdings (MARA.US)$ advanced more than 60%, while $MicroStrategy (MSTR.US)$ gained upwards of 50%.
The crypto market rally has been fueled by Donald Trump's election as US President. Trump has promised a more lenient approach to cryptocurrencies and intends to appoint crypto-friendly figures to key positions.
Bitcoin Bull Market Set to Persist
Bitcoin has surged 110% this year, supported by strong demand for Bitcoin spot ETFs and a Federal Reserve interest rate cut.
Data from crypto options exchange Deribit shows investors are betting on Bitcoin reaching $100,000 by year-end. Prediction market Polymarket indicates a 68% probability of Bitcoin hitting $100,000 by 2024.
Bitwise Chief Investment Officer Matt Hougan noted that while more investors are eager to join the rally, long-term Bitcoin holders have not sold below the $100,000 mark.
In our recent article, "Bulls Are Eyeing Bitcoin's Next Target: $120K," some analysts predict Bitcoin could reach $120,000 by spring next year and potentially $200,000 by the end of 2025.
Stock
MicroStrategy: Leading Bitcoin Holder
MicroStrategy Inc., the largest corporate Bitcoin holder, is intensifying its cryptocurrency acquisition strategy. The company has accumulated nearly 280,000 Bitcoins after purchasing about 27,200 Bitcoins for $2.03 billion in its largest acquisition since December 2020. This brings MicroStrategy's total Bitcoin investment to $11.9 billion, with an unrealized profit of approximately $11 billion.
In its third-quarter earnings report on Oct. 30, MicroStrategy unveiled a "21/21 Plan," aiming to raise $42 billion over three years—split evenly between equity and bonds—to expand its Bitcoin holdings further.
Shares of $MicroStrategy (MSTR.US)$ have surged 438% this year, significantly outperforming Bitcoin’s 110% rally. This outperformance is attributed to two factors. First, MicroStrategy acts as a proxy for Bitcoin investment, appealing to investors who cannot directly purchase the cryptocurrency. Second, with rising Bitcoin prices, investors anticipate improvements in MicroStrategy’s earnings forecasts and valuation multiples, highlighting the differing valuation dynamics between equities and digital assets.
Coinbase: Major Cryptocurrency Exchange
$Coinbase (COIN.US)$, a leading cryptocurrency exchange in the U.S., offers direct buying and selling services for digital currencies, generating revenue through transaction fees among other means.
Its stock has surged 86% this year, influenced not only by Bitcoin's price fluctuations but also by overall market activity, investor sentiment, and regulatory policy. When the broader cryptocurrency market performs well and trading activity increases, Coinbase's transaction volume and revenue are likely to rise, potentially driving its stock price higher.
MARA, RIOT and CLSK: Bitcoin Mining Firms
$MARA Holdings (MARA.US)$ and $Riot Platforms (RIOT.US)$, key players in Bitcoin mining, are leveraging their extensive operations to mine and sell Bitcoin. Marathon holds over 26,800 Bitcoins, while Riot holds more than 12,400.
Marathon's shares have climbed 6.5% this year, whereas Riot's have slid 3.2%. In the near term, their profits are highly responsive to Bitcoin price fluctuations due to relatively stable mining costs. However, long-term profitability and share performance could be pressured by rising mining costs, competitive computational demands, or a downturn in Bitcoin prices or increased mining difficulty.
Besides, $CleanSpark (CLSK.US)$ focuses on delivering technical support and services for cryptocurrency mining, offering efficient equipment and optimizing processes. Its performance is linked to the health of the crypto mining industry. When the market thrives and the sector expands, demand for CLSK's services rises, driving up its stock. This year, CLSK shares have jumped 60%.
ETFs
Beyond Bitcoin-related stocks, a Bitcoin spot ETF offers another way to capitalize on the cryptocurrency's rally. The top three Bitcoin ETFs by size are $iShares Bitcoin Trust (IBIT.US)$, $Grayscale Bitcoin Trust (GBTC.US)$, and $Fidelity Wise Origin Bitcoin Fund (FBTC.US)$.
In early 2024, the SEC approved 11 Bitcoin spot ETFs for the first time. On November 11, U.S. Bitcoin spot ETFs recorded their highest total trading volume in over seven months.
Notably, uncertainty remains over whether Donald Trump will fulfill his previous commitments to support cryptocurrencies after he takes office. Bitcoin's volatility underscores the need for investors to stay vigilant, closely tracking market sentiment and news developments to manage risk effectively.
Source: Bloomberg, Companies Market Cap, FXStreet, Crypto Briefing
by moomoo News Olivia
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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