Crypto-linked stocks experienced a notable rally on Friday as Bitcoin’s price surged more than 3% over the past 24 hours, concluding the week on a positive note. Leading the outperformance were bitcoin mining companies, known for their sensitivity to price fluctuations, with stocks like Cipher Mining (CIFR), Mawson (MIGI), and Core Scientific (CORZ) witnessing gains ranging from 5% to 15%. This resurgence follows a week marked by selling pressure, signaling a return of bullish sentiment in the crypto market.
In addition to mining companies, other crypto-linked stocks such as Coinbase (COIN) and MicroStrategy (MSTR) also saw notable gains of 3% to 5% on Friday. MicroStrategy, recognized as a proxy for bitcoin’s price, holds approximately 189,000 bitcoins in its balance sheet following its latest purchase in December. Meanwhile, Coinbase, serving as a custodian for numerous spot bitcoin exchange-traded funds (ETFs), endured a volatile week influenced by Wall Street analyst actions.
Coinbase faced fluctuations in its stock price after JPMorgan downgraded it to an underweight rating earlier in the week, citing disappointing prospects for a bitcoin ETF approval. However, the stock received an upgrade to outperform from Oppenheimer on Thursday, citing strong company fundamentals and capable management.
The recent selloff in the crypto market was partly triggered by traders treating the bitcoin ETF approval as a “sell the news” event, resulting in a withdrawal of funds from Grayscale Bitcoin Trust (GBTC). Additionally, the slow inflow of funds into newly approved ETFs contributed to the pressure, dampening the initial hype surrounding the ETF approval. The situation was further exacerbated by FTX’s bankruptcy estate selling 22 million GBTC shares, as reported by CoinDesk.
Markus Thielen, head of research at 10x Research, remains optimistic despite the recent market volatility. He argues against adopting a bearish stance, emphasizing the supportive macroeconomic environment in 2024 and the potential for a constructive fiscal response during the US election cycle. Thielen suggests that the post-ETF-approval drop may be a short-term phenomenon, advising investors to consider any further dips as buying opportunities rather than reasons for pessimism.
“In early January, when Bitcoin was trading at $44,000, we called for a correction back to $36,000/$38,000. We would use any further dip to start buying again,” Thielen remarked, underlining the resilience of the cryptocurrency market amid fluctuations and the long-term growth potential.
