Stocks of companies involved in crypto mining and those tracking the performance of bitcoin experienced an increase on Friday. This uptick occurred as the world’s biggest cryptocurrency continued its recent surge, reaching a nearly 19-month peak due to a growing willingness to take on more investment risk.
Bitcoin , up 1.6% at $38,337, has been gaining since October on optimism that a potential approval of a spot exchange-traded fund is likely to unleash more capital investments in the digital asset sector.
“Tailwinds have been gathering strength all year, especially in recent months, as spot ETF expectations build, the Binance uncertainty is resolved, and 2024’s accelerated money printing becomes more inevitable,” crypto-focused economist Noelle Acheson said, referring to the bitcoin rally.
Stocks of companies involved in mining Bitcoin, whose profits increase with the rise of Bitcoin’s value, such as Riot Blockchain, Marathon Digital, and TeraWulf, experienced gains ranging from 1.7% to 4%.
J.P. Morgan raised its price projections for Cipher Mining, CleanSpark, Iris Energy, Marathon Digital, and Riot Blockchain to account for the surge in the value of Bitcoin.
Mining companies are ramping up production ahead of Bitcoin’s upcoming “halving” event, where the rewards for creating new tokens will be halved. This move is driven by the anticipation of increased demand and higher prices.
“Higher crypto prices should lead to a boost in transaction volume and transaction revenues for Coinbase as we enter 2024,” said CFRA Research analyst Michael Elliott.
CFRA Research analyst Michael Elliott predicts that the rise in cryptocurrency prices will lead to increased transaction volume and revenues for Coinbase in 2024. However, Elliott warned that the exchange faces legal challenges and new regulations, which will unfold over time and contribute to stock volatility.
The ETF approval bets have helped counter latest concerns after Changpeng Zhao, the founder of the world’s largest crypto exchange, stepped down and pleaded guilty to breaking U.S. anti-money laundering laws.
Other entities that experienced increases included Microstrategy, a U.S.-based software developer and investor in bitcoin, which saw a rise of almost 3.5%. Similarly, the ProShares Bitcoin Strategy ETF recorded a gain of 2.1%.
