Bitcoin’s Potential Breakout: Impact on Crypto-Related Stocks
Bitcoin, the dominant player in the cryptocurrency market, appears to be consolidating within proximity of its all-time highs, fostering curiosity amongst investors, speculators, and traders about a possible breakout. Currently valued at $67,100 per bitcoin with a year-to-date (YTD) increment of nearly 52%, Bitcoin is eyeing the critical short-term support level of $66,000. A move past the resistance level at $72,000 could usher in consequential shifts in Bitcoin-related stocks. Here’s an in-depth look at four popular Bitcoin-related companies that may witness substantial hikes if Bitcoin breaks out.
Examining Marathon Digital Holdings’ Operations in Bitcoin Mining
Marathon Digital Holdings is primarily engaged in Bitcoin mining, having rebranded itself in 2020. Despite a surge earlier in the year, Marathon has lost footing, with share values down by almost 15% YTD. The stock carries a bearish sentiment, indicated by a 22% short interest with an analyst consensus predicting a further downside. From a technical standpoint, Marathon seems unprepared for a bullish breakout, making it a less favorable contender for investors.
Riot Platforms: Analyst Predictions and Buy Rating
Riot Platforms, intending to dominate Bitcoin mining operations in North America, has likewise underperformed. The company’s stock value has seen a fall of nearly 30% YTD with a striking 17% short interest. Recently, short selling corporation Kerrisdale Capital released a detrimental report on Riot, questioning the efficiency of its business model. However, analysts continue to maintain a buy rating, forecasting a potential upside of 65% with a price target of $18.10. Nevertheless, from a technical standpoint, the current situation at Riot does not signal a bullish trend.
Inspecting MicroStrategy’s Premium Over Bitcoin Holdings
MicroStrategy, a renowned provider of enterprise analytics software, currently possesses 214,400 bitcoins. Contrary to Marathon and Riot, MicroStrategy’s shares have surged 134% YTD. If Bitcoin can break out, MicroStrategy might experience an upward swing over the $1,800 mark, possibly reaching record highs above $2,000. However, with a notable short interest of almost 19% and substantial insider selling in the past year, investors are advised to proceed with caution.
Coinbase Global: Leader Among Cryptocurrency Exchanges
Coinbase Global, a leading cryptocurrency exchange, offers trading facilities over 200 cryptocurrencies. From a technical standpoint, Coinbase presents a more favorable situation as it consolidates above all major moving averages and is merely 12% away from its 52-week high. Shares have risen over 40% YTD and the company boasts a relatively low short interest of 5%. Recent earnings have exceeded expectations, reporting $1.65 earnings per share as against a projection of $1.04, and revenue figures standing at $1.64 billion, surpassing the anticipated $1.26 billion. These factors position Coinbase for further gains should a Bitcoin breakout occur.
Key Takeaways: Bitcoin-Related Stocks to Watch
As Bitcoin oscillates on the cusp of a potential breakout, specific Bitcoin-related stocks appear primed for capitalizing on this shift. While companies like Marathon and Riot are hampered by bearish sentiments and technical setups, MicroStrategy and Coinbase seem to be in a better position. MicroStrategy could witness considerable gains if Bitcoin rallies, but due to insider selling, a hefty premium to its underlying holdings, and significant short interest, caution is recommended. On the other hand, Coinbase, with its robust technical setup and recent history of superior earnings, appears best suited to benefit from a Bitcoin breakout.
Investors, nevertheless, should remain vigilant and tread carefully through the volatile landscape of the cryptocurrency market which necessitates strategic planning and thoughtful decision-making. Another responsive alternative for investors could be the iShares Bitcoin Trust ETF issued by Blackrock, arguably the most popular Bitcoin spot ETF. However, before considering an investment in iShares Bitcoin Trust, it’s important to note that while it currently holds a “hold” rating among analysts, top-rated analysts believe there are better buying opportunities elsewhere.
