Left for Dead Crypto Names Roar Higher as Bitcoin Bounces
Bitcoin has put together its first sustained rally since the FTX collapse in early November.
With nearly the entire universe of publicly traded crypto stocks down 70% to 90% or even more in 2022, just a little bit of life in bitcoin (BTC) this week has led to outsized sector gains.
Trading at $19,370 at press time, bitcoin is up about 13% this week, at its strongest level in the more than two months since the implosion of crypto exchange FTX.
Among the big movers this week is Coinbase (COIN), up 49%. The crypto exchange has seen a number of sell-side downgrades and price target cuts to begin the year and also faced a credit rating downgrade from Moody's. The company also this week announced a cut of 20% of its workforce. Cathie Wood's ARK Investment, however, has been doing some bottom-fishing, purchasing $7.5 million in Coinbase stock this week and about $28.5 million over the past month.
Thanks to a combination of a low bitcoin price, rising electricity costs, often high debt levels and nearly closed capital markets, bitcoin miners came into 2023 facing an existential crisis. Indeed, Core Scientific (CORZ), one of the largest miners by computing power, already declared bankruptcy and Argo Blockchain (ARBK) barely fended Chapter 11 off after a late-inning bailout from Michael Novogratz's Galaxy Digital (GLXY.TO).
Things were so bad that one of the leading miners – Riot Blockchain – began the year exorcising all ties to crypto from its name, re-branding itself as Riot Platforms (RIOT).
Given those factors, just the modestly good news for bitcoin sent the sector's shares exploding higher. Marathon Digital (MARA) has gained 79% this week, Hut 8 Mining (HUT) added 49% and Bit Digital rose 41%. As for Riot, it's ahead just 27% this week, perhaps punishment for giving up "blockchain" in its name.
Other crypto stocks on the move include MicroStrategy (MSTR), advancing 30% this week, and troubled crypto bank Silvergate Capital (SI) rising 11%.
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