Crypto-Linked Stocks Rise With Bitcoin as Analyst Says 'Not The Time to Turn Bearish'

Miners such as Core Scientific (CORZ), Hut 8 (HUT) and TeraWulf (WULF) were among the outperformers.

AccessTimeIconJan 26, 2024 at 5:27 p.m. UTC
Updated Mar 8, 2024 at 8:33 p.m. UTC
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  • Miners lead the outperformance on Friday, including Cipher Mining (CIFR), Mawson (MIGI), and Core Scientific (CORZ).
  • Coinbase stock goes through the Wall Street roller coaster after upgrades and downgrades in the same week.
  • U.S. election could provide a potential positive macro catalyst for the bitcoin price, an analyst wrote.

After a week of selling, some bulls seem to be back in the crypto market.

Crypto-linked stocks rallied Friday after bitcoin (BTC) price rose more than 3% in the last 24 hours, ending the week in the green. Bitcoin mining companies, which generally are more exposed to the price fluctuations, were the biggest gainers, with many of the stocks rising from 5% to 15%, including Cipher Mining (CIFR), Mawson (MIGI), Core Scientific (CORZ), Sphere 3D (ANY), TeraWulf (WULF), Bitfarms (BITF), Marathon Digital (MARA), and Hut 8 (HUT), which had been particularly hit hard earlier in the week after it became a target of a short seller.

Other crypto-linked stocks, such as crypto exchange Coinbase (COIN) and enterprise software company that holds bitcoin in its balance sheet, MicroStrategy (MSTR), were also up between 3% and 5% on Friday. MicroStrategy, long considered as a proxy for bitcoin price, holds about 189,000 in its balance sheet after the latest purchase in December.

Coinbase, which acts as custodian for many of the spot bitcoin exchange-traded funds (ETFs), saw roller coast of Wall Street analysts actions this week, adding to the price fluctuations.

The shares of the crypto stock came under added pressure earlier this week after JPMorgan downgraded the stock to an underweight rating, citing a disappointing bitcoin ETF catalyst. Subsequently, the stock was upgraded to outperform Thursday by Oppenheimer, which cited strong company fundamentals and a tough management team.

The main catalyst for the week's selloff was traders treating the bitcoin ETF approval as the "sell the news" event, pulling money out of Grayscale Bitcoin Trust (GBTC). The slow inflow of funds intro the newly approved ETFs might have also added to the pressure as it likely have dampened the hype that was built up heading into the ETF approval. Meanwhile, the selloff was accentuated even more by FTX’s bankruptcy estate dumping 22 million GBTC shares, as CoinDesk reported.

The post-ETF-approval drop might be a short-term phenomenon, according to Markus Thielen, head of research at 10x Research. "Even if Bitcoin ETF inflows disappoint, this is not the time to turn bearish as the macro environment will remain a tailwind in 2024, and the US election cycle will see a constructive fiscal response that will lift asset prices higher," he wrote in a note.

"The time to turn bearish was in early January when we called for a correction back to 36,000/38,000 when Bitcoin traded at 44,000. We would use any further dip to start buying again," Thielen added.

Edited by Kevin Reynolds.


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Aoyon Ashraf

Aoyon Ashraf is managing editor with more than a decade of experience in covering equity markets

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