Miners such as Core Scientific (CORZ), Hut 8 (HUT) and TeraWulf (WULF) were among the outperformers.
Following a week of selling, a resurgence of bullish sentiment appears to be evident in the cryptocurrency market. Crypto-related stocks experienced a rally on Friday, propelled by a more than 3% increase in the price of bitcoin (BTC) within the last 24 hours, concluding the week on a positive note. Notably, bitcoin mining companies, which are typically more sensitive to price fluctuations, saw significant gains, with several stocks surging between 5% and 15%. This upward momentum was observed in companies such as Cipher Mining (CIFR), Mawson (MIGI), Core Scientific (CORZ), Sphere 3D (ANY), TeraWulf (WULF), Bitfarms (BITF), Marathon Digital (MARA), and Hut 8 (HUT), the latter having faced challenges earlier in the week when it became a target of a short seller.
Additionally, other cryptocurrency-related stocks, including Coinbase (COIN), a crypto exchange, and MicroStrategy (MSTR), an enterprise software company that holds bitcoin in its balance sheet, also recorded gains ranging from 3% to 5% on Friday. MicroStrategy, often regarded as a proxy for bitcoin price, currently holds approximately 189,000 bitcoins in its balance sheet following the latest acquisition in December.
Coinbase, responsible for safeguarding numerous spot bitcoin exchange-traded funds (ETFs), witnessed a turbulent week on Wall Street, influenced by varied actions from analysts that contributed to fluctuations in its stock price.
Earlier in the week, the crypto stock faced increased selling pressure following a downgrade to an underweight rating by JPMorgan. The downgrade was attributed to a perceived disappointment regarding the bitcoin ETF catalyst. However, the stock’s fortunes took a positive turn on Thursday when Oppenheimer upgraded it to an outperform rating. The upgrade cited robust company fundamentals and a resilient management team as key factors.
The primary driver behind the week’s selloff was traders treating the approval of the bitcoin ETF as a “sell the news” event, leading to a withdrawal of funds from the Grayscale Bitcoin Trust (GBTC). The gradual inflow of funds into the newly approved ETFs may have also contributed to the pressure, as it likely tempered the excitement that had built up in anticipation of the ETF approval. Additionally, the selloff was exacerbated by FTX’s bankruptcy estate liquidating 22 million GBTC shares, as reported by CoinDesk.
Markus Thielen, the head of research at 10x Research, suggests that the decline observed after the approval of the ETF could be a temporary occurrence. “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.
