Bitcoin Stocks Are Growing Faster than the Cryptocurrency Itself

Key Insights

• Bitcoin’s value has significantly risen from $16,540 on January 1, 2023, to $31,260 as of July 14, 2023, marking an 85% increase over these months.
• Companies related to Bitcoin, particularly publicly listed BTC mines, are experiencing exceptional growth in their stocks.
• The upcoming 2024 Bitcoin halving is anticipated to further drive Bitcoin’s price growth.

Since the beginning of the year on January 1, 2023, Bitcoin has experienced a substantial rise in value. It started at $16,540, and as of July 14, 2023, it is currently trading at $31,260. This impressive surge amounts to an 85% increase over the course of these months.

This is an excellent result, but BTC-related companies are doing even better.

What’s more, experts predict huge profits for them in the future – after the 2024 Bitcoin halving.

Crypto stocks are growing like weeds

Stocks of companies related to Bitcoin are growing at an amazing pace. This is especially evident in the case of publicly listed BTC mines, which include Marathon, Riot, Canaan and others.

Read also: Bitcoin Outperforms the Nasdaq and S&P 500 Indices

According to Kaiko analysts, since the beginning of 2023, the value of their shares has increased from 280 to 420 percent. Therefore, the profitability of this investment instrument exceeds the profitability of Bitcoin several times over the same period.

According to experts, the reason for this situation was the increase in the profitability of miners of the primary cryptocurrency. This was facilitated by both the increase in the BTC exchange rate and the activation of blockchain users who carried out many transactions and paid higher commissions for transfers. They were motivated by the development of the Ordinals protocol and the BRC-20 tokens.

All this is happening simultaneously with the active accumulation of the first cryptocurrency. According to the Glassnode platform, long-term BTC holders are currently purchasing about 27.1 thousand. bitcoins per month. Who are long-term holders? These are investors who have not moved their coins for at least six months.

Against the background of such conditions, Bitcoin miners are doing extremely well. At the same time, the next wave of BTC growth may be caused by representatives of this particular market category.

As experts from Standard Chartered previously noted, Bitcoin’s rise to $120,000 next year is possible as the rate at which miners sell mined coins slows down.

Who profits from the growth of Bitcoin stocks?

Berenberg Capital Markets analysts took a look at what is happening in the market on the example of MicroStrategy shares.

According to experts, the giant’s shares should gain value after Bitcoin’s halving next year. MicroStrategy itself has been actively investing in the major cryptocurrency since summer 2020.

Today, it is the largest holder of BTC among all public companies.

MicroStrategy purchased 152,333 BTC at $29,668 per coin, spending $4.52 billion on them.

As a result, analysts set a price target for MSTR shares at $430. Representatives of Berenberg Capital Markets shared details of their market research based on previous Bitcoin bull cycles.

Today, the MSTR trades around $413 per share. Meanwhile, at the beginning of the year, the security was valued at around $145 – the price has almost tripled in a few months. The goal of Berenberg analysts is not so high. Therefore, it is possible that the MSTR will be able to jump to the level mentioned by experts long before the halving.

The steady rise in MicroStrategy’s share price reflects the interest of large investors in what is happening in the cryptocurrency industry. And since the company has a huge amount of BTC on its balance sheet, its capitalization itself has become an indicator of the dynamics of the cryptocurrency market.

2024 Bitcoin halving

The halving procedure consists in reducing the reward for miners for mining a block exactly twice. Halving occurs every 210,000 blocks, and it takes an average of ten minutes to mine one block. The next such event should therefore take place next year, specifically April 2024.

Even before the halving, the price of Bitcoin should start to grow significantly. This is what the experts think:

If the historical pattern from the first three Bitcoin halvings continues with the fourth halving, the BTC rally will start in about four months.

It should be noted that not all participants in the cryptocurrency industry are so positive. For example, the head of the cryptocurrency exchange Binance Changpeng Zhao is betting on growth in the year following the halving – that is, in late 2024 or as early as 2025.

In previous cycles, the price of Bitcoin has increased by at least 682 percent. Analysts noted that while cryptocurrency supply follows a “predetermined trajectory,” it is necessary to assess overall asset demand to predict the “potential scale” of future growth.

As evidence of the growing institutional demand for Bitcoin, the Berenberg study cites a recent surge in requests for cryptocurrency ETFs from some of the world’s “biggest and best-known” investment firms. In particular, we are talking about the initiative of the investment giant BlackRock and the positive comments of its boss Larry Fink.

SEC vs Bitcoin ETF

The U.S. Securities and Exchange Commission (SEC) handles the approval of new Bitcoin ETFs. Jay Clayton once gave an extensive interview in which he shared a list of conditions that the regulator must meet to accept this investment vehicle.

Clayton said that in order to approve a Bitcoin spot ETF application, the SEC must ensure that the new instrument will provide “similar performance to the futures market.”

As a reminder, Bitcoin ETFs are already operating in the US, but they are based on cryptocurrency futures. The current wave of applications to launch ETFs for the spot product, i.e. based on the regular price of BTC.

Clayton admitted that as head of the SEC, he was skeptical about the prospects of cryptocurrencies. Nevertheless, noticeable demand from large institutional investors may affect the current leadership of the regulator.

So far, the SEC shows no signs of collaborating with cryptocurrency companies.

Read also: Gemini CEO Slams SEC for Denying Bitcoin ETFs

On the contrary – the regulator is involved in several lawsuits against the largest of them at the same time. Jay Clayton’s opinion is no longer relevant in the context of the current composition of the Commission. It is also unlikely to influence the course of events.

Bitcoin’s profitability seems to extend beyond the cryptocurrency industry. This is logical, because the profit of public BTC miners directly depends on what is happening on the network.

And there, due to the popularity of NFT and new tokens, there is no problem with user activity. They are willing to shell out big bucks for commissions to complete fast trades.

How might the surge in Bitcoin stocks and the forthcoming halving impact the wider cryptocurrency market and the adoption of Bitcoin as an investment asset? Let us know your thoughts in the comments.