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5 Bitcoin-Centric Stocks to Buy to Gain From the Next Rally
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The cryptocurrency market suffered a severe blow in April after a strong rally in the previous 15 months. On Mar 14, the largest cryptocurrency, Bitcoin (BTC), recorded an all-time high of 73,750.07. However, it has fallen nearly 15% thereafter. Bitcoin gained more than 67% in first-quarter 2024 after jumping 157% in 2023. At present, Bitcoin is 9.3% below its all-time high.
One of the major reasons for the decline in Bitcoin price was the halving event that took place last month. The Bitcoin halving event happens once in four years. Moreover, U.S. equity markets tumbled in April owing to market participants’ concern that the Fed will keep the interest rate higher for longer in light of the sticky inflation rate and a resilient labor market. A higher interest rate is detrimental to high-growth sectors like technology, consumer discretionary and cryptocurrency.
Nevertheless, with the April Bitcoin halving event now concluded, there is widespread speculation that the reduction in the supply of Bitcoins will result in a scarcity-driven price increase for the digital asset in the upcoming months. Miners who validate and record transactions receive rewards from the Bitcoin network and transaction fees. Halving reduces the block reward by half, aiming to cap Bitcoin's global circulation at 21 million. Consequently, demand for new Bitcoins increases, driving up prices.
Moreover, since the launch of the first Bitcoin ETFs on Jan 11, the asset has surged more than 50%. The ETFs represent a landmark in Bitcoin’s journey, offering both retail and institutional investors a regulated and accessible means to invest in the cryptocurrency. This development not only enhances liquidity but also contributes to price stability.
Favorable Economic Data
Wall Street rebounded in early May following a sharp decline in the April job additions, a notable deterioration of the U.S. GDP growth rate in first-quarter 2024, the contraction of manufacturing and services PMI in April and a less-than-hawkish statement by Fed Chairman Jerome Powell after the May FOMC meeting.
The Wall Street rally solidified further after the Department of Labor reported that the consumer price index (CPI) for the month of April rose 0.3% month over month. The reading, however, came in below the consensus estimate and March’s reading of 0.4%. Year over year, CPI increased 3.4%, in line with expectations.
The core CPI (excluding volatile food and energy items) rose 0.3% month-over-month in April, after rising 0.4% in the previous three months. April’s data showed the smallest monthly increase since December 2023. Year over year, core CPI increased 3.6%, marking the lowest monthly increase since April 2021.
Moreover, the Department of Commerce reported that retail sales in April remained flat month over month, missing the consensus estimate of a rise of 0.4%. The reading for March was also revised downward to 0.6% from 0.7% reported earlier. However, year over year, retail sales increased 3% in April. Consequently, investors’ expectations for the number of interest rate cuts in 2024 rose.
Our Top Picks
We have narrowed our search to five bitcoin-oriented stocks that have strong potential for 2024. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2(Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Coinbase Global Inc. (COIN - Free Report) provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.
Zacks Rank #1 Coinbase Global has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
Robinhood Markets Inc. (HOOD - Free Report) operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.
Zacks Rank #2 Robinhood Markets has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
CleanSpark Inc. (CLSK - Free Report) operates as a Bitcoin miner in the Americas. CLSK owns and operates data centers that primarily run on low-carbon power. CLSK’s infrastructure supports Bitcoin, a digital commodity and a tool for financial independence and inclusion.
Zacks Rank #2 CleanSpark has an expected earnings growth rate of more than 100% for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
Hut 8 Corp. (HUT - Free Report) acquires, builds, manages, and operates data centers for digital assets mining, computing, and artificial intelligence in the United States. HUT mines Bitcoin. It merged with US Bitcoin Corp to increase its total hash rate substantially. HUT aims to increase its total hash rate to 9.8 EH/s. HUT operates in four segments: Digital Assets Mining, Managed Services, High Performance Computing, Colocation and Cloud, and Other.
Zacks Rank #2 Hut 8 has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last seven days.
Block Inc. (SQ - Free Report) is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of the Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications that run on programmable blockchains. SQ is also one of the largest Bitcoin investors.
Zacks Rank #2 Block has an expected earnings growth rate of 73.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the last 30 days.
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5 Bitcoin-Centric Stocks to Buy to Gain From the Next Rally
The cryptocurrency market suffered a severe blow in April after a strong rally in the previous 15 months. On Mar 14, the largest cryptocurrency, Bitcoin (BTC), recorded an all-time high of 73,750.07. However, it has fallen nearly 15% thereafter. Bitcoin gained more than 67% in first-quarter 2024 after jumping 157% in 2023. At present, Bitcoin is 9.3% below its all-time high.
One of the major reasons for the decline in Bitcoin price was the halving event that took place last month. The Bitcoin halving event happens once in four years. Moreover, U.S. equity markets tumbled in April owing to market participants’ concern that the Fed will keep the interest rate higher for longer in light of the sticky inflation rate and a resilient labor market. A higher interest rate is detrimental to high-growth sectors like technology, consumer discretionary and cryptocurrency.
Nevertheless, with the April Bitcoin halving event now concluded, there is widespread speculation that the reduction in the supply of Bitcoins will result in a scarcity-driven price increase for the digital asset in the upcoming months.
Miners who validate and record transactions receive rewards from the Bitcoin network and transaction fees. Halving reduces the block reward by half, aiming to cap Bitcoin's global circulation at 21 million. Consequently, demand for new Bitcoins increases, driving up prices.
Moreover, since the launch of the first Bitcoin ETFs on Jan 11, the asset has surged more than 50%. The ETFs represent a landmark in Bitcoin’s journey, offering both retail and institutional investors a regulated and accessible means to invest in the cryptocurrency. This development not only enhances liquidity but also contributes to price stability.
Favorable Economic Data
Wall Street rebounded in early May following a sharp decline in the April job additions, a notable deterioration of the U.S. GDP growth rate in first-quarter 2024, the contraction of manufacturing and services PMI in April and a less-than-hawkish statement by Fed Chairman Jerome Powell after the May FOMC meeting.
The Wall Street rally solidified further after the Department of Labor reported that the consumer price index (CPI) for the month of April rose 0.3% month over month. The reading, however, came in below the consensus estimate and March’s reading of 0.4%. Year over year, CPI increased 3.4%, in line with expectations.
The core CPI (excluding volatile food and energy items) rose 0.3% month-over-month in April, after rising 0.4% in the previous three months. April’s data showed the smallest monthly increase since December 2023. Year over year, core CPI increased 3.6%, marking the lowest monthly increase since April 2021.
Moreover, the Department of Commerce reported that retail sales in April remained flat month over month, missing the consensus estimate of a rise of 0.4%. The reading for March was also revised downward to 0.6% from 0.7% reported earlier. However, year over year, retail sales increased 3% in April.
Consequently, investors’ expectations for the number of interest rate cuts in 2024 rose.
Our Top Picks
We have narrowed our search to five bitcoin-oriented stocks that have strong potential for 2024. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2(Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Coinbase Global Inc. (COIN - Free Report) provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.
Zacks Rank #1 Coinbase Global has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
Robinhood Markets Inc. (HOOD - Free Report) operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.
Zacks Rank #2 Robinhood Markets has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
CleanSpark Inc. (CLSK - Free Report) operates as a Bitcoin miner in the Americas. CLSK owns and operates data centers that primarily run on low-carbon power. CLSK’s infrastructure supports Bitcoin, a digital commodity and a tool for financial independence and inclusion.
Zacks Rank #2 CleanSpark has an expected earnings growth rate of more than 100% for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
Hut 8 Corp. (HUT - Free Report) acquires, builds, manages, and operates data centers for digital assets mining, computing, and artificial intelligence in the United States. HUT mines Bitcoin. It merged with US Bitcoin Corp to increase its total hash rate substantially. HUT aims to increase its total hash rate to 9.8 EH/s. HUT operates in four segments: Digital Assets Mining, Managed Services, High Performance Computing, Colocation and Cloud, and Other.
Zacks Rank #2 Hut 8 has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last seven days.
Block Inc. (SQ - Free Report) is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of the Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications that run on programmable blockchains. SQ is also one of the largest Bitcoin investors.
Zacks Rank #2 Block has an expected earnings growth rate of 73.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the last 30 days.