Bitcoin has recently experienced an extraordinary surge in value, crossing the $93,000 threshold for the first time, which represents a remarkable increase of over 32% following the recent U.S. presidential election. The anticipated pro-cryptocurrency policies from the newly elected President may foster a more supportive regulatory environment, prompting both investor optimism and excitement within the cryptocurrency market. This soaring cryptocurrency performance has sparked renewed interest in stocks that exhibit a strong correlation to Bitcoin, particularly those listed on major exchanges such as the New York Stock Exchange and Nasdaq, with a collective market cap exceeding $1 billion.
As investors explore the landscape of correlated stocks, it’s essential to note that the high correlation coefficients observed over the past 60 days suggest these equities could benefit significantly from further Bitcoin appreciation. This interconnectedness prompts an analysis of which public companies are most likely to experience upward pressure as Bitcoin’s value continues to rise.
Among the stocks identified through CNBC Pro’s screening process, Coinbase stands out due to its substantial correlation to Bitcoin, quantified at a striking 0.81. With its stock price surging by an impressive 78% within the calendar year, and a notable 73% rise just in the month of November, Coinbase’s valuation could further propel higher in response to Bitcoin’s momentum. Interestingly, Bank of America has adjusted its price target for Coinbase from $214 to $365, reflecting a bullish outlook despite maintaining a neutral rating.
Analyst Mark McLaughlin pointed out the favorable conditions for the cryptocurrency market following the elections, while also cautioning that volatility might loom in the near term, as the cryptocurrency space continues to evolve amid regulatory uncertainties. The expectation of gradual adoption suggests that while short-term fluctuations may be inevitable, the long-term prospects for companies like Coinbase remain highly optimistic.
Alongside Coinbase, cryptocurrency mining companies such as Mara Holdings and Riot Platforms also exhibit strong correlations to Bitcoin prices, with coefficients sitting at 0.82 and 0.81, respectively. Despite a flat performance for Mara Holdings overall this fiscal year, its stock has seen a significant uptick of 41% in November alone, potentially signaling investor confidence in its future profitability amid evolving market conditions. Analyst Brett Knoblauch accurately highlighted that while the market may underestimate the profitability prospects of cryptocurrency mining firms, those that manage to streamline their operations will likely be well positioned for success.
Riot Platforms has experienced similar enthusiasm — although its stock remains down 11% year-to-date, it has enjoyed a robust monthly gain of 48%, underscoring the potential for recovery and growth as Bitcoin continues to appreciate. As the cryptocurrency narrative gains traction, these mining companies could leverage their positioning to tap into increasing investor interest.
The broader implications of Bitcoin’s surge extend to lesser-known but potentially profitable firms like Bitdeer Technologies and Hut 8, which have correlation coefficients of 0.67 and nearly 0.7, respectively. These firms have sought to establish themselves within the crypto mining ecosystem, each displaying unique market dynamics. Bitdeer has achieved a 46% increase in value this month alone, along with a 16% gain over the year, demonstrating a strong response to the ongoing rally in Bitcoin prices.
Meanwhile, Hut 8 has managed an astounding rebound in 2024, surging 100% year-to-date and witnessing a remarkable 69% rise in November. Such performances illustrate the potential for substantial capital appreciation in response to Bitcoin advancements, proof that the cryptocurrency’s momentum cascades beyond its immediate market into various segments of related equities.
As the cryptocurrency market continues to grapple with fluctuating valuations, emerging regulations, and increased mainstream adoption, investors should carefully assess cryptocurrency-related stocks. Companies like Coinbase, Mara Holdings, and Riot Platforms are poised to benefit from Bitcoin’s ascent, but they also carry inherent volatility and risks associated with market dynamics. Assessing correlations coupled with long-term outlooks reveals a compelling investment narrative that warrants careful attention as Bitcoin’s rise continues to influence the broader financial landscape.