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Is now the time to buy Bitcoin stocks as institutional adoption increases?

source-logo  crypto.news 21 May 2024 16:10, UTC

Wall-street investors may consider now an opportune time to buy Bitcoin stocks, as a bullish breakout could drive further growth.

As of Tuesday, the crypto market continues to show resilience and growth, leading to a positive sentiment for Bitcoin (BTC) stocks. This crypto surge is fueled by institutional adoption and upcoming legislative developments. Bitcoin made significant gains on Monday afternoon, reaching over $71,000 in late trading, leaving behind the stagnant price action of the past few days. This marks the first time Bitcoin has surpassed the $70,000 mark since early April.

Other cryptos also had strong intraday gains. Ethereum (ETH) shot up 11.5% to $3,4300, and Solana (SOL) was up 8.2%. Ethereum has since shot up to over $3,700.

The rally boosted cryptocurrency-related stocks on Monday, with Marathon Digital (MARA) rising by 15%, Bit Digital (BTBT) by 22%, and Coinbase (COIN) by 8.5% at the close of Monday’s session. Bitcoin mining stocks like Marathon Digital (MARA), Riot Platforms (RIOT), CleanSpark (CLSK), and Cipher Mining (CIFR) will be in the spotlight as BTC demand and price rises.

Institutional adoption and ETF holdings

The introduction of spot Bitcoin ETFs in January has accelerated the institutional adoption of crypto. According to recent 13-F filings, 563 professional investment firms reported owning $3.5 billion of Bitcoin ETFs.

Notable names in that filing include hedge funds like Citadel, Millennium, and Point72. Morgan Stanley, a traditional asset manager, disclosed a $270 million investment in GBTC. Additionally, the State of Wisconsin Investment Board (SWIB) was the first U.S. pension fund to invest in Bitcoin ETFs, setting a precedent for other state pensions.

Nearly $1 billion was poured into spot Bitcoin ETFs last week

The 13-F filings also revealed an influx of capital into spot Bitcoin ETFs, totaling $948.3 million in net inflows last week. This surge reversed nearly $500 million of net outflows from these products over the prior eight weeks, bringing year-to-date net flows back above $12 billion. This renewed investor interest underscores the growing acceptance of BTC-related financial products in traditional investment portfolios.

Bullish sentiment for Bitcoin stocks

Given this influx of adoption and a growing number of BTC ETF investments, the sentiment for crypto remains bullish. Bitcoin mining stocks have faced pressure post-halving, but a bullish breakout in Bitcoin’s price could signify a positive turn — mining companies are looking to boost investments in mining machines and rely on Bitcoin’s price rise to sustain growth. Companies like Cipher Mining, Marathon Digital, and CleanSpark have reported strong quarters, indicating the potential for further rallying if Bitcoin stays above $70,000.

H.C. Wainwright & Co gave notable stocks like Marathon Digital (MARA), CleanSpark (CLSK), Core Scientific (CORZ), and Riot Platforms (RIOT) all “buy” ratings, reflecting a bullish sentiment on Bitcoin stocks.

H.C. Wainwright & Co stated in a research note that Bitcoin’s volatility and sensitivity to CPI data “proves to us that it still very much remains a risk asset, and that investors should expect significant volatility around future CPI releases, and note that inflation still remains well above the Fed’s 2% target, coming in at +3.4% y/y in April.”