The crypto sector has been on a tear, propelled higher by none other than the leading digital asset, Bitcoin (BTC-USD). Its rise has proliferated into other digital assets, with many investors in this space focusing on cryptos alone.
So, within this sector, two key catalysts could drive greater upside over the near-term. They both have to do with Bitcoin. First is the upcoming halving event, set to take place in a couple weeks. And the second is the impact spot ETFs will have on the entire sector.
As more money flows into this space, and Bitcoin’s price rises following its halving, other related companies should benefit. Some publicly-traded companies do well when crypto does well. Much focus now is shifted to spot Bitcoin ETFs (which can be bought and sold on the markets just as stocks are). However, a valuation gap may be coming into play.
Therefore, let’s dive into three crypto stocks to benefit most from a possible vicious rally higher for the rest of the year.
Coinbase (COIN)
Showing up as the top blockchain stock worldwide, Coinbase (NASDAQ:COIN) remains a top option for equity investors. It provides the critical infrastructure to support the largest centralized exchange in the U.S.
Despite legal and regulatory challenges, Coinbase is still the top player in its industry. As such, when the SEC did approve spot Bitcoin ETFs, Coinbase took over handling the back-end functionality for most of the companies that successfully received approvals from regulators.
Notably, analysts have been upgrading the stock in recent weeks. Kyle Voigt, an analyst from KBW, expressed their impressions on COIN as it has showed unique exposure in the crypto economy. This analyst raised his price target to $230 from $160, while maintaining a market performance rating, noting potential revenue growth from increased USD Coin balances and rising crypto asset levels. Currently, COIN stock trades around $250 per share, so there’s still downside baked into this target. But it’s a significant raise, nonetheless.
In the first quarter, outstanding USDC balances surged by 32%, per reports. USDC, a stablecoin issued by Circle and backed by Coinbase, contributes to the crypto exchange’s gross interest income, generating about 56% of this key metric. Additionally, March saw a spike in average daily trading volume to $5.1 billion, compared to $2.4 billion in February, driving momentum for the stock.
If more capital continues to flow into the crypto sector, it’s likely to come through Coinbase, at least in the U.S. Accordingly, the thesis is very simple with this crypto stock.
Marathon Digital (MARA)
Marathon Digital (NASDAQ:MARA) is among the largest Bitcoin miners in the world, making it deserving of a spot on this list.
Recent bearish sentiment around the upcoming Bitcoin halving has led to selling pressure for MARA stock. That makes sense, since the company’s revenue (at least in terms of Bitcoin mined) will halve overnight.
But for those bullish on Bitcoin’s price rising materially following its halving, this is a stock to consider. Recent innovations like MARAFW firmware and MARA UCB 2100 control board aim to optimize mining rigs, enhancing operational efficiency. Additionally, the company’s MARA 2PIC700 cooling system promises higher power density. So this will enable robust expansion despite the halving’s impact.
Also, Marathon Digital’s Bitcoin production and revenue demonstrate the pivotal role of mining output in its performance assessment. With expanded operations and hash rate, MARA should benefit from rising Bitcoin prices over time. Of course, a Bitcoin price at least 50% above current levels will likely be needed to spark another major rally in this miner. But for those who think that’s possible, buying now may be a decent strategy.
MicroStrategy (MSTR)
During this year’s crypto surge, MicroStrategy (NASDAQ:MSTR) known for its substantial Bitcoin holdings, saw its market cap surpass that of almost half the S&P 500 companies. MicroStrategy’s stock surged 204% in 2024, reaching $1,919 by Wednesday’s close. Contrast this to Nvidia’s (NASDAQ:NVDA) 82% year-to-date (YTD) increase.
Having initially invested in Bitcoin as an inflation safeguard in August 2020, MicroStrategy continuously accumulated Bitcoin. Today, the company holds a total of 214,246 BTC, becoming the leading corporate holder of this digital asset. While opinions vary on MicroStrategy’s Bitcoin accumulation strategy, it remains a notable aspect of its operations.
MicroStrategy’s substantial Bitcoin holdings were acquired at an average of $33,706 per Bitcoin. Now, they are valued at $65,000 each. This greatly influences its trajectory. With Bitcoin holdings valued at around $14 billion, this business now vastly overshadows MicroStrategy’s business intelligence segment, providing significant leverage for the future. Predictions of Bitcoin surpassing $100,000 by next year underscore its enduring value.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.