The cryptocurrency market suffered a severe blow in the first week of August. Bitcoin (BTC), the largest cryptocurrency globally, hit an all-time high of $73,750 on Mar 14. However, the broader market bloodbath last week also saw cryptocurrencies suffering. Consequently, Bitcoin fell to below $55,000.
This year, Bitcoin gathered momentum after the Securities and Exchange Commission approved 11 spot Bitcoin exchange-traded funds (ETFs) in January. 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.
However, the price of Bitcoin saw a steady decline from April. One of the major reasons for the decline in Bitcoin price was the halving event that took place in April. The halving event, which reduces the reward for mining new blocks by half to cap the total supply of Bitcoins at 21 million, typically increases demand and drives up prices. Despite this, Bitcoin saw a significant drop, with its price falling below $59,000.
Meanwhile, following the release of a few weak economic data in July, especially the labor market data, the CME FedWatch currently shows a 100% probability of a 25-basis point interest rate cut in September and a 51.5% chance of a 50-basis point rate cut.
For November, market participants estimate a 100% probability that the total (year-to-date) rate cut will be 50 basis points and a 62.6% probability that the total rate cut will be 75 basis points. Likewise for December, market participants estimate a 100% probability that the total rate cut will be 75 basis points and a 72.4% probability that the total rate cut will be 1% in 2024.
At this stage, investors should think from a long-term perspective. The Fed is undoubtedly approaching the end of the higher rate regime. A low interest rate is beneficial to high growth-oriented industries such as technology, consumer discretionary and cryptocurrency.
Therefore, investors should accumulate bitcoin using a buy-on-the-dip strategy. Every dip in the bitcoin price will be a good purchasing point in order to gain handsomely once the Fed’s tighter monetary control comes to an end.
Stocks in Focus
We have narrowed our search to five bitcoin-oriented stocks that have strong potential for the rest of 2024.
CME Group Inc. ’s CME options give the buyer of the call/put the right to buy/sell cryptocurrency futures contracts at a specific price at some future date. CME offers Bitcoin and ether options based on the exchange's cash-settled standard and micro-Bitcoin and Ethereum futures contracts.
CME Group has an expected earnings growth rate of 4.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days. CME currently carries a Zacks Rank #3 (Hold).
NVIDIA Corp. NVDA is a semiconductor industry giant and one of the biggest success stories of 2023 and 2024. As a leading designer of graphic processing units (GPUs), the NVDA stock usually soars on a booming crypto market. This is because GPUs are pivotal to data centers, artificial intelligence, and the creation of crypto assets.
NVIDIA’s expected earnings growth rate for the current year is more than 100% (ending January 2025). The Zacks Consensus Estimate for its current-year earnings has improved 0.4% over the last 30 days. NVDA currently carries a Zacks Rank #2 (Buy).
Interactive Brokers Group Inc. IBKR is a global automated electronic broker. IBKR executes, processes and trades in cryptocurrencies. IBKR’s commodities futures trading desk also offers customers a chance to trade cryptocurrency futures.
Interactive Brokers Group has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the last 30 days. IBKR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
Robinhood Markets Inc. HOOD 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.
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 14% over the last seven days. HOOD currently carries a Zacks Rank #2.
Block Inc.
SQ 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.
Block has an expected earnings growth rate of 98.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 9.2% over the last 30 days. SQ currently carries a Zacks Rank #3.
The chart below shows the price performance of five above-mentioned stocks in the past month.
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CME Group Inc. (CME) : Free Stock Analysis Report
Interactive Brokers Group, Inc. (IBKR) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Block, Inc. (SQ) : Free Stock Analysis Report
Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report
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