08 Aug 2022

The bitcoin rebound fuels a crypto stock surge

Share prices of bitcoin miners, crypto holding companies, and crypto exchanges have all surged in July.
Source: Tradingview
There are several crypto stocks from various sectors in the crypto ecosystem, such as bitcoin miners, crypto holding companies, and crypto exchanges.Crypto stocks have tended to follow the bitcoin price, albeit with a higher beta, meaning that they amplify bitcoin’s price movements both to the upside and the downside. Looking at the chart, we can see how correlated these stocks are, resulting from their high correlation to the bitcoin price.As the bitcoin price has declined by 49% in 2022, crypto stocks have naturally also seen a poor first half of the year. Bitcoin holder MicroStrategy is down 38%, bitcoin miner Marathon has fallen 55%, while crypto exchange Coinbase has seen 60% of its share price shaved off in 2022.Still, these stocks would have been down much more if not for their strong rebound during the last month, fueled by bitcoin’s recent solid performance. Since July 1st, Marathon has soared 178%, MicroStrategy 102%, and Coinbase 100%. Nothing fundamentally changed at Marathon or MicroStrategy that should have caused these price increases, but they are both heavily affected by the bitcoin price. A large share of Coinbase’s returns came on August 4th when the crypto exchange announced that Blackrock – the world’s largest asset manager- will let institutional clients trade crypto through a Coinbase integration.Crypto stocks offer risk-tolerant investors the opportunity to take a levered bet on the crypto ecosystem. We have covered bitcoin mining stocks in depth this summer, with one article analyzing their balance sheets and one comparing their valuations.
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