A lot of attention is on the cryptocurrency sector at the moment, especially Bitcoin, the mammoth of the sector.
However, under the attention radar, stocks of the four largest public companies that mine Bitcoin have been increasing in correlation to the cryptocurrency, even outperforming it by up to 450% in the last 12 months.
Even while operating at losses, the stocks of Marathon Digital Holdings, Riot Blockchain, Hive Blockchain, and Hut 8 have rallied 5000% on average in the last 12 months, each of which represents a market cap of over $1 billion.
This analysis was done and shared by Fundstrat’s vice president of digital asset strategy, Leeor Shimron, while appearing on CNBC. Shimron found that the stocks had a very high positive correlation with Bitcoin. He concluded that for every 1% price move in BTC, Bitcoin mining shares move by 2.5% on average. This implies that in a bearish Bitcoin market, the stocks would also suffer far painful losses.
Shimron attributed the high volatility in mining stocks to the lack of regulated crypto investment products in the United States, speculating that “until a Bitcoin ETF is approved, investors may view public mining companies as one of the only ways to get exposure to Bitcoin.”
Victor Nnadi is an Independent Economics Researcher and a Securities Trader.
