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3 Stocks Poised to Benefit the Most From Spot Bitcoin ETF Approval

Published 01/11/2024, 01:54 AM
Updated 04/07/2022, 04:55 AM

The Bitcoin ETF approval hype showed its strength late Tuesday when the BTC price reached $47.8k. This level aligns with the beginning of the Fed’s interest rate hiking cycle in March 2022.

Not only are institutional capital inflows now nearly set in stone for Bitcoin but Fed fund futures price the first rate cut in March at 69.49% probability.

On top of that, Bitcoin’s fourth halving is expected in April, setting the Bitcoin inflation rate under 1% from the present 1.74%.

Even for investors not holding cryptocurrencies, this trifecta represents a rare opportunity. Which crypto stocks are poised to benefit most from the uptick in crypto market activity?

1. MicroStrategy, Inc.

The co-founder of MicroStrategy (NASDAQ:MSTR), Michael Saylor, is not a fan of portfolio diversification, to put it lightly. In a podcast interview, Saylor once posited that having an investment conviction in Bitcoin is no different than having conviction in everyday tools.

“The point is you put on one pair of glasses, one pair of AirPods. You look at me through one screen, you’re using one microphone. That’s one microphone, you trust it? Is that conviction? That seems kind of scary, why don’t you diversify? Why don’t you use 10 microphones?”

True to his word, Saylor has been aggressively leveraging capital, including debt, to gain as much Bitcoin exposure as possible since 2020. MicroStrategy now holds 189,150 BTC at an average purchase price of $31,168, totaling $5.9 billion.

Year-over-year, MSTR stock gained 194% value, even outpacing Bitcoin’s gain of 157% for the same period. This made MSTR the closest Bitcoin proxy, which Saylor acknowledged at the Bitcoin 2022 Miami conference, “We’re kind of like your nonexistent spot ETF.”

Most recently, Saylor plans to liquidate 315,000 MSTR shares worth $216 million to acquire more BTC, per SEC filing on January 2nd. The investing thesis remains the same. Fiat currency is not veering off the debasement road, while Bitcoin’s limited supply of 21 million BTC is secured by the world’s most powerful computing network.

Based on five analyst inputs pulled by Nasdaq, MSTR stock is a “strong buy.” The average MSTR price target is $713.67 vs the current $564. The high estimate is $791, while the low forecast is above the press-time price at $660 per share.

2. Cipher Mining

Investment in Bitcoin mining stocks is cyclical. Mining companies securing the Bitcoin network undergo phases of accumulation and capitulation, mirroring the 4-year halvings. In this competitive sector, capital expenditures are heavy to optimize cost-effectiveness.

Mining companies earn more money when the BTC price goes up by selling some of the BTC they mined and repay capital/debt expenditures. One such company is Cipher Mining (NASDAQ:CIFR), one of the few penny stocks in the sector. Founded in June 2020, the young company had an impressive 2023, tracking over 287% performance.

Just over the last 30 days, CIFR stock gained 31% in value. On January 3rd, the company announced a 60 MW expansion and acquired 16,000 new mining rigs from Canan. In Q2, this should place Cipher Mining capacity at 8.4 EH/s.

In December, Cipher Mining generated 465 BTC, a 7.4% uptick from the month prior, with a total balance of 796 BTC. Based on seven analyst inputs pulled by Nasdaq, CIFR stock is a “strong buy.” The average CIFR price target is $5.2 vs. the current price of $3.67. The high estimate is $6, while the low forecast is above $4 per share.

3. WisdomTree

Another borderline penny stock, this global financial company specializes in rolling out exchange-traded products (ETPs) at competitive fees. Presently, WisdomTree’s (NYSE:WT) Bitcoin ETF application is in the middle ground, at 0.30% fee after waiver.

BTC ETFs

Image credit Bloomberg

WT stock gained 19% value year-over-year, making it a low-entry stock ahead of Bitcoin approval news. In Q3 2023 earnings, WisdomTree generated $2 billion in net inflows, marking 12 consecutive net inflows across all ETPs, with an adjusted $18 million net income.

For the quarter, WisdomTree generated $18 million net income, increasing its operating income margin by 8.3 points to 29.5%, showcasing streamlined cost management. Based on seven analyst inputs pulled by Nasdaq, WT stock is a “buy.”

The average WT price target is $8.38 vs current $6.94. The high estimate is $10, while the low forecast aligns with the press-time price of $7 per share.

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

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This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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