Bitcoin Vs. Nasdaq
Bitcoin mining stocks have been among the stock market’s best performers all year. The situation got even better since the start of the week as several miners rallied double digits.
The surge in the cryptocurrency market this month rallied the price of Bitcoin and other cryptocurrencies. That includes an increasingly dominant Bitcoin market cap, as well as competitors like Ethereum (ETH) and Ripple (XRP). But on-chain crypto spot prices aren’t the only ones seeing a meteoric rise in fortunes.
Promising developments in the regulatory landscape coinciding with the upcoming Bitcoin halving have blown the lid off shares of publicly traded crypto mining companies.
Riot stock (RIOT) jumped 17%, Bitfarms shares (BITF) rose 20%, TerraWulf stock (WULF) rallied 20%, Hut 8 Mining stocks (HUT) shot up 24%, Cleanspark shares (CLSK) soared 26%, and Marathon Digital Holdings (MARA) rocketed 32% in less than 48 hours from the Monday open to their intra-day peak prices Tuesday.
Mining shares outperformed spot Bitcoin exchange prices since Monday. BTC rallied by 12.45% over the same period for the mining stock percentage gains quoted above.
Bitcoin stocks have been soaring all year, not just this week, on the heels of the latest BTC price rally. By August, Bitcoin stocks had gained over 200% in market trading YTD.
Mining stocks have also outpaced Bitcoin spot prices all year, with BTC still behind several of them in the year-to-date range. BTC is up 103% YTD, while Marathon Digital has soared by 187% in 2023.
Another SEC retreat from its years-long battle with Ripple Labs in U.S. courts, plus increasing investor confidence in a spot Bitcoin ETF approval, were major tailwinds for BTC mining stocks this week.
Should Ripple Labs receive a favorable final judgment or settlement in its case, that tailwind could continue. An actual SEC approval for a spot Bitcoin exchange-traded fund would also likely increase demand for BTC mining stocks.
Meanwhile, the Bitcoin halving scheduled for April next year has historically been an ongoing tailwind for the asset’s prices and related mining stocks.
Headwinds include the SEC dragging its feet on Ripple, Bitcoin, or both for long enough that market enthusiasm wavers.
Rising electricity prices due to the growing economy or geopolitical conflicts spiking oil prices is another headwind for Bitcoin miners. Their profit margins are heavily affected by the cost of electricity.