Bitcoin Rally Lifts Crypto Proxy Stocks
Stocks tied to cryptocurrencies rose sharply on Tuesday, as investors tracked a large rally in bitcoin that took prices back above $15,000.
Crypto Stocks Rally
Riot Blockchain Inc. (RIOT) surged more 20% on Tuesday, while LongFin Corp (LFIN) added more than 38%.
Both companies offer exposure to the cryptocurrency market, with Riot investing heavily in blockchain technology. LongFin’s stock has quadrupled over its short history thanks to a strategic acquisition of Ziddu.com, a blockchain technology provider. LongFin only began trading on the Nasdaq a few weeks ago.
At present values, Riot Blockchain has a market cap of $284 million. LongFin is worth nearly $2.2 billion.
Nvidia Corp (NVDA), another company tied to the blockchain revolution, was also up on Tuesday.
Meanwhile, HIVE Blockchain Technologies (HIVE) was down more than 10%.
Crypto stocks followed bitcoin’s lead on Tuesday, as the world’s largest digital asset rose more than 17% in midday trade to reach $16,035. At the time of writing, bitcoin was up 13% at $15,768 for a total market cap of roughly $269 billion, according to CoinMarketCap. That gives bitcoin a roughly 44% share of the cryptocurrency market.
Bitcoin has added more than 1,500% this year, prompting investors to seek out both direct and indirect exposure to the digital asset. One such way has been to buy shares of companies that are part of the blockchain industry. For many on Wall Street, this is seen as a safer alternative to investing directly in the volatile digital asset.
The value of bitcoin has fluctuated wildly all year long, but perhaps none more than the last two weeks. The BTC/USD exchange rate approached $20,000 Dec. 17 before shedding more than $8,000 over the next five days. Prices would later recover to $15,000 before another brisk selloff drove the cryptocurrency to $13,000.
The surge in crypto-related investments has drawn the attention of the Securities and Exchange Commission (SEC), which only last week put the clamp down on The Crypto Co (CRCW) stock over possible price manipulation. The California-based cryptocurrency consultancy has seen trading of its shares suspended temporarily as regulators investigate its multi-billion-dollar price surge.
In a statement, the SEC said, “Questions have also arisen concerning potentially manipulative transactions in the company’s stock in November 2017.”
At the time trading was suspended, Crypto Co’s share price was $575 for a total market capitalization of $11 billion.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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