Crypto Proxy Stocks Rise With Broader Market
The cryptocurrency market’s sudden revival has triggered a large rally in crypto proxy stocks, a broad cluster of companies with direct and indirect exposure to blockchain technology. After a bumpy few months, blockchain-branded firms are once again rising in lockstep with bitcoin and the broader digital asset class.
Crypto Stocks Jump
Stocks tied to cryptocurrencies have traded sharply higher in recent days, with the likes of Riot Blockchain Inc. (RIOT), HIVE Blockchain Technologies (HIVE) and Marathon Patent Group Inc. (MARA) among the best performers.
Riot surged more than 20% on Tuesday en route to fresh two-month highs. Share prices surged 11.7% on Monday.
HIVE, the first publicly-listed blockchain infrastructure firm, jumped more than 11% Tuesday and is up more than 23% this week. The penny stock is proposing a business model that aims to bridge the gap between distributed ledger technology and capital markets.
Marathon’s share price rose 19% on Tuesday after gaining 9.2% in the previous session. Marathon was one the first miners to secure a listing on the Nasdaq.
Nvidia Corp (NVDA), an S&P 500 component, rose by as much as 2.2% Tuesday after falling in each of the last two sessions. The California-based chipmaker generated $289 million in sales to cryptocurrency miners during the first quarter, far exceeding forecasts of $200 million. The company has warned that mining sales are likely to fall sharply in the July quarter.
The price of bitcoin is once again showing signs of life after blowing past $8,000 earlier in the day. The gain not only sparked a wider relief rally among cryptocurrencies, it put crypto proxy stocks on the fast track to bigger gains.
With the exception of Nvidia, which is far more diversified than some of its blockchain peers, many of Wall Street’s crypto players are small- and medium-sized firms that have struggled to make headway during the market downturn. Although blockchain companies for the foreseeable future will continue to be steered by cryptocurrency prices, their long-term trajectory is more favorable as distributed ledger technology gains wider acceptance.
Current market leaders in blockchain technology include Ripple, Chain, Coinbase and Bitmain. Over the next five years, market researchers expect the industry to grow manifold with the likes of Microsoft, IBM, Amazon and Deloitte entering the picture.
As Hacked reported July 9, China’s Bitmain has become the largest blockchain-focused company in the world following a series of strategic acquisitions. The company says it is open to the idea of an initial public offering (IPO) after rivals Ebang and Canaan Creative announced plans to go public.
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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