Cryptocurrencies have been facing volatility for the past three weeks.  Prices of cryptocurrencies are inversely related to the market interest rate. In the past three weeks, two major developments in the United States left an adverse impact on cryptocurrencies.

The Fed reinitiated its interest rate hike regime in the July FOMC meeting after a pause in the June FOMC. On Jul 26, the Fed raised the benchmark lending rate by 25 basis points to the range of 5.25-5.5%. This marked the highest range of the Fed fund rate since March 2001. Moreover, the central bank remained open to more rate hikes depending on upcoming economic data.

On Aug 1, Fitch Ratings downgraded the U.S long-term foreign currency issuer default rating to AA+ from AAA. The agency cited “expected fiscal deterioration over the next three years.” Consequently, the yield on the benchmark 10-Year U.S. Treasury spiked to 4.198%, its highest level since November 2022. The yield on the long-term 30-Year U.S. Treasury Note touched 4.3%, its highest level since October 2022.

As a result, prices of cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Cardano (ADA) and Dogecoin (DOGE) and Litecoin (LTC) remained rangebound. Cryptocurrencies may face volatility in the near-term.

At this stage, investors should accumulate cryptocurrencies using a buy-on-the-dip strategy. Every dip in crypto prices will be a good purchasing point in order to gain handsomely once the market interest rate stabilizes.

Stocks to Watch

Block Inc. SQ is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications to run on programmable blockchains. SQ is also one of the largest Bitcoin investors.

Block has an expected earnings growth rate of 69% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3% over the last 90 days. SQ currently has a Zacks Rank #1 (Strong Buy).

Shopify Inc. SHOP is an e-commerce company that allows merchants using its platform to accept cryptocurrencies as payment and has integrated with cryptocurrency payments processor CoinPayments.

Shopify’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for its current-year earnings has improved 6.7% over the last 60 days. SHOP currently has a Zacks Rank #2 (Buy).

Robinhood Markets Inc. HOOD operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.

Robinhood Markets has an expected earnings growth rate of 48.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.2% over the last 30 days. HOOD currently carries a Zacks Rank #3 (Hold).

Coinbase Global Inc. COIN provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.

Coinbase Global has an expected earnings growth rate of 78.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.4% over the last 30 days. COIN currently carries a Zacks Rank #3.

Hut 8 Mining Corp. HUT has recently merged with US Bitcoin Corp to increase its total hash rate substantially. HUT aims to increase its total hash rate to 9.8 EH/s.

Hut 8 Mining has an expected earnings growth rate of 50% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 90 days. HUT currently carries a Zacks Rank #3.

Shopify Inc. (SHOP): Free Stock Analysis Report

Block, Inc. (SQ): Free Stock Analysis Report

Coinbase Global, Inc. (COIN): Free Stock Analysis Report

Hut 8 Mining Corp. (HUT): Free Stock Analysis Report

Robinhood Markets, Inc. (HOOD): Free Stock Analysis Report

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