The price of Bitcoin (BTC) has been trading within a narrow range in August as volatility this time around is significantly low due to traders going on holiday until Labor Day.
However, the price of Bitcoin lately bounced back from its trough of below $25,500, the lowest level since mid-June, touched last week. It is now holding above the psychological level of $26,000 over the past 24 hours.
So, what’s behind the Bitcoin rally? Traditionally, the price of Bitcoin is dependent on the performance of the tech-heavy Nasdaq 100 stock index. This is because both tech stocks and cryptocurrencies are considered to be risky assets.
Now, NVIDIA Corporation’s NVDA current blowout earnings have not only lifted the mood among investors to place bets on tech stocks but also given cryptos, including the price of Bitcoin a lift.
The long-dated Treasury yield, meanwhile, has fallen. The 10-year Treasury yield, after hitting its highest level in more than 15 years earlier in the week, declined to 4.18% on Aug 24.
Growing concerns about a “hard landing,” or in other words, the Federal Reserve not being able to tame inflation without causing an economic slump, has put pressure on bond yield. After all, the Fed’s move to curtail inflation has impacted both the manufacturing and services side of the economy adversely. This, in turn, is spurring bets that the central bank will be compelled to remain accommodative.
The possibility of a pause in interest rate hikes in the upcoming meetings bodes well for high-risk assets, including digital coins. The CME FedWatch Tool lately shows that around 80.5% of market participants do not anticipate the Fed to raise interest rates in September.
Furthermore, interest among financial bigwigs in crypto is likely to push the price of Bitcoin, along with other digital coins, higher shortly. BlackRock, Inc. BLK has appealed to regulators to create a spot Bitcoin ETF, which will increase retail participation. Similarly, The Charles Schwab Corporation SCHW is backing a new exchange called EDX Markets.
The price of Bitcoin is also dependent on its halving cycles. Bitcoin’s halving event is due next year when the supply of the world’s numero uno cryptocurrency will be lowered leading to a boost in its price. Thus, astute investors should now keep a tab on companies that can make money by capitalizing on Bitcoin’s current upsurge, and growth prospects.
Primary among them is the Bitcoin mining firm HIVE Digital Technologies Ltd. HIVE. HIVE Blockchain’s shares have soared 138.9% so far this year, while the broader S&P 500 Index has gained 16.9% in the same period.
HIVE Blockchain’s expected earnings growth rate for the current year is 72.3%. The Zacks Consensus Estimate for HIVE’s current-year earnings has increased 39.4% over the past 60 days. HIVE Blockchain has a Zacks Rank #3 (Hold).
Block, Inc. SQ, by the way, has invested significantly in Bitcoin. Per CoinGecko, Block has around $235 million in Bitcoin on its balance sheet. Its Cash App, where users can easily purchase and sell Bitcoin, has seen strong engagement in recent times.
Block has made rampant investments in blockchain technologies that empower the presence of cryptocurrency, including Bitcoin. Block’s expected earnings growth rate for the current and next year are 68% and 36.3%, respectively. In reality, Block’s projected earnings growth rate over the next five-year period is 30%. Block has a Zacks Rank #3.
BlackRock, Inc. (BLK): Free Stock Analysis Report
The Charles Schwab Corporation (SCHW): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
HIVE Digital Technologies Ltd. (HIVE): Free Stock Analysis Report
Block, Inc. (SQ): Free Stock Analysis Report
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