This year’s cryptocurrency rally is no fluke. It wasn’t a memorable 2022 for cryptocurrencies, but the picture has dramatically changed this year, courtesy of the traditional currency market and favorable macroeconomic factors, including easing inflation.

Bitcoin, particularly, has had a great 2023 after its market value plummeted as much as 65% last year. This was mainly because of a couple of unfortunate events, namely the FTX bankruptcy following a major fraud and the Tera Luna crash.

However, cryptocurrencies are in top form this year. Experts predict that the rally will gather further momentum in the coming days on favorable macroeconomic conditions.

Given this scenario, investors should watch out for stocks such as Stronghold Digital Mining, Inc. SDIG, Riot Platforms, Inc. RIOT, and Marathon Digital Holdings, Inc. MARA.

Macroeconomic Factors Favoring Bitcoin

Bitcoin crossed $31,000 last week and has been hovering around $30,500 for the past few days. Needless to say, the rebound has been remarkable.

Earlier this year, the regional banking crisis had a significant impact, leading to substantial losses on various bond holdings. As a response to the severe liquidity issues caused by these losses, the Fed has taken a cautious approach toward implementing rate hikes.

The crypto market has never fared well during periods of rapidly increasing interest rates, as its inherent volatility makes it less favorable in such economic conditions.

In recent months, the crypto market has faced significant challenges due to strict regulatory actions by the SEC and overall high levels of inflation, prompting the Fed to continue raising interest rates.

However, Bitcoin has still had a solid run this year. The banking sector crisis that unfolded earlier this year, marked by the failure of several regional banks, caused significant concerns about a potential recession.

In response, many investors turned to digital assets, which many perceived as a safer alternative than regional banks. The instability in the banking sector led to a shift in investment strategies, with many considering digital assets as a more secure option during times of uncertainty.

The Bitcoin rally is expected to gather more steam in the second half of the year as macroeconomic conditions ease globally. Also, there has been more positive news for the sector recently. Data indicating a slowdown in inflation and the decision by the Fed to pause rate hikes in June have created a bright outlook for the crypto market.

Stocks to Watch

From an investment perspective, taking advantage of Bitcoin’s current upward trend can be seen as a prudent decision. One strategy will be to focus on companies that use Bitcoin and related technologies, including blockchain.

By monitoring and investing in these companies, investors may potentially benefit from the increasing adoption and growth of Bitcoin and its underlying technologies, without directly investing in the cryptocurrency itself.

Stronghold Digital Mining is a vertically integrated Bitcoin mining company. SDIG focuses on mining Bitcoin in the United States.

Stronghold Digital Mining’s expected earnings growth rate for next year is 92.1%. Shares of SDIG have gained 100.1% in the past 30 days. Stronghold Digital Mining presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Riot Platforms is a Bitcoin-driven infrastructure platform. RIOT is a Bitcoin mining and digital infrastructure company focused on a vertically integrated strategy.

Riot Platforms’ expected earnings growth rate for next year is 28.2%. Shares of RIOT have gained 72.4% in the past 30 days. Riot Platforms presently has a Zacks Rank #3 (Hold).

Marathon Digital Holdings is a digital asset technology company. MARA mines cryptocurrencies, with a focus on the blockchain ecosystem and the generation of digital assets.

Marathon Digital Holdings’ expected earnings growth rate for next year is 350%. Shares of MARA have gained 80.7% in the past 30 days. Marathon Digital Holdings currently carries a Zacks Rank #3.

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Marathon Digital Holdings, Inc. (MARA): Free Stock Analysis Report

Riot Platforms, Inc. (RIOT): Free Stock Analysis Report

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