Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Blackrock BLK, Coinbase Global COIN, Riot Blockchain RIOT, Bitfarms BITF and Marathon Digital MARA.
Here are highlights from Monday’s Analyst Blog:
5 Reasons Bitcoin Will Rally into Year-End and Beyond
Bitcoin: Expect the Unexpected
Late last year, crypto exchange giant FTX transformed from a well-respected industry juggernaut to a bankrupt, fraudulent embarrassment in a matter of weeks. Meanwhile, Bitcoin lost over 60% of its value in 2022, surrendering more than $2 trillion in market cap.
However, against all odds, Bitcoin is once again rising from the ashes and rallying in the face of what Bitcoin enthusiasts call FUD (fear, uncertainty, & doubt). Now, investors wonder, “Is the rally in Bitcoin simply a dead cat bounce, or does it have legs?”. Below are 5 reasons Bitcoin will rally into year-end, including:
Seasonality
Like with equities, historical seasonality is an essential tool for investors to utilize when analyzing Bitcoin. Seasonality refers to instances during the year when Bitcoin tends to be strong or weak – on average. As with any other study, seasonality is not a panacea. However, seasonality can aid investors by providing them with a mathematical edge.
Whether it is due to factors such as bonuses, tax considerations, or holiday sentiment, Bitcoin has enjoyed a strong end-of-year seasonal tailwind throughout its history. Did you know that, on average, throughout October and November, Bitcoin tends to gain 50%?!
Long-Term Technical Chart
The 50-month simple moving average is a tool technicians use to size up the very long-term trend in an instrument. Apart from 2022, Bitcoin has held the 50-month MA for the entirety of its more than decade rally. Now, BTC is again clearing the 50-month as it carves out a textbook bull flag pattern.
Risk-On Environment
Though many exchanges and alt-coins (cryptocurrencies not named Bitcoin) have collapsed, Bitcoin has been resilient through the years and has handily outperformed other stores of value, such as Gold. In fact, Bitcoin tends to be more correlated to the Nasdaq, which is good news for Bitcoin investors if the Federal Reserve cuts rates next year and the animal spirits return.
Regulatory Clarity + ETF Approval
The Securities & Exchange Commission (SEC) is suffering a string of recent crypto-related losses in the US court system. As time goes by, it seems more and more likely that it will be a matter of when, not if, Bitcoin ETFs from applicants such as Blackrock (the world’s largest asset manager) will be approved. ETF approval and regulatory clarity will be a huge win for companies like Coinbase Global, who will be the custodian exchange for most Bitcoin ETFs. Furthermore, regulatory clarity will be a win for Bitcoin, as institutional and retail investors will have much more access to Bitcoin than ever before.
Bitcoin Hash Rate Hits New Highs
When the Bitcoin hash rate mints fresh highs, it suggests that the computational power and security of the Bitcoin network have increased significantly. Miners such as Riot Blockchain, Bitfarms and Marathon Digital are dedicating more resources to validate transactions and secure the network, indicating growing interest and investment in Bitcoin.
Bottom Line
Bullish catalysts such as seasonality, technicals, market environment, regulatory clarity, and the Bitcoin hash rate suggest that Bitcoin and Bitcoin proxies are a strong investment into year-end and beyond.
BlackRock, Inc. (BLK): Free Stock Analysis Report
Marathon Digital Holdings, Inc. (MARA): Free Stock Analysis Report
Riot Platforms, Inc. (RIOT): Free Stock Analysis Report
Coinbase Global, Inc. (COIN): Free Stock Analysis Report
Bitfarms Ltd. (BITF): Free Stock Analysis Report
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This article originally appeared on Zacks
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