Crypto Stocks are Taking Off: Here’s How to Catch the Wave.

May 11, 2023

https://liquidity-provider.com/app/uploads/2023/05/11.05.jpg

Bitcoin may be one of the best-performing investments this year, but the values of other cryptocurrency firms dwarf it as well as its crypto stocks. Take caution. Uncle Sam is about to interrupt the party.

In 2023, Bitcoin increased by around 65% to $27,350. That comes after the oldest cryptocurrency struggled into 2022 as a slew of scandals and bankruptcy sent the market into disarray. Few predicted that token prices would recover so soon. Some observers credit the latest run since March to the regional banking crisis, which proponents of the currency argue strengthens Bitcoin’s argument as an alternative to the old financial system.

However, the success of tokens pales in comparison to the success of some of the corporations that trade them. Crypto stocks of Coinbase Global (COIN), a cryptocurrency trading platform, are up 81% this year to $60.94. Shares of Marathon Digital Holdings (MARA) and Riot Blockchain (RIOT) are up 192% and 254%, respectively. 

Even corporate software giant MicroStrategy (MSTR), whose CEO Michael Saylor stepped away from the helm during last year’s crypto collapse, has more than quadrupled this year to $310 per share, aided by the company’s significant Bitcoin holdings.

Crypto enterprises rely on the continued growth of token prices and their ability to profit from the market. Both of these pillars are in jeopardy. Investors who expect such profits to continue in the long run should be cautious.

On the other hand, recent gains have been primarily driven by the same causes that have aided other risky assets: the hope that interest rates may stall or even fall.

Bitcoin and other crypto tokens are not intended to generate money. Bitcoin supporters believe that it will one day be extensively utilized as a store of wealth and that other currencies will someday have practical worth when their blockchains become effective in the real world. However, because those days appear to be years away, rising rates disproportionately negatively influence returns, as they do on other higher-risk assets. Higher interest rates tend to reduce the returns for investments with the least chance of making money in the short term.

So this year, the prospect that the Federal Reserve is nearing the end of its rate-hiking campaign was a huge boost to token prices. The problem now is that the tailwind has likely passed. Investors have not only priced in a pause in rates but expect the Fed will start cuts later this year. That’s a risky bet, and if cuts aren’t in the offing, token prices could turn on a dime.

“Any indication of further rate hikes could lead to crypto assets trading sideways to down until there’s more clarity,” said Compass Point Research & Trading analysts in a note last week.

The second major issue for crypto firms goes beyond token pricing and into a regulatory environment that is as hostile to the sector as it has ever been.

Marathon Digital Holdings CEO Fred Thiel expresses his perspective, noting that even after the FTX meltdown last year, the tone in Washington has shifted from “we’re open to talking about crypto” to “we really want to stamp this out.” While he is not a conspiracy theorist, he claims that there is a systematic attempt, coordinated or not, from various parts of government to exert pressure on the sector.

To wit, the White House suggested a 30% tax on crypto miners’ power consumption last week, claiming that it was necessary to counteract mining’s environmental damage. Miners, for their part, claim that their methods promote the development of renewable energy sources and assist power providers in selling extra energy that would otherwise go to waste.

The Securities and Exchange Commission, which warned Coinbase in March that it is likely to sue the business for securities breaches, is the most serious danger to cryptocurrency platforms. While the business stated that the agency’s goal was not entirely clear, executives believe it is likely looking at the tokens it displays as well as the items it gives clients that create yield. Coinbase has always disputed that its platform provides securities.

At a recent earnings conference, Coinbase executives stated that the smaller currencies and staking products that the SEC may be targeting account for a small fraction of the company’s current profitability. On the other hand, analysts covering the stock consider the yield business as one of the most potential areas of development for the company.

“We continue to think retail crypto volumes will remain weak, and the regulatory overhang will linger for some time,” wrote BofA Global Research analysts in a note after the earnings report. The analysts rate the stock “Underperform.”

And, although there appeared to be growing support in Congress last year for bills to limit the SEC’s authority, crypto doubters now appear to have the upper hand and are praising the crackdown.

“The problem is not regulatory ambiguity; it is mass noncompliance,” said Rep. Stephen Lynch (D., Mass.) at a hearing on Wednesday.

That’s hardly a good indicator that crypto businesses will have Congressional protection from enforcement agencies — and it’s certainly not a positive climate for their earnings as long as the investigation continues.

The hazards for crypto stocks investors abound, whether it’s a harsh awakening from the Fed on token pricing or an assault by the SEC on corporations’ profit centers.

Subscribe Our Newsletter

Fear Is Back. How to Profit From It.
Fear Is Back. How to Profit From It.

The market's fear indicator, the Cboe Volatility Index, or VIX, has appeared to be stuck at a dormant level as if investors had forgotten share prices may fall. It has risen dramatically in the last time.

Stocks
A Few Huge Stocks Are Driving the Stock Market Rally. It Could Be a Bad Sign.

Milena

A Few Huge Stocks Are Driving the Stock Market Rally. It Could Be a Bad Sign.

A few large stocks are driving the stock market rally. The average stock is up just 1% this year compared to the S&P 500's 7% gain. Narrow rallies may be less resilient.

Stocks
Anna

What is The Difference Between Liquidity Provider and Liquidity Aggregator?
Forex is a platform where everyone, from a huge corporation to a beginner trader, can start making a profit from their funds. The Forex market is so gainful, thanks to its exceptionally high liquidity.

discover
What is Cryptocurrency CFD Trading?

Oliver

What is Cryptocurrency CFD Trading?

A growing number of profitable opportunities emerged as crypto developed. Trading cryptocurrency CFDs is one such opportunity. The practice of day trading, which was first used in the stock market, has also spread to the crypto market. The only difference is that instead of using fiat money, crypto CFDs use cryptocurrencies. CFDs on cryptocurrencies are a fantastic method to trade digital currencies without needing to make a real purchase.

Liquidity

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries b2broker

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alexander

    What Is a Gamma Squeeze, and How to Trade It?

    What Is a Gamma Squeeze?

    Alexander

    Simple and Compound Interest — How Do They Differ?

    Simple and Compound Interest: How Do They Differ?

    Alexander

    How Strong is The US Economy Today?

    How Strong is The US Economy Today?

    Alexander

    How Do Crypto Liquidity Pools Work in 2023-2024?

    How Do Crypto Liquidity Pools Work

    Alexander

    What Is The Wheel Strategy in Trading?

    What Is The Wheel Strategy in Trading?

    Alexander

    How to Choose a Forex Liquidity Provider in 2023?

    How to Choose a Forex Liquidity Provider in 2023?

    Alexander

    5 Best AI ETFs for 2023-2024

    5 Best AI ETFs

    Alexander

    What Is an Investment Priorities Plan?

    Investment Priorities Plan - Definition

    Alexander

    What is a Token Maker? – Creating Your Own Crypto Token Without Coding Skills

    What is a Token Maker? – Creating Your Own Crypto Token Without Coding Skills

    Alexander

    How Many Days a Year the Stock Market Is Up? – An Investor’s Guide to Long-Term Success

    How Many Days a Year the Stock Market Is Up?

    Alexander

    Invest $100 and Make $1,000 a Day: Best Strategies to Grow Your Money

    Invest $100 and Make $1,000 a Day: Best Strategies to Grow Your Money

    Alexander

    Is Real Estate Investment Trusts a Good Career Path? — Opportunities in 2023

    Is Real Estate Investment Trusts a Good Career Path?

    Alexander

    Is Day Trading Gambling? Most Likely Yes

    Is Day Trading Gambling? Most Likely Yes

    Alexander

    Where to Exchange Currency Without Paying a High Fee — Planning Your Travel Beforehand

    Where to Exchange Currency Without a High Fee

    Alexander

    Is Infinite Banking a Scam? Unveiling the Truth Behind the Concept

    Is Infinite Banking a Scam? The Truth Behind the Concept

    Alexander

    The Dollar Milkshake Theory: Could the US Dollar Become Even Stronger?

    The Dollar Milkshake Theory: Could the US Dollar Become Even Stronger?

    Alexander

    Why “Skip the Latte” is Poor Financial Advice

    Why "Skip the Latte" And "Cancel Netflix" Is Bad

    Alexander

    Is Now a Good Time to Invest? Exploring Investment Opportunities in 2023

    Exploring Investment Opportunities in 2023.

    Alexander

    Best Bitcoin Wallets in 2023: Comparing Features, Security, and Usability

    Best Bitcoin Wallets in 2023

    Alexander

    Top Rising NFT Artists to Watch Out for in 2023 And Beyond

    Top Rising NFT Artists to Watch Out for in 2023

    Alexander

    Insuring Your Future: What Type of Insurance to Buy?

    Insuring Your Future: What Type of Insurance to Buy

    Alexander

    Is IUL a Good Investment Strategy? — A Guide for Beginner Investors

    Is IUL a Good Investment Strategy? — A Guide for Beginner Investors

    Alexander

    Are Crypto Wallets Safe? — Tips to Ensure Maximum Protection of Your Digital Assets.

    Are Crypto Wallets Safe? — Tips to Ensure Maximum Protection

    Alexander

    Roth IRA Guide: What It Is and What You Need to Know.

    Roth IRA Guide: What It Is and What You Need to Know
    Latest News - Liquidity Provider: Business & FinTech Media
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
    [email protected]

    © 2023 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site.