The cryptocurrency market started 2024 on a high after a solid rally in 2023. A historic step in the crypto space was taken on Jan 10 when the U.S. Securities and Exchange Commission (SEC) gave approval to 11 spot Bitcoin (BTC) exchange-traded funds (ETFs).
The decision is expected to change the entire ballgame as it will now allow retail investors, money managers and other financial institutions to trade Bitcoin without actually owning it.
The SEC’s announcement saw Bitcoin, the world’s largest cryptocurrency, rallying past $47,000. However, the rally has since stalled and prices have been on a freefall. On Feb 1, Bitcoin was trading around $43,131 after falling to nearly $39,600 in the last week of January.
The cryptocurrency took a further hit on Jan 31, falling nearly 2%, following the Federal Reserve’s FOMC meeting. The Federal Reserve left its benchmark policy rate steady in the current range of 5.25-5.50% and indicated that the monetary tightening campaign is likely over.
However, Fed Chair Jerome Powell also said that it was unlikely that the central bank would be ready for the first rate cut in March. This dampened investors’ sprits, with both stocks and cryptocurrencies taking a hit.
Higher interest rates typically exert a negative impact on growth-oriented sectors, including technology, consumer discretionary industries, and cryptocurrencies.
However, the recent decline appears to be temporary, as Bitcoin holds immense potential. Experts see immense potential in Bitcoin, and the launch of the ETF is expected to positively impact the market in the long run. Despite the inherent volatility and risks associated with cryptocurrencies, the move to integrate cryptocurrencies into the mainstream has been eagerly awaited.
Also, the next Bitcoin Halving is expected in the first half of this year. During a halving, the reward for mining new blocks is reduced by half, posing a greater challenge for miners to accumulate net Bitcoins. Historically, this occurrence has resulted in heightened scarcity, contributing to an increase in the value of Bitcoin as a result of reduced supply.
Stocks in Focus
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’ expected earnings growth rate for the current year is 45.3%.The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the last 60 days. Robinhood Markets currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Coinbase Global, Inc. COIN offers financial infrastructure and technology to support the global cryptocurrency economy. COIN provides a main financial account for consumers in the crypto space, a marketplace with liquidity for institutional crypto asset transactions, and technology and services for developers to build crypto-based applications and accept cryptocurrencies securely as payment.
Coinbase Global’s expected earnings growth rate for the current year is 93.1%. The Zacks Consensus Estimate for current-year earnings has improved 16.3% over the last 60 days. Coinbase currently has a Zacks Rank #3.
BlackRock, Inc. BLK is one of the world’s largest investment managers and is publicly owned. BLK was one of the first companies from the traditional market to join the Bitcoin ETF race back in June 2023.
BlackRock’s expected earnings growth rate for the current year is 4.3%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the last 60 days. BlackRock presently carries a Zacks Rank #3.
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 95% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 60 days. SQ currently carries a Zacks Rank #3.
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BlackRock, Inc. (BLK) : Free Stock Analysis Report
Block, Inc. (SQ) : Free Stock Analysis Report
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Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report