- At least 52 companies with stocks worth $7.1 trillion are invested in cryptocurrency in one way or another.
- Crypto-related stocks have surpassed traditional stocks, with over 24 crypto stocks posting 90+ percent gains this year.
Stocks linked to cryptocurrency have been outperforming traditional stocks. These include shares of companies that are mining, trading, have Bitcoin on their balance sheets, or are exposed to crypto-related services. Crypto king Bitcoin (BTC) is on the edge of re-attaining its $65K all-time high. Shares of companies immersed in virtual assets are inclined to follow the trend, placing them at the top of the stock market board.
Additionally, at least 52 companies with stocks worth $7.1 trillion are tied to cryptocurrencies and the decentralized application (DApp) project of Web3. This is per a recent analysis from Morgan Stanley Capital International (MSCI). “Institutional investors may be experiencing a “creeping” exposure to cryptocurrency” for both advocates and non-enthusiasts, the report reads.
This year, over 24 global crypto stocks have posted more than 91 percent gains, according to Bloomberg. These firms’ have surpassed those of the energy, financial, and technology sectors. Shares of the crypto mining companies Hut 8 Mining Corp, Marathon Digital Holdings Inc., and Bitfarms Ltd., are up over 180 percent since the start of the year.
Cryptocurrency-related stocks outdo traditional stocks
The US Securities and Exchange Commission (SEC) approval of Bitcoin futures exchange-traded fund (ETF) has also contributed to these gains. In the past five days, shares of Coinbase and Hut 8 Mining Corp, part of the top four crypto-related stocks on Nasdaq, have climbed up 24 percent and 21 percent respectively.
The Bitcoin ETF excitement also saw institutional products tracking Bitcoin mark their fifth consecutive week of inflows. ProShares, which enjoys the first-mover advantage of a Bitcoin ETF, is now the most heavily traded fund in market history. The asset manager also saw a $1 billion turnover after launching trading on the New York Stock Exchange (NYSE).
However, as Craig Erlam, a senior market analyst from foreign exchange company Oanda, notes,
It remains to be seen if the ETF listing will stoke the next surge in Bitcoin prices or end up being an opportunity to take profits. Either could be the trigger for some pretty wild price action in the cryptocurrency space.
Challenges in institutional investor exposure to BTC
The MSCI report also notes that increasing cryptocurrency influence in investor portfolios has its challenges. These include environmental risks linked to contributing to the carbon footprint and electronic waste (e-waste). There are also social challenges that comprise investor education and protection. Governance challenges include password custodians. The latter is, however, complicated and largely unchartered, demanding great caution when addressing them.
The crypto king BTC, which has driven all these gains, was trading at $63,844 at writing time, up 2.6 percent in the day according to our data. Some analysts predict that the cryptocurrency will make a new all-time high before receding to $58,000.