Investors are likely aware of the “everything rally” that occurred days after the US presidential election results were released, signaling markets to show the world just how bullish the administration’s coming years will be. However, some asset classes, including cryptocurrencies, have begun to cool off after this significant rally.
Having reached an all-time high of just over $90,000, Bitcoin has now pulled back enough to bring most of its post-election plays back into the market. This is where some investors may begin to get excited about using their available cash, hoping for a potential recovery to recent highs, if not higher. However, there are several fundamental reasons why investors should wait.
Before considering stocks like MicroStrategy Inc. NASDAQ: MSTR as an avid bitcoin owner, Coinbase Global Inc. NASDAQ: COIN like a tech stock exchange allowing investors and traders to get a piece of the cryptocurrency action and volatility in the coming weeks, and even a diversified ETF like iShares Bitcoin Trust NASDAQ: GOthere must first be one clear signal.
Buying cryptocurrency stocks on the decline: what to look for before investing
Intermarket Gold Alert: Key Signals Investors Are Watching
Days before Bitcoin gave up some of its gains, the price of gold began to deviate and this should have been taken as a warning to cryptocurrency investors. Although Bitcoin is a relatively new asset, gold has historically been the choice of investors to express their views on inflation or a weaker dollar.
In this sense, investors looking to buy falling cryptocurrency stocks will have to wait for gold to consolidate at the bottom and then pull the trigger if and only if gold decides to take control again.
Can MicroStrategy stock achieve another double-digit gain?
MicroStrategy stock forecast today
$479.25
Growth potential 23.69%Buy
Based on 8 analyst ratings
| High forecast | $650.00 |
|---|---|
| Average forecast | $479.25 |
| Low forecast | $194.00 |
MicroStrategy stock forecast details
According to MicroStrategy’s latest financial reports, the company has up to 279,420 bitcoins on its balance sheet. This means that as Bitcoin potentially recovers to all-time highs, the company’s book value will rise significantly along with it.
That’s why the broader markets are willing to pay a premium for the company’s balance sheet, as evidenced by the stock’s current price-to-book (P/B) valuation of 18.3 times, compared with the computer sector’s average P/B valuation of 6.8 times. Today.
While some may call this expensive, investors should understand that markets willing to overpay for a particular stock usually have a good reason for doing so, and a company’s balance sheet today is that justification. Some institutional investors understand this idea, which is why the folks at Geode Capital Management saw fit to increase their MicroStrategy holdings by 990% in the most recent quarter.
This new addition brings the group’s net investment to $465.6 million, or a 1.3% stake in the company.
Why Short Sellers Think Coinbase is Coming Back
Global Coinbase Stock Forecast Today
US$255.22
-13.83% DisadvantageHold
Based on ratings from 20 analysts
| High forecast | $375.00 |
|---|---|
| Average forecast | US$255.22 |
| Low forecast | US$150.00 |
Coinbase Global Stock Forecast Details
As Bitcoin and other cryptocurrencies begin to gain traction and become more popular with the rest of the market, short sellers are no longer convinced to maintain their short positions in stocks. At least that’s a logical explanation after the company’s short interest dropped 10.3% in the last month alone.
The same buyers of MicroStrategy stock, Geode Capital Management, also decided their money could benefit from some exposure to Coinbase stock. As of November 2024, the group has increased its holdings in Coinbase by 10.1% to today’s high of $609.8 million, replacing some retreating short sellers.
Wall Street analysts believe the underlying growth in the business is already in place. They currently forecast Coinbase’s earnings per share (EPS) to hit $0.94 over the next 12 months, implying a net upside of 235% from today’s $0.28.
Harness the Gold Signal with This Diversified Bitcoin ETF
When and if gold prices signal that investors should start buying Bitcoin again, since gold is an indicator of all the fundamental factors that make it a commodity to buy and sell alongside Bitcoin, investors could take a more diversified approach to entering the cryptocurrency market.
This is where the iShares Bitcoin ETF comes into play, as it offers less volatility than the spot price of Bitcoin and all the benefits of stock markets, such as options to hedge your ETF position in case markets become volatile again. As with Coinbase, short sellers see no reason to maintain their short positions in the sector.
This trend can be seen by the 22.6% decline in short interest on this ETF over the past month, indicating signs of bearish capitulation. The ETF also reported institutional inflows of up to $1.7 billion over the past 12 months, showing that fleeing bears are being replaced by willing bulls.
Before you consider the iShares Bitcoin Trust, you should hear this.
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