Bitcoin’s Rising Tide Lifts Public Stock for Crypto Companies
Bitcoin (BTC) has seen an 87% increase in value this year, and this surge has also boosted the stock prices of crypto companies. One notable example is the Grayscale Bitcoin Trust (GBTC), the largest Bitcoin fund in the world, which has experienced a 196% rise since the beginning of the year. Investors have found GBTC shares to be a more profitable choice compared to owning actual Bitcoin.
Grayscale’s Plans for a Bitcoin ETF
Grayscale has announced plans to convert its fund into a spot Bitcoin ETF, offering investors exposure to its underlying Bitcoin stash. If approved by regulators, each share in the fund will be directly redeemable for a fixed portion of BTC. While this conversion hasn’t occurred yet and is not guaranteed, a recent legal victory over the U.S. government has increased the likelihood of approval. Consequently, the discount on GBTC shares, which previously traded at a lower price than Grayscale’s BTC holdings, has significantly decreased. A court order issued today has instructed the SEC to reevaluate Grayscale’s Bitcoin spot ETF.
MicroStrategy and Coinbase’s Success
MicroStrategy (MSTR) stock has also been used as an alternative investment option for Bitcoin, with its value increasing by 161% this year. The software company holds a substantial amount of BTC on its balance sheet. Similarly, Coinbase (COIN) shares have surged by 135% in 2023. Despite being affected by market trends, Coinbase’s strong stance against a U.S. government lawsuit and endorsement from BlackRock as its preferred Bitcoin ETF custodian have propelled its stock price.
Underperforming Competitors
While Coinbase thrives, traditional financial firms attempting to establish themselves as Bitcoin on-ramps have struggled. Square (SQ), founded by Bitcoin enthusiast Jack Dorsey, has supported Bitcoin trading through its subsidiary, CashApp, since 2018. However, SQ’s stock has declined by 31% since the beginning of the year. PayPal, another major payment platform that holds a significant amount of crypto and recently launched its own stablecoin, PYUSD, has also seen a 27% decrease in its stock price.
Bitcoin Mining Firms’ Outperformance
In addition to public stock for crypto companies, Bitcoin mining firms have outperformed the cryptocurrency itself in terms of returns. On average, these firms have achieved a return of 148.59% in 2023.
Hot Take: Crypto Stocks Ride the Wave of Bitcoin’s Success
The surging value of Bitcoin has not only benefitted individual investors but also public stock for crypto companies. The Grayscale Bitcoin Trust, MicroStrategy, and Coinbase have all experienced significant gains this year. Meanwhile, traditional financial firms like Square and PayPal have struggled to compete with the success of their crypto-focused counterparts. As the popularity and acceptance of cryptocurrencies continue to grow, it is likely that the performance of these crypto stocks will remain closely tied to the fortunes of Bitcoin and other digital assets.
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