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2023 was a good year for crypto. By the end of the year, the crypto market was seeing its best performance since May 2022, with the two biggest cryptocurrencies, Bitcoin and Ethereum, both breaching the $41,000 and $2,200 marks respectively. In addition to that, the latest crypto rally has taken the total crypto market cap to $1.42 trillion, a 2023 high.
Can it get better than this? Experts think it can.
The factors fueling the crypto rally will also determine the crypto market’s performance in 2024. Find out what to expect and crypto stocks to invest in to potentially profit from the crypto market’s revival.
Expectations for Fed Rate Cuts
The first factor fueling the crypto rally is expectations that the U.S. Federal Reserve will cut interest rates in 2024. Higher interest rates affect the availability of easy money for both traders and businesses. Therefore, traders become more risk adverse in these conditions – pushing them away from riskier assets like crypto.
It’s easy to see the relationship between crypto and interest rates when you look at Bitcoin prices over the past few years.
In 2020-2021, crypto prices skyrocketed after interest rates fell near 0% during the Covid-19 pandemic, pushing Bitcoin prices north of $64,000 twice in 2021. However, after the Fed’s first interest rate hike in March 2022, BTC prices dropped roughly 58%. As interest rates continued increasing throughout 2022-2023, Bitcoin’s price dropped to as low as $15,787 in 2022.
The correlation between the Fed’s monetary policy and the crypto market is not surprising. But now that the Fed has decided to leave interest rates at 5.25%-5.5% at their last meeting of the year, expectations that interest rate cuts will begin in early 2024 have contributed to surging crypto prices.
Bitcoin ETF Approval in 2024
One of the largest drivers for the crypto rally is undoubtedly expectations that a spot Bitcoin ETF will be approved in 2024. According to a K33 Research report, the SEC is on track to approve spot Bitcoin ETFs as early as January of next year following progressive talks with issuers over the preferred redemption model for these investment vehicles.
These issuers include investment companies such as BlackRock and WisdomTree, which both submitted amended applications with the SEC.
Michael Saylor – executive chairman of MicroStrategy, a software company that has been hoarding Bitcoin over the past three years – made headlines when he said that the approval of a Bitcoin ETF could be the most significant event on Wall Street in three decades. His comparison to the introduction of the S&P 500 ETF illustrates just how earth shattering a spot Bitcoin ETF could be for the entire market.
He added that retail investors have lacked a proper channel for investing in Bitcoin, and a Bitcoin ETF could fill that gap by making investing in BTC easier, more attractive, and more easily regulated.
But it’s not just Saylor who thinks that a Bitcoin ETF would be a gamechanger. Standard Chartered Bank went so far as to predict that Bitcoin could reach $120,000 by the end of 2024, thanks to these new developments. This bullish sentiment has not gone unnoticed, as BTC has rallied 64% since mid-October while ETH is up roughly 47% over the same period.
Bitcoin Halving in 2024
Another catalyst affecting Bitcoin in 2024 is the halving event which is expected to take place in April. With a supply of just 21 million Bitcoins, the halving will make mining the cryptocurrency even more difficult and as a result the value of BTC will also increase. Grayscale research noted that a larger share of Bitcoin is held by long-term holders such as institutions, this will further limit the supply of Bitcoin available. The research team noted that, “Next year’s Bitcoin halving will also limit the growth of new token supply. This combination of inelastic Bitcoin supply and potential new investor inflows should be positive for valuations, in our view”.
Best Crypto Stocks for 2024
Given the bullish outlook for crypto in 2024, investors should be watching for crypto stocks which offer a compelling investment case for the new year. With this in mind, we’ve picked out 5 crypto stocks that could see growth in the future thanks to a continued crypto rally.
We’ve ranked the first four crypto stocks by the value of their crypto holdings from the lowest to the highest. But the last crypto stock is pretty special. While it doesn’t actually deal with Bitcoin, its relation to the crypto market could make it a surprising performer in 2024.
The first crypto stock on our list is Bitcoin miner Riot Platforms (NASDAQ: RIOT). The company owns 7,358 BTC at a market value of $315 million. While Riot Platforms started out as a small patent holding company known as Bioptix, it ditched its original business model in 2017 and turned into a fully dedicated Bitcoin miner.
In order to become a leading BTC mining company, Riot purchased tens of thousands of high quality Antminers from Bitmain developing a massive fleet of high-end miners in the process. Riot achieved an impressive 112,944 miners by the end of November which allow it to produce an average 18.4 BTC every day.
The company sells hundreds of Bitcoins each month to increase its liquidity, but it was still holding 7,358 BTC, with a market value of $315 million, on its balance sheet at the end of November.
As a result of the crypto rally, RIOT stock increased around 72% from November until now. As BTC’s price continues to increase, Riot’s revenues and profits should increase correspondingly since the company mainly depends on selling Bitcoin.
In addition to selling Bitcoin, the company plans to stabilize its long-term operating margins by selling its excess power back to the grid at spot prices. Riot Platforms has a market cap of $3.44 billion and its stock trades at around $16. Additionally, its expected earnings growth rate for next year is 60.1%.
To find out more about RIOT stock, check out our earlier article.
A second crypto stock to consider is Jack Dorsey’s Block Inc. (NYSE: SQ ) which owns 8,027 BTC with a market value of $343 million. Block Inc. offers an online digital and mobile payment platform for consumers. It is also the parent company of Square, Cash App, Spiral, Tidel and TBD.
Block Inc. is an important player in the crypto market since its subsidiary, Spiral, is focused on Bitcoin development. It also offers a convenient entry to the crypto market through Cash App, which allows its users to buy, sell, send and receive Bitcoin. Additionally, the company’s decentralized TBD platform allows developers to build finance applications to run on programmable blockchains.
In its Q3 earnings results, Block generated $5.62 billion in revenue, of which 43% came from Bitcoin. The company’s gross profit also increased by 21% year-over-year, reaching $1.9 billion this quarter. Meanwhile, Cash App reported 27% increase in gross profit reaching $984 million.
These signs of life for SQ stock are very promising. The company’s performance was squashed in the post-pandemic era, and while it may never reach its pandemic highs of more than $260 per share, it offers a more diversified play for investors looking to benefit from catalysts in the crypto market and a broader recovery in consumer spending.
As for its exposure to crypto, Block shared that it achieved $45 million in bitcoin gross profit. Block sold $2.42 billion worth of crypto to customers, a 37% increase YoY. This notable growth is thanks to the increasing price of BTC as well as greater demand for the digital asset.
Beating earnings expectations and raising guidance helped spur SQ stock on a run. Now up 97% since its earnings, the company could continue running in sympathy with any crypto rallies. Considering that the RSI is significantly overbought at 82 on the daily chart, investors may want to watch SQ stock for a pullback to take a position in 2024.
Next on the list of best crypto stocks for 2024 is Coinbase Global (NASDAQ: COIN). The company owns around 9,000 BTC at a market value of $385 million.
This company offers a secure online platform for buying, selling, transferring, and storing cryptocurrency. It provides its customers with a main financial account in the crypto space, a marketplace with liquidity for institutional crypto transactions, and technology and services for developers to build crypto-based applications.
Coinbase can benefit greatly from the establishment of a Bitcoin ETF since it has been selected as a custodian by nine out of twelve spot-traded BTC ETF candidates. This is not surprising, given that BlackRock picked Coinbase to offer crypto services to institutional investors back in August. Although this crypto exchange came under some scrutiny from the SEC, it is still considered one of the most regulated crypto platforms.
COIN stock has climbed a whopping 145% since its earnings despite reporting a decline in Q3 trading volumes from $26 billion in 2022 to $11 billion this quarter. The RSI of 80 on the daily timeframe shows COIN stock is significantly overbought, investors may want to wait for a pullback before taking a position.
Since COIN stock could benefit the most from the spot Bitcoin ETF approval, it is definitely a crypto stock to watch in 2024. Additionally, its expected earnings growth rate for next year is 30.5%.
A crypto favorite, Marathon Digital Holdings (NASDAQ: MARA) ranks with the largest holding of Bitcoin out of the four stocks chosen. In fact, the company owns 14,025 BTC at a market value of $600 million, making it one of the largest holders of Bitcoin among publicly traded companies in the US.
MARA is a favorite among crypto stocks and for good reason. As one of the largest, most energy efficient, and most technologically advanced Bitcoin mining companies, MARA could substantially capitalize on the crypto market’s recovery.
So far Marathon Digital Holdings has differentiated itself by investing in the newest technologies for Bitcoin mining. Very recently, MARA announced it was investing $179 million to acquire two new mining sites which are expected to add 390 megawatts of capacity and reduce the cost per coin mined by around 30%.
This all cash deal could be just one of many as MARA works to capitalize on acquisition opportunities ahead of Bitcoin’s halving in 2024. Marathon noted that its has more than $800 million of cash and bitcoin to “capitalize on strategic opportunities, including industry consolidation” ahead of the halving event.
This acquisition announcement has given MARA stock a notable push. The stock has climbed 33% since the announcement but had already climbed 134% since its November earnings. The RSI is notably overbought on the daily timeframe reaching an incredible 87.
Currently, MARA has a market cap of $4.89 billion and its expected earnings growth rate for next year is 74.5%. Those interested in capitalizing on the BTC rally may find opportunities in MARA stock in 2024.
To find out more about MARA stock, check out our earlier article.
Unlike the other 4 crypto stocks, this one is a little different. While it does not hold BTC, it moves according to changes in the prices of the crypto making it a great opportunity for investors waiting for the approval of a spot Bitcoin ETF. ProShares Bitcoin Strategy ETF (NYSEARCA: BITO) aims to produce returns that correspond to Bitcoin by tracking Bitcoin futures. However, its not without its disadvantages, for example, its 0.95% expense ratio is much higher than the average expense ratio of equity ETFs at 0.16%.
Because BITO holds Bitcoin futures it is able to more closely track Bitcoin returns than for-profit companies that deal with overhead costs and may have less direct exposure to Bitcoin. On top of that, BITO was one of the best performing ETF’s of 2023.
Its YTD daily total return reached 140.08%, and it offers a yield of 14.98%. Additionally, BITO is up nearly 58% since mid-October the ETF has net assets worth $1.46 billion.
Crypto Stocks Forecast
As the crypto market rallies into the end of 2023, its outlook for 2024 looks particularly bullish. With a number of catalysts ranging from Bitcoin’s halving in April, to interest rate cuts, and potential spot Bitcoin ETF approval, crypto stocks like these could be too good to ignore.
While it didn’t make the list, there is one honorable mention which may be worth watching. Find out more about Robinhood Markets, Inc (NASDAQ: HOOD)and how it may benefit from the crypto rally in our other article.
Crypto stocks aside, to play the crypto rally directly investors can always buy cryptos like BTC and ETH. But keep in mind the volatility of these digital assets when making any investments.
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