Although many investment professionals and other wise people warn us not to put all our eggs in one basket, sometimes this strategy can really pay off. On Monday, several publicly traded companies based on a particular cryptocurrency saw sharp gains alongside those underlying assets.
Specialists in cryptocurrency mining cleanspark (CLSK 19.88%) achieved gains of approximately 20%, while its counterpart Riot pads (riot 9.12%) Its stock prices saw an improvement of more than 9%. At the head of both of them was Michael Saylor, the cryptocurrency bull The precise strategy (MSTR 21.86%)which ended the day up nearly 22%.
All in top encryption
There are no prizes for guessing which stellar cryptocurrencies each of these companies are based on. yes it is Bitcoin (BTC 4.81%)the currency that Cleanspark and Riot Platforms have enthusiastically mined, and Microstrategy is feverishly pouring their capital into buying.
Sure, that laser focus can be limited, but not when these assets are flying so high. For the first time in its relatively long history (more than 15 years), Bitcoin surpassed $70,000 on Monday morning. And so far, as of this writing late that afternoon, the price has been holding there.
This certainly surprised quite a few investors. After all, the securities that helped propel Bitcoin to new heights earlier this year — the recently introduced Bitcoin exchange-traded funds (ETFs) — have seen a net… flows last week.
according to Coinbase In a research report published on Friday and cited by cryptocurrency outlets like Coindesk, between March 18 and 21, these funds totaled $836 million for the pool of spot Bitcoin ETFs on the market. This was the first week of outflows recorded by Coinbase in two months.
However, you cannot hold good cryptocurrency. Yes, many investors traded out of Bitcoin as capital drained from Bitcoin exchange-traded funds, but the resulting price weakness in the coin attracted bargain hunters. Upside abounds in the world of cryptocurrencies, as the Federal Reserve appears still set to cut its key interest rate several times this year, and inflation continues to moderate (at least somewhat).
Prove the doubters wrong
We must also keep in mind that in the very near future, Bitcoin will undergo a very significant change. This is the latest “halving” of the cryptocurrency, which simply means that the rewards for mining the coin will be cut in half. This may seem like a distant memory to some, as the latter half occurred nearly four years ago.
However, the significantly lower reward for Bitcoin mining is leading to a rush into the cryptocurrency. After all, miners are eager to start their engines to make more before those wages drop.
I've been skeptical of Bitcoin over the years, but now there are several green lights for the best cryptocurrencies. Unless we see a red flash or two in the coming days and weeks, it should hold its current value fairly well. The same goes for Cleansparks, Riots, and Microstrategys that rely mostly – or entirely – on it.
Eric Volkmann has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
