Impact of Bitcoin and Ethereum Rallies on Crypto-Related Stocks: Will the Bullish Trend Continue?

The recent surge in Bitcoin and Ethereum prices has not only excited crypto enthusiasts but also sparked a positive trend in crypto-related stocks. With Bitcoin surpassing $70,000 and Ethereum climbing over 20% to trade above $3,700, the market sentiment is bullish.

The optimism is further fueled by the increased likelihood of an Ethereum exchange-traded fund (ETF) approval, as noted by senior analyst Eric Balchunas. The U.S. Securities and Exchange Commission (SEC) appears to be fast-tracking the approval process, potentially due to political pressure and a shift in stance on ETFs.

Hashrate futures contract traders are also optimistic, predicting a rise in hashprice over the next six months. This positive outlook is reflected in the performance of crypto-related stocks like Coinbase and MicroStrategy.

Coinbase saw a 378% increase in share price, reaching $225 on May 20, driven by a surge in transactions and favorable changes to crypto accounting rules. The company reported a revenue of $1.6 billion in the first quarter of 2024, marking a 72% increase from the previous quarter.

MicroStrategy, on the other hand, has seen its market cap surge from $3.60 billion to $30.63 billion, thanks to its substantial bitcoin holdings. With 214,400 bitcoins valued at approximately $15.26 billion, the company has generated a paper profit of around $7.76 billion.

Marathon Digital Holdings has also experienced significant growth, with its market cap increasing by 616% between 2020 and 2024. Despite operational challenges, the company remains bullish on its future, aiming to ramp up to 50 exahash per second (EH/s) and anticipating further growth in 2025.

As the crypto market continues its upward trajectory, investors are advised to exercise caution due to its inherent volatility. Diversifying investments and having a clear risk management strategy are crucial to navigate the uncertainties in this space. The potential approval of an Ethereum ETF could further drive up prices and investment in both crypto and related stocks, but it’s essential to remember the golden rule of investing: never invest more than you can afford to lose.