Cryptocurrencies have faced a challenging period following a robust performance in 2023 and the first quarter of this year. Bitcoin (BTC), in particular, surged to an all-time high of $73,750 in March, marking a significant milestone. However, momentum has since waned, with Bitcoin struggling below $70,000 for most of May and continuing into June. On June 13, Bitcoin briefly dipped below $67,000 before rebounding slightly to trade at $67,100.
The decline in Bitcoin’s value can be attributed to several factors, notably the Bitcoin halving event in April. This event, occurring roughly every four years, cuts the block reward by 50%, intended to limit the total supply of Bitcoin to 21 million coins. Historically, such reductions have spurred demand for cryptocurrencies, typically resulting in price increases. Despite these expectations, Bitcoin failed to regain its earlier momentum post-halving. Concurrently, a slowdown in the Wall Street rally during April, driven by concerns over inflation and potential interest rate hikes, also impacted Bitcoin’s performance.
While inflation showed signs of easing in April and May, alleviating immediate fears of aggressive rate hikes, uncertainty surrounding the Federal Reserve’s future rate cut plans unsettled investors. Federal Reserve Chairman Jerome Powell indicated a more cautious approach following the FOMC meeting, suggesting only one rate cut this year, a significant revision from the earlier projection of three cuts discussed in March. Powell emphasized that although inflation had decreased substantially over the past year, it remained above the Fed’s target of 2%, implying a prolonged period of higher interest rates. Such conditions typically dampen enthusiasm for growth assets such as technology stocks, consumer discretionary stocks, and cryptocurrencies.
Despite the recent setbacks, experts remain optimistic about Bitcoin’s long-term potential. Year-to-date, Bitcoin has still managed to gain 45.5%, building on its impressive 207% surge in 2023.
Turning attention to investment opportunities in the cryptocurrency sector, several stocks are poised for potential growth in 2024. Four notable picks, each carrying a favorable Zacks Rank, have been highlighted:
NVIDIA Corporation (NVDA), a leader in visual computing technologies, has transitioned from PC graphics to advanced solutions supporting AI, high-performance computing, gaming, and virtual reality platforms. NVDA boasts an expected earnings growth rate of 106.2% for the current year, with a Zacks Rank #1.
Interactive Brokers Group, Inc. (IBKR), a global electronic broker, facilitates cryptocurrency trading alongside traditional commodities futures. IBKR anticipates a 14.6% earnings growth rate for the current year, with a Zacks Rank #2.
Robinhood Markets, Inc. (HOOD), known for its financial services platform in the U.S., offers a range of investment options including stocks, ETFs, options, precious metals, and cryptocurrencies like Bitcoin and Ethereum through its Robinhood Crypto platform. HOOD projects substantial earnings growth this year, with estimates revised upwards by 110.3% over the last 60 days, earning it a Zacks Rank #2.
Coinbase Global, Inc. (COIN) provides critical infrastructure and technology supporting the global cryptocurrency economy, offering services from consumer accounts to institutional trading liquidity and developer tools for crypto applications. COIN expects significant earnings growth, with estimates improving by 219.1% over the last 60 days, securing a Zacks Rank #1.
While recent months have seen cryptocurrencies face headwinds due to regulatory uncertainties, inflation concerns, and interest rate expectations, the underlying bullish sentiment towards Bitcoin and select crypto-related stocks underscores potential opportunities for investors looking ahead to 2024.
