Bitcoin Rises to $70,000, Prompting Coinbase Upgrade; BlackRock fund increases BTC exposure

Bitcoin hit a new all-time high early Friday, sending prices of cryptocurrencies and related stocks higher as it moves back toward Tuesday's record levels. The cryptocurrency's recent rally led to an upgrade of Coinbase shares by Goldman Sachs on Thursday. Elsewhere, investment management giant BlackRock plans to add Bitcoin to one of its largest funds.

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Coinbase upgrade

Goldman Sachs upgraded the stock on Thursday Coinbase (COIN) from sell to neutral based on rising crypto prices. Cryptocurrencies have surged to all-time highs, while Coinbase daily volumes reached levels last seen in 2021. This led to a 48% increase in Goldman's revenue estimates since the beginning of February, according to the research report. Goldman had previously expected Coinbase to underperform due to low trading volume. In the longer term, acceptance and trading volume remain key questions. Goldman Sachs has a price target of $282 on COIN stock – not quite 10% above where the stock closed on Friday.

BlackRock buys BTC ETFs

Elsewhere, BlackRock (BLK) filed with the Securities and Exchange Commission on Thursday to add bitcoin exposure to its BlackRock Global Allocation Fund. BlackRock said the fund may purchase shares of Bitcoin exchange-traded products (ETPs) or spot Bitcoin ETFs and invest in Bitcoin futures. The Global Allocation Fund will only invest in BTC ETPs listed and traded on national securities exchanges and may include its own iShares Bitcoin Trust (IBIT), the filing said.

BlackRock noted that all Bitcoin futures investments may involve illiquidity risk because the BTC futures market is relatively new and not as heavily traded as other futures.

According to BlackRock's website, the Global Allocation Fund had $17.83 billion in assets under management as of March 8.

Bitcoin price action

Bitcoin hit a new record high of $70,136 on Friday before falling to $68,400 in the afternoon. Data from CoinMarketCap shows the cryptocurrency rose more than 11% over the week, even as Bitcoin's volatility was clearly on display. Bitcoin rallied to a record $69,208 on Tuesday before hitting resistance and falling lower. According to data from CoinDesk, this move surpassed Bitcoin's previous all-time high of $68,990 in November 2021.

Bitcoin is up 62% so far this year, with most of the gains coming after the launch of spot Bitcoin ETFs in early January.

Ethereum hit a new 26-month high of $4,000 on Friday, marking its highest price since December 2021 and surpassing its last record set on Tuesday. Ethereum rose more than 15% this week and is up 71.5% year-to-date.

BTC outlook

Many industry analysts believe that the upcoming Bitcoin halving, expected in April, will drive prices even higher.

“Bitcoin demand is colliding with increasingly tight supply,” Zach Pandl, managing director of research at Grayscale Investments, told IBD last week. Pandl noted that US spot Bitcoin ETFs returned an average of $212 million per calendar day in February. Meanwhile, the Bitcoin network is currently producing around 900 coins per day, which is equivalent to around $54 million worth of Bitcoin at a price of $60,000.

“With the Bitcoin halving in April, issuance will drop by half – that’s equivalent to 450 coins or $27 million worth of Bitcoin per day,” Pandl said. “There simply isn’t enough Bitcoin to meet all of the new demand, and so natural supply/demand dynamics drive prices even higher.”

Bitcoin ETF flows

Spot Bitcoin ETF prices rose more than 2% on Friday, adding to modest gains on Thursday after rising more than 8% on Wednesday. ETFs fell about 8.5% overall on Tuesday as Bitcoin fell from its record highs.

The 10 spot Bitcoin ETFs on Tuesday, excluding Hashdex's DEFI, saw record trading volume of $10 billion on Tuesday, Bloomberg ETF analyst Eric Balchunas reported, surpassing the previous record set on February 28 by about $6 billion.

According to data from BitMEX Research, BlackRock's iShares Bitcoin Trust (IBIT) has been the clear leader in inflows since spot Bitcoin ETFs launched on Jan. 11, with inflows of around $9.69 billion at the end of the day on Jan. 7 . March. The Fidelity Wise Origin Bitcoin Fund (FBTC) is in second place with inflows of $6.02 billion. The ARK 21Shares Bitcoin ETF (ARKB) is in third place with $1.81 billion, followed by the Bitwise Bitcoin ETF (BITB) with about $1.34 billion in inflows.

Most Bitcoin ETFs put all their eggs in one basket. Is that risky?

Grayscale outflows

Grayscale Bitcoin Trust (GBTC) recorded $10.25 billion in outflows as of March 7. A large portion of the outflows are due to the remaining effects of the crypto winter in 2022.

FTX liquidated its GBTC position in late January, selling around $1 billion worth of shares as part of its bankruptcy proceedings, CoinDesk previously reported. Elsewhere, on February 14, a U.S. District Court for the Southern District of New York approved bankrupt crypto lender Genesis to sell $1.6 billion worth of GBTC shares to repay creditors, Reuters reported.

“The Grayscale team anticipated that GBTC's diverse shareholder base would take profits and deploy investment strategies that would impact the trust's inflows, and we are pleased that outflows have continued to stabilize – particularly in light of forced selling due to real estate bankruptcies,” said Jennifer Rosenthal. Vice President of Communications at Grayscale. “With market-leading liquidity, strong trading volume and an unparalleled track record, we expect GBTC to continue to be a primary capital market risk transfer vehicle for Bitcoin.”

Still, Grayscale remains the leader in terms of assets with $27.11 billion under management, followed by iShares Bitcoin Trust with $12.97 billion.

Despite GBTC outflows, the new ETFs have seen $9.368 billion in inflows since their launch, according to BitMEX Research.

Spot Bitcoin ETF stocks are trading above their January 11 launch day highs.

Crypto stocks

Coinbase (COIN) jumped 5.8% on Friday, extending its 1.7% gain on Tuesday. COIN stock gained nearly 18% this week and is up 39.5% for the year.

Bitcoin miners Marathon Digital (MARA) and CleanSpark (CLSK) rose to close the week after falling on Tuesday.

According to its monthly production update, Marathon Digital announced on Tuesday that it produced 833 Bitcoins in February as the company was operating at 61% of its total capacity due to maintenance issues at two of its production facilities.

MARA stock rose 7.7% on Friday. Shares fell 13.4% on Tuesday and are down 13% this week. Nevertheless, Marathon Digital is unchanged year-on-year.

CLSK rose 13.6% on Friday, marking a weekly gain of 13.3%. CleanSpark fell nearly 7% on Tuesday. Still, shares rose 83.5% in 2024.

For more stock news and updates, you can follow Harrison Miller on X/Twitter @IBD_Harrison

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