The Securities and Exchange Commission (SEC) yesterday approved the first US-listed spot Bitcoin (BTC) exchange traded funds (ETFs). The move was widely expected as it was reflected in buying pressure in both Bitcoin and Bitcoin miners in recent months, JPMorgan said in a research note on Thursday.
“It is unclear whether the announcement will lead to further near-term upside for Bitcoin and mining stocks or whether investors will sell the news,” analysts Reginald Smith and Charles Pearce wrote. “We think mining stocks are in for a breather, but expect stock performance to follow Bitcoin prices in the coming weeks.
The two noted that Bitcoin mining stocks have surged over the past three months and that the total market capitalization of the fourteen U.S. listed mining companies covered was nearly $17 billion yesterday, an increase of 131% from the end of September versus $71 billion represents % gain in Bitcoin over the same period.
“Miners are trading near record highs relative to our proven reserves and four-year rolling block reward revenue estimates,” the analysts wrote, warning that there could be selling pressure in the sector if investors decide to exit crypto-related stocks to gain more direct exposure to Bitcoin via an ETF.
Still, the bank sees any selloff as a buying opportunity since the ETF “does not have a direct impact on the mining economy or change competitive dynamics.”
JPMorgan claims it maintains the view that “the stars are aligned for a big year in Bitcoin mining.” Overweight Iris Energy (IREN) is the bank's top value pick.
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