Bitcoin News Today: BITQ ETF surges 144% since January 2024 as BCA backs crypto stocks post-GENIUS Act

Investing in crypto-related equities has emerged as a strategic approach to gain exposure to Bitcoin’s price movements, according to a report by BCA Research. The firm positions crypto stocks as “a smart play on Bitcoin,” emphasizing their potential to offer diversified and regulated access to the cryptocurrency market amid recent regulatory advancements in the U.S. [1]. This perspective aligns with the passage of the GENIUS Act, the first major national cryptocurrency legislation, which aims to establish a regulatory framework for stablecoins and foster institutional adoption of digital assets.

BCA analysts argue that crypto equities carry high beta to Bitcoin, meaning they tend to outperform during bull markets but also exhibit elevated volatility and operational risks. For instance, the BITQ ETF (NYSE:BITQ), a diversified index of crypto-related stocks, has a market beta of 2.2, reflecting the sector’s leveraged exposure to digital assets. Since January 2024, the fund has surged 144%, outpacing the S&P 500 and Nasdaq [1]. The report highlights that crypto stocks span multiple categories, each with distinct risk profiles: miners, treasury holders, exchanges, asset managers, and infrastructure providers.

Miners such as Marathon Digital Holdings (NASDAQ:MARA) and Riot Platforms (NASDAQ:RIOT) directly benefit from Bitcoin price increases but face challenges like thin profit margins and rising operational costs. Treasury holders like MicroStrategy (NASDAQ:MSTR) accumulate Bitcoin on balance sheets, creating a leveraged bet on BTC appreciation. However, BCA cautions this model is vulnerable during market downturns [1]. In contrast, exchanges like Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD), along with infrastructure firms, are described as “the least speculative investments” due to their reliance on broader adoption and transaction volume growth rather than direct price exposure.

The report underscores the importance of diversification, advising investors to access the sector through ETFs rather than individual stocks or narrow categories. While BITQ is the most established option, alternatives like FDIG (NASDAQ:FDIG), DAPP (NASDAQ:DAPP), and CRPT (NYSE:CRPT) are also highlighted as viable vehicles [1]. Analysts led by Irene Tunkel recommend using market pullbacks to build long-term positions, given the sector’s high volatility and dispersion in performance.

The GENIUS Act, passed earlier this month, requires stablecoins to be backed one-to-one by U.S. dollars or low-risk assets, providing regulatory clarity for the sector. Supporters argue this framework enhances transparency and supports the U.S.’s competitiveness in payment innovation. BCA’s analysis suggests such developments could accelerate mainstream adoption of digital currencies by reducing institutional hesitancy.

Despite the bullish outlook, the recommendation acknowledges inherent risks, including regulatory shifts, energy consumption debates, and macroeconomic headwinds. These factors contribute to the sector’s mixed performance, with some firms seeking capital raises to fund operations or growth. The report concludes that while crypto stocks offer a buffer against Bitcoin’s extreme volatility, their success remains tied to broader market conditions and technological advancements.

Source:

[1] title: Crypto stocks offer ’a smart play on Bitcoin’, BCA says

url: https://www.investing.com/news/cryptocurrency-news/crypto-stocks-offer-a-smart-play-on-bitcoin-bca-says-4156843