Following the approval of spot bitcoin exchange-traded funds (ETFs) in the United States last month, Bitcoin (BTC) mining companies seem to have bottomed out. Broker Bernstein advises buying its preferred stocks in the industry ahead of the next reward halving, the company said in a research report on Thursday.
According to Bernstein, the biggest cryptocurrency in the world has outperformed expectations in the lead-up to the 50% reduction in the reward that miners receive for their work. This trend is likely to continue for the remainder of the year. It is anticipated that the cut will occur in April. Each of the three earlier incidents caused the price of bitcoin to spike, and this time it is strong before the catalyst, according to the report. Early Tuesday, Bitcoin reached a one-month high of $46,000.
Each of the three earlier incidents caused the price of bitcoin to spike, and this time it is strong before the catalyst, according to the report. Early Friday in Europe saw a one-month high for bitcoin at $46,000.
The broker’s top selections in the space are outperform-rated Riot Platforms (RIOT) and CleanSpark (CLSK), and Bernstein advises obtaining bitcoin exposure through mining stocks.
“Given the positive ETF flows momentum, resilient BTC price action and healthy miners adding capacity into the halving, we feel comfortable recommending investors to enter here for our preferred names,” the two analysts wrote. Because bitcoin is the reflexive asset and the institutional narrative around it is driving demand, we anticipate that a rise in price will result in more ETF inflows and new highs for the asset class.
As the market “looks to clear out high-cost miners, operating at unsustainable costs,” halving is typically a “risk-off” event for the industry, according to the research. After the halving, the broker predicts that 15% of the bitcoin hash power would stop mining, although if prices stay high, the drop may be less pronounced. “At $44,500 bitcoin price, most of the U.S. listed miners look relatively well positioned, even if their costs double post halving.”
Positive changes in ETF flows have also helped the biggest cryptocurrency in the world. “Consistent net ETF inflows means the overall market will lean bullish and reflexivity should ensure a higher price-higher inflows feedback loop,” the report stated.