Bitcoin Rally Creates Lukewarm Crypto Stock Performance

Bitcoin Rally Creates Lukewarm Crypto Stock Performance

August 10, 2022 0 By Jeanine Sanchez

Bitcoin performed quite impressively in the month of July amidst its ongoing struggles. Other assets that hit their expected targets over the last four weeks also had a good run. Bitcoin shot by more than a quarter as it reached $24,000 and Ethereum rose by about 55% to trade at $1,700.

Bitcoin Miners Revenue

Bitcoin price led a strong market rally in the interest of other cryptocurrencies in the first week of July. As one would expect, this consequently led to an increase in Bitcoin’s mining stock. This was revealed by research conducted by Arcane.

Miners are now making higher revenue by getting more Bitcoin. It is expected that the asset’s price increase would equally improve their revenue further. As a way of adding to their leverage, Bitcoin miners keep a significant portion of the assets they mine instead of converting them to cash instantly.

The miners’ approach can quickly become problematic when the Bitcoin price begins to fall in the market. But the result in the general stock price becomes very huge when the Bitcoin price increases. The asset’s graph indicates how close the price of Bitcoin and the equities are correlated.

The International Monetary Fund carried out research recently where it showed the connection between traditional entities like stocks and the crypto market. The research revealed that the connection has gained strength due to increasing usage. It has, therefore, reduced the perception of risk diversity and its benefits.

Many emerging economies that have gone ahead to adopt cryptocurrencies in one way or the other also display a strong correlation between stocks and cryptocurrencies.

The Solid Market Spur

Those following trends in the crypto sector might have observed that the price of altcoins decreases proportionately with the price of Bitcoin. And when the price of Bitcoin increases, it is usually anticipated that the prices of altcoins will also increase.

As Bitcoin has lost price value for almost half of this year, it is unavoidable that crypto stock prices have also gone through the same experience. Bitcoin Holding MicroStrategy shares have dipped by 38% this year already. Marathon, the crypto mining firm, lost 55%, while Coinbase has lost 60%, according to Arcane research.

These equities could have been much lower now if not for the market rally over four weeks now. It was pushed by the crypto market’s internally generated momentum.

Marathon jumped by 180% since the first week of July, Coinbase came back by 100%, and MicroStrategy rose by 102%. There is nothing really significant about Marathon and MicroStrategy that might have brought the changes but they were both touched by the rally in Bitcoin price.