Bitcoin Rally to Resume With Rate Cuts – Three Crypto-Centric Stocks
After a tough August, Bitcoin showed signs of life on September 2, rising by roughly 0.2% to $58,972. Despite last week’s 7% drop, Bitcoin seems poised to restart its rally, particularly as the Federal Reserve prepares to begin slashing interest rates. In light of this, now may be a good time to explore investing in crypto-focused stocks such as NVIDIA Corporation (NVDA), Interactive Brokers Group, Inc. (IBKR), and Robinhood Markets, Inc. (HOOD).
Factors Impacting Bitcoin’s Price
The Bitcoin rally began in 2023 and culminated on March 14, 2024, when the cryptocurrency reached an all-time high of $73,750. However, its price has since dropped and has remained mostly rangebound.
The halving event in April 2024, which generally enhances Bitcoin’s value, did not have the expected impact this time around. Despite the event having the incentive for mining new blocks and limiting the overall Bitcoin supply to 21 million, Bitcoin’s price fell significantly.
August presented new obstacles, as fears of a US recession triggered a huge selloff in global markets, prompting Bitcoin to struggle in its bid to recover. Positive economic data in recent weeks has alleviated recession fears, but continued concerns regarding token distributions and large-scale sale events, particularly those involving the now-defunct exchange Mt. Gox, have put Bitcoin under pressure.
September – A Historically Challenging Month
September could be a challenging month for Bitcoin investors. According to historical statistics, Bitcoin has had negative returns in September for nine of the previous 13 years, with an average decrease of 5.36%, making it one of the cryptocurrency’s worst months.
However, there is hope that Bitcoin will rebound once the Federal Reserve begins its easing cycle. With inflation continuously dropping, Federal Reserve officials are growing increasingly confident that it will meet the central bank’s 2% target.
Market participants expect a 25-basis-point rate drop in September. Lower interest rates promote growth assets, such as cryptocurrencies, by lowering the opportunity cost of keeping assets that do not provide a return.
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In a low-interest-rate environment, investors gravitate toward assets with bigger prospective returns, even if they carry higher risks.
Crypto-Centric Stocks to Watch
Here are three cryptocurrency-related stocks with high potential for 2024. Each of these stocks has a favorable Zacks Rank, indicating solid earnings outlooks.
NVIDIA Corporation (NVDA)
Interactive Brokers Group, Inc. (IBKR)
Robinhood Markets, Inc. (HOOD)
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