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Bitcoin Breakout: 2 Top-Ranked Stocks for the Next Leg Higher
Broad stock market indexes have again made new all-time highs this week, confirming the current bull market. The ~6% pullback seen in the S&P 500 in April was as generic as a bull could have asked for, and the strong snapback to new highs should encourage investors looking to add risk to their portfolios.
Although I was exclaiming on the way down that this would be a fantastic buying opportunity, if you didn’t buy on the way down there is no need to fret because I believe we are on the cusp of another big bull run.
If that is indeed the case and investors are back to risk-on mode, there is one approach that is going to practically guarantee outperformance.
Bitcoin Is Ready
For the last year or so, Bitcoin has acted as a proxy for risk, and been tightly correlated with US equities, especially technology stocks. Although correlations do come and go, as of now this one is still strong and for every 1% stocks gain, Bitcoin can jump 3-5%.
On Wednesday of this week, the price of Bitcoin clearly broke out from a bullish wedge/flag pattern. This would be the third such breakout in the cryptocurrency since October, so it fits within the standard bullish action.
Coinbase Global
Of course, you can go ahead and buy Bitcoin on the spot market, but another way to hitch a ride on this trend is with Coinbase Global.
Coinbase is the leading cryptocurrency brokerage in the US, and primary access point to the crypto ecosystem for retail and some institutional investors. Coinbase Global crushed its most recent quarterly earnings expectations, driven by the growing trading activity in Bitcoin and other cryptos.
Earnings estimates have rocketed higher in the last two months, with FY24 climbing from $1.57 per share to $7.18 per share! Not surprisingly, this has earned the stock a Zacks Rank #1 (Strong Buy) rating.
Like the underlying, Coinbase stock is also forming a compelling technical chart pattern. This descending wedge is a formation that COIN is familiar with, and if the stock can trade above the $220 level, it would signal a breakout.
A powerful breakout, with accompanying volume should send the stock to new highs.
Cleanspark
Another way to get exposure to Bitcoin in the stock market is through cryptocurrency miners. Cleanspark is a highly volatile miner, but potentially lucrative way to play the Bitcoin theme.
While Cleanspark is a less followed name than some of the other crypto miners like Riot Platforms Inc., I believe that Cleanspark is showing more promise in the near future.
Over the 3 months, 6 months, 12 months, and YTD, Cleanspark has considerably outperformed both Marathon Digital and Riot Platforms and is actually the only one of the group with positive returns YTD. This relative strength shows considerable bullishness.
Additionally, Cleanspark has seen some heft revisions higher to its earnings estimates, giving it a Zacks Rank #2 (Buy) rating. FY25 earnings have been revised higher from $0.04 per share to $1.86, an incredible 4,550%.
Like Coinbase and Bitcoin itself, Cleanspark stock is building a convincing technical pattern. A breakout from this very broad bull flag should send the stock higher. The breakout level is $17.70.
iShares Bitcoin Trust
Alternatively, if you want direct exposure to Bitcoin, while using exclusively the stock market, the iShares Bitcoin Trust ETF is a fantastic way to do so. Although the ETF does not currently have Zacks Rank coverage, I believe it to be the best Bitcoin ETF on the market.
IBIT has the second largest assets under management, second to Grayscale Bitcoin Trust ETF, but has considerably lower fees. GBTC has an annual fee of 1.5%, while IBIT is just 0.25%.
Bottom Line
For investors who are looking to add some high-flying stocks to their portfolios, and are also willing to stomach some additional volatility for those returns, Bitcoin and related stocks are a worthwhile consideration.
With the large upgrades in brokerage and mining stock, along with the bullish chart setups, now appears to be a timely opportunity to jump in.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Coinbase, Cleanspark, Platforms, IBIT and GBTC
For Immediate Release
Chicago, IL – May 20, 2024 – Today, Zacks Investment Ideas feature highlights Coinbase Global (COIN - Free Report) , Cleanspark (CLSK - Free Report) , Platforms Inc. (RIOT - Free Report) , iShares Bitcoin Trust (IBIT - Free Report) and Grayscale Bitcoin Trust ETF (GBTC - Free Report) .
Bitcoin Breakout: 2 Top-Ranked Stocks for the Next Leg Higher
Broad stock market indexes have again made new all-time highs this week, confirming the current bull market. The ~6% pullback seen in the S&P 500 in April was as generic as a bull could have asked for, and the strong snapback to new highs should encourage investors looking to add risk to their portfolios.
Although I was exclaiming on the way down that this would be a fantastic buying opportunity, if you didn’t buy on the way down there is no need to fret because I believe we are on the cusp of another big bull run.
If that is indeed the case and investors are back to risk-on mode, there is one approach that is going to practically guarantee outperformance.
Bitcoin Is Ready
For the last year or so, Bitcoin has acted as a proxy for risk, and been tightly correlated with US equities, especially technology stocks. Although correlations do come and go, as of now this one is still strong and for every 1% stocks gain, Bitcoin can jump 3-5%.
On Wednesday of this week, the price of Bitcoin clearly broke out from a bullish wedge/flag pattern. This would be the third such breakout in the cryptocurrency since October, so it fits within the standard bullish action.
Coinbase Global
Of course, you can go ahead and buy Bitcoin on the spot market, but another way to hitch a ride on this trend is with Coinbase Global.
Coinbase is the leading cryptocurrency brokerage in the US, and primary access point to the crypto ecosystem for retail and some institutional investors. Coinbase Global crushed its most recent quarterly earnings expectations, driven by the growing trading activity in Bitcoin and other cryptos.
Earnings estimates have rocketed higher in the last two months, with FY24 climbing from $1.57 per share to $7.18 per share! Not surprisingly, this has earned the stock a Zacks Rank #1 (Strong Buy) rating.
Like the underlying, Coinbase stock is also forming a compelling technical chart pattern. This descending wedge is a formation that COIN is familiar with, and if the stock can trade above the $220 level, it would signal a breakout.
A powerful breakout, with accompanying volume should send the stock to new highs.
Cleanspark
Another way to get exposure to Bitcoin in the stock market is through cryptocurrency miners. Cleanspark is a highly volatile miner, but potentially lucrative way to play the Bitcoin theme.
While Cleanspark is a less followed name than some of the other crypto miners like Riot Platforms Inc., I believe that Cleanspark is showing more promise in the near future.
Over the 3 months, 6 months, 12 months, and YTD, Cleanspark has considerably outperformed both Marathon Digital and Riot Platforms and is actually the only one of the group with positive returns YTD. This relative strength shows considerable bullishness.
Additionally, Cleanspark has seen some heft revisions higher to its earnings estimates, giving it a Zacks Rank #2 (Buy) rating. FY25 earnings have been revised higher from $0.04 per share to $1.86, an incredible 4,550%.
Like Coinbase and Bitcoin itself, Cleanspark stock is building a convincing technical pattern. A breakout from this very broad bull flag should send the stock higher. The breakout level is $17.70.
iShares Bitcoin Trust
Alternatively, if you want direct exposure to Bitcoin, while using exclusively the stock market, the iShares Bitcoin Trust ETF is a fantastic way to do so. Although the ETF does not currently have Zacks Rank coverage, I believe it to be the best Bitcoin ETF on the market.
IBIT has the second largest assets under management, second to Grayscale Bitcoin Trust ETF, but has considerably lower fees. GBTC has an annual fee of 1.5%, while IBIT is just 0.25%.
Bottom Line
For investors who are looking to add some high-flying stocks to their portfolios, and are also willing to stomach some additional volatility for those returns, Bitcoin and related stocks are a worthwhile consideration.
With the large upgrades in brokerage and mining stock, along with the bullish chart setups, now appears to be a timely opportunity to jump in.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.