Here’s Why Many Bitcoin Stocks Are Flying High Today

What happened

Many stocks with a financial interest in leading cryptocurrency Bitcoin (CRYPTO:BTC) traded sharply higher on Monday morning. A cautiously bullish Bitcoin report from well-respected analyst firm Citi sparked the jump, assisted by a modest rebound in cryptocurrency prices after a difficult end to February.

Here are some of the morning’s leading Bitcoin gainers, including a few household names that are not always seen as cryptocurrency investments:

Company

Cryptocurrency Business

Max Gain on March 1, 2021

The9 (NASDAQ:NCTY)

China-based Bitcoin miner

43.1%

Marathon Patent Group (NASDAQ:MARA)

Cryptocurrency miner, digital asset manager

22%

Riot Blockchain (NASDAQ:RIOT)

Colorado-based Bitcoin miner

19.2%

Paypal Holdings (NASDAQ:PYPL)

Enables U.S. customers to buy and sell four cryptocurrencies, including Bitcoin

5.5%

Square (NYSE:SQ)

Enables Bitcoin transactions through Cash App, invested $220 million in Bitcoin

4.8%

Data source: Yahoo! Finance, noon EST, March 1, 2021.

So what

In a note sent to Citi’s investment clients on Monday morning, managing director Kathleen Boyle said that Bitcoin stands at a “tipping point” right now. Citing high interest in Bitcoin futures and Bitcoin’s potential role as a long-term inflation hedge for large investors, Boyle argued that the cryptocurrency “balances at the tipping point of mainstream acceptance or a speculative implosion.”

The analyst provided incisive analysis of both the bull and bear cases for Bitcoin, but the mere existence of a balanced report from one of the world’s largest banks should be counted as a positive development. Megabanks like Citi and JPMorgan are starting to take Bitcoin seriously, and that’s a big shift from the largely dismissive views they have held in the past.

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It’s no surprise to see Bitcoin investors focusing on the bullish parts of Boyle’s analysis. At press time, Bitcoin shares traded 12% higher in 24 hours amid a generally positive cryptocurrency market.

A coin bearing the Bitcoin symbol rests against one of many gold bullion bars.

Image source: Getty Images.

Now what

The mainstream names are arguably the bigger story. The big jumps in The9, Marathon, and Riot Blockchain added a total of $1.1 billion to the total market value of these stocks. Square’s small move boosted that stock’s market cap by $4.4 billion, and digital finance giant PayPal added $14.8 billion to its massive footprint. Cryptocurrency mining is still a risky and often unprofitable business, while Square and PayPal are attempting to use cryptocurrencies like Bitcoin as a medium for sending, receiving, and saving money.

Bitcoin remains a rather volatile and risky investment vehicle, but the level of risk is reduced every time a major voice in the traditional money management world lends its support to the digital currency. That’s what happened today, moving Bitcoin and other cryptocurrencies one small step closer to long-term stability for value-minded investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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View more information: https://www.fool.com/investing/2021/03/01/heres-why-many-bitcoin-stocks-are-flying-high-toda/

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