The Rise of Inflation Trades: How Investors Can Benefit from Bitcoin Exposure
As investors across markets take notice of the potential for inflation trades to make a comeback, a significant amount of capital is flowing into risk assets like commodities and cryptocurrencies. This shift in sentiment has propelled the price of gold to reach its all-time high and led Bitcoin to deliver a remarkable 13% return in the past month alone.
For investors who are intrigued by Bitcoin’s performance but are hesitant to dive into the world of cryptocurrencies, there are alternative ways to gain exposure to Bitcoin and its inflationary benefits. Some stocks are now holding substantial amounts of Bitcoin on their balance sheets, positioning them to benefit from any future rallies in Bitcoin’s price.
These stocks include MicroStrategy Inc. (NASDAQ: MSTR), Coinbase Global Inc. (NASDAQ: COIN), and CleanSpark Inc. (NASDAQ: CLSK). While these companies are classified under the technology sector, they are more closely tied to the price of Bitcoin than to the broader technology industry.
1. MicroStrategy’s Balance Sheet Strength and Potential for Growth
MicroStrategy Inc. currently trades at 93% of its 52-week high, driven by its bullish price action fueled by the company’s financial structure. The latest quarterly earnings report revealed that MicroStrategy holds up to 226,500 Bitcoin on its balance sheet, with a book value estimated at $16.3 billion at today’s Bitcoin price of $71,800.
Market recognition of the stock’s upside potential is evident in its price-to-book (P/B) valuation of 19.5x, significantly higher than the sector average of 7.1x P/B. Analysts at Sanford C. Bernstein have set a price target of $290 for MicroStrategy stock, implying a 16% upside from current levels.
2. Coinbase Global’s Position Amid Bitcoin’s Surge
As Bitcoin continues its upward momentum, more capital is expected to flow into the asset class, driving increased trading activity. Coinbase Global, as a leading exchange, stands to benefit from higher fees and commissions for its trading and account services.
Analysts at HC Wainwright have reiterated their Buy ratings for Coinbase stock with a price target of $295, representing a potential 37% upside. Institutional investors like Atomi Financial Group have also increased their stake in the company, signaling confidence in its growth prospects.
3. CleanSpark: A High-Growth Bitcoin Play Worth Considering
CleanSpark Inc. reported producing 1,583 Bitcoin in the last quarter alone, with plans to expand its mining capabilities. The company currently holds around $430 million worth of Bitcoin on its balance sheet, a figure that is likely to have grown substantially given recent Bitcoin price movements.
Analysts at Cantor Fitzgerald have set a price target of $23 for CleanSpark stock, implying an 88.5% upside potential. Additionally, the stock has a high level of short interest, which could lead to a short squeeze if there is a sharp rally in the stock or in Bitcoin itself.
In conclusion, investors looking to capitalize on the potential for inflation trades can consider these stocks with significant Bitcoin exposure. By understanding the connection between these companies and the price of Bitcoin, investors can position themselves to benefit from any future rallies in the cryptocurrency market.