Why Crypto Mining Stocks Surged on Wednesday


Buoyed by several pieces of good news individually and optimism about cryptocurrencies generally, crypto mining companies had a fine Wednesday on the stock exchange.

Many of them closed the day well higher in price. Cleanspark (CLSK 22.80%) surged to a gain of almost 23%, while Marathon Digital Holdings (MARA 16.10%) wasn’t far behind with a 16% increase. Riot Platforms (RIOT 11.81%) didn’t quite reach those heights but did deliver a nearly 12% rise for its shareholders.

The Fed stays pat

As the stock market approached its close, the most impactful event washed over cryptocurrencies. This was the Federal Reserve’s decision to hold interest rates steady. In doing so, the Fed also indicated its willingness to cut rates later in the year, perhaps as much as three times.

So unless something unforeseen and relatively drastic occurs in the global or U.S. economy, we’re nearly certain not to get interest rate raises anytime soon.

Crypto investors like steady-to-falling rates, as they tend to encourage people to pull their money from “safety” investments (like government and highly rated corporate bonds) and put it into riskier assets.

Since cryptocurrencies continue to be volatile, they remain relatively high on the risk scale. So that was the big top-down development pushing cryptos — such as the asset foundational to the top crypto miners, Bitcoin — and related investments higher on Hump Day.

As for individual crypto mining stocks, Wednesday’s news was generally quite favorable, and a rising tide tends to lift most, if not all boats. Well before market open, influential “Big Four” bank JPMorgan Chase upgraded its recommendation on Riot Platforms. The lender, in the person of analyst Reginald Smith, now rates it an overweight (read: buy), one peg up from the previous neutral. The target price is $15 per share.

This came on the heels of another bullish analyst move in the crypto mining space. On Tuesday, BTIG pundit Gregory Lewis nearly doubled his price target on Cleanspark, raising it to $22 per share from $12 and maintaining his buy evaluation.

Investors love those spot Bitcoin ETFs

With the Fed’s decision, all lights continued to glow green for cryptocurrencies. In the background, meanwhile, funds continued to flow into spot Bitcoin exchange-traded funds (ETFs), the monster engine that has been powering Bitcoin higher since nearly the beginning of the year.

Some are predicting that the already-high price of Bitcoin could more than double before long. I’m not sure I’d be that optimistic; the leading coin still suffers from a lack of practical application and has flaws as a store of value, after all. But bulls abound in this market just now, and it seems like they’ll keep pushing cryptos higher.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and JPMorgan Chase. The Motley Fool has a disclosure policy.



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