Bitcoin edged higher on Sept. 2, after a not-so-impressive August. The world’s largest cryptocurrency rose around 0.2% and was trading at $58,972, after declining more than 7% last week.
Several factors have been impacting Bitcoin’s price over the past month. However, Bitcoin still has a lot of potential left and is poised to resume its rally as the Federal Reserve gears up to start its rate cuts. Given this situation, it would be ideal to invest in crypto-centric stocks like NVIDIA Corporation NVDA, Interactive Brokers Group, Inc. IBKR and Robinhood Markets, Inc. HOOD.
Multiple Factors Impacting Bitcoin Price
The Bitcoin rally that started in 2023 gathered pace in the first quarter of this year, with the cryptocurrency hitting an all-time high of $73,750 on March 14. However, its price has since slumped and remained rangebound.
Even the halving event in April did not manage to drive up Bitcoin’s price. The halving event, which cuts the reward for mining new blocks in half to limit the total Bitcoin supply to 21 million, usually boosts demand and lifts prices. However, Bitcoin declined sharply following its halving.
The cryptocurrency was trying to stage a rebound but plunged in early August as global markets witnessed a major selloff on fears of a potential U.S. recession. The fears have eased over the past few weeks, thanks to a spate of positive economic data that showed a steady decline in inflation.
However, Bitcoin is still struggling to make a rebound as it faced setbacks from ongoing worries about token distributions and large-scale sale events, particularly involving the defunct exchange Mt. Gox.
Tricky September Ahead for Bitcoin Stocks
September could be a testing time for Bitcoin. Historical data shows that Bitcoin has had negative returns in September in nine out of the past 13 years, making it one of the worst months for the cryptocurrency, with an average decline of 5.36%.
However, investors are optimistic about Bitcoin making a solid rebound once the Federal Reserve starts its easing cycle. Inflation has been declining steadily, and Federal Reserve officials are confident that it is well on track to reach the central bank’s 2% target.
Market participants are now almost 100% sure about a 25-basis point rate cut in September. Lower borrowing rates bode well for growth assets like cryptocurrencies as they reduce the opportunity cost of holding assets that don’t provide yields.
In a low-interest-rate environment, investors are more inclined to seek assets with higher potential returns, even if they involve greater risk.
Crypto-Centric Stocks in Focus
We have narrowed our search to three crypto-oriented stocks that have strong potential for 2024. Each of our picks carries either a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here .
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, NVDA’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
NVIDIA has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3% over the last 60 days. NVDA presently carries a Zacks Rank #3.
Interactive Brokers Group, Inc. is a global automated electronic broker. IBKR executes, processes and trades in cryptocurrencies. IBKR’s commodities futures trading desk also offers customers a chance to trade cryptocurrency futures.
Interactive Brokers Group has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the last 60 days. IBKR currently sports a Zacks Rank #1.
Robinhood Markets, Inc. operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin and other cryptocurrencies using its Robinhood Crypto platform.
Robinhood Markets’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 35.7% over the last 60 days. Robinhood Markets currently sports a Zacks Rank #1.
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Interactive Brokers Group, Inc. (IBKR) : Free Stock Analysis Report
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