Mining stocks represent an attractive opportunity for investors looking to gain access to the long-term bitcoin adoption trade, the analysts wrote.
Investors should turn their attention to the potential impact on the bitcoin (BTC) price now that spot BTC exchange-traded funds (ETFs) have been approved, broker Cantor Fitzgerald said in a research report.
The approval should be viewed as a “landmark milestone in bitcoin’s short history, with substantial implications for long-term price appreciation,” Cantor said.
“We believe this approval acts as a major demand shock to the market, occurring a few months before bitcoin’s recurring supply shock: the halving event expected in April 2024,” analysts Josh Siegler and Will Carlson wrote. When bitcoin halving occurs, the rewards miners receive are cut by 50%.
“With levered upside and theoretical hedged downside, we believe bitcoin miners represent an attractive investment opportunity for equity investors looking for a way to access this long-term bitcoin adoption trade,” the authors wrote, adding that the spot ETFs could have a “substantial positive impact on bitcoin miner valuations.”
Investment bank H.C. Wainwright & Co. said spot ETF approval is a “historic moment for bitcoin and the miners,” as ETFs offer both retail and institutional investors a “familiar and regulated investment vehicle” and should significantly expand access to the world’s largest cryptocurrency.
“We believe many BTC-curious institutional and retail investors have lacked either the willingness or the ability to directly invest in BTC, given the nuanced requirements to acquire digital assets,” analyst Mike Colonnese wrote. “We expect significant incremental demand for BTC via these newly approved spot ETFs.”
