Bernstein advises buying bitcoin miners’ shares amid a decline in their value

According to analysts, “any weakness in the near term represents a potential buying opportunity

18.01.2024 - 12:55

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2 min

The material is not an investment recommendation and is published for informational purposes only.

What’s new? In recent weeks, shares of companies in the field of bitcoin mining have shown low returns, according to a report from broker Bernstein. Experts note that “any weakness in the near term represents a potential buying opportunity.” After the launch of spot bitcoin exchange-traded funds (ETFs) in the US, miner stocks faced two hurdles. First, “lower investor appetite to use them as a proxy,” and second, the price of BTC has weakened, which could lead to further diminishing returns.

CoinDesk’s material

What else is known? According to the report, the value of shares in Valkyrie’s WGMI fund, which invests in publicly traded shares of bitcoin miners, has fallen nearly 38% this year, while the bitcoin price and broader equity markets have been more or less stable.

“Just like bitcoin, the next two months offer a dip buying opportunity in bitcoin miners,” analysts Gautam Chhugani and Mahika Sapra write. According to them, further temporary weakening of BTC is possible, and a potential short-term bottom for the asset is in the $38 000-42 000 range. That said, investors should open long positions ahead of the next bitcoin halving, according to Bernstein.

Halving is code’s embedded cut in half of the reward to miners for a mined block on the blockchain, which occurs approximately every four years. Initially, miners received 50 BTC; on November 28, 2012, the number dropped to 25 BTC, on July 9, 2016, to 12,5 BTC, and on May 11, 2020, to 6,25 BTC. In April 2024, the award will be cut to 3,125 BTC.

In November, Bernstein analysts predicted that the BTC rate would rise to $150 000 by 2025 amid the launch of spot bitcoin ETFs on the US market.

On January 17, miners sold bitcoins worth about $450 million.

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