Bitcoin-related stocks soared on Thursday as the major digital currency regained $45,000, erasing losses following the approval of several Bitcoin spot ETFs last month.
MicroStrategy (MSTR), a publicly traded software company with 190,000 BTC, rose 12% on the day to $569 per share. Meanwhile, cryptocurrency exchange Coinbase (COIN) rose 7.7% to $131, outperforming its recovery from a sharp decline earlier this week.
Bitcoin mining companies like CleanSpark (CLSK) and Marathon Digital (MARA) are also surging, with the former up 24% since last week and the latter up 16% on Thursday alone.
Publicly traded crypto companies have historically traded like highly volatile proxies for Bitcoin, making today’s market movements somewhat expected. However, its performance is an encouraging sign that these companies can still keep pace with BTC even in the face of competition from publicly traded Bitcoin spot ETFs.
Spot ETFs like those from BlackRock and Fidelity, which launched on January 11, are designed to track the price of Bitcoin by directly backing their stocks with BTC. For investment purposes, buying Bitcoin on an exchange is much the same as buying stocks using a bank or brokerage account.
It is also the only option for some companies to gain direct exposure to BTC, as internal policies prohibit them from purchasing anything other than stocks or ETF wrappers. That makes it a fierce competitor to incumbent Bitcoin companies, which have until now been the next best thing for corporate investors.
Bitcoin companies still have some advantages. Earlier this week, MicroStrategy rebranded as a Bitcoin development company with a “unique value proposition for Bitcoin Spot ETFs.” This includes the ability to “develop software,” “generate cash from business activities,” and “exploit capital markets” through the issuance of debt or equity.
Vanguard, the world’s second-largest asset manager after BlackRock, prevents its clients from investing in Bitcoin Spot ETFs, but it is also a major owner of Bitcoin Miner and MSTR. According to Bloomberg ETF analyst Eric Balchunas, Vanguard has an investment philosophy that favors companies with substantial cash flow over mere commodities like Bitcoin itself.
“Bitcoin should be avoided like the plague,” the late Vanguard founder John Bogle said in 2017. “Bitcoin has no underlying rate of return…bonds have coupons, stocks have profits and dividends, but gold has none.”
Edited by Ryan Ozawa.