Nalak Das / Aug 15, 2024 / Zacks

The cryptocurrency market suffered a severe blow in the first week of August. Bitcoin (BTC), the largest cryptocurrency globally, hit an all-time high of $73,750 on Mar 14. However, the broader market bloodbath last week also saw cryptocurrencies suffering. Consequently, Bitcoin fell to below $55,000.

This year, Bitcoin gathered momentum after the Securities and Exchange Commission approved 11 spot Bitcoin exchange-traded funds (ETFs) in January. The ETFs represent a landmark in Bitcoin’s journey, offering both retail and institutional investors a regulated and accessible means to invest in cryptocurrency. This development not only enhances liquidity but also contributes to price stability.

However, the price of Bitcoin saw a steady decline from April. One of the major reasons for the decline in Bitcoin price was the halving event that took place in April. The halving event, which reduces the reward for mining new blocks by half to cap the total supply of Bitcoins at 21 million, typically increases demand and drives up prices. Despite this, Bitcoin saw a significant drop, with its price falling below $59,000.

Meanwhile, following the release of a few weak economic data in July, especially the labor market data, the CME FedWatch currently shows a 100% probability of a 25-basis point interest rate cut in September and a 51.5% chance of a 50-basis point rate cut.

For November, market participants estimate a 100% probability that the total (year-to-date) rate cut will be 50 basis points and a 62.6% probability that the total rate cut will be 75 basis points. Likewise, for December, market participants estimate a 100% probability that the total rate cut will be 75 basis points and a 72.4% probability that the total rate cut will be 1% in 2024.

At this stage, investors should think from a long-term perspective. The Fed is undoubtedly approaching the end of the higher rate regime. A low interest rate is beneficial to high growth-oriented industries such as technology, consumer discretionary, and cryptocurrency.

Therefore, investors should accumulate bitcoin using a buy-on-the-dip strategy. Every dip in the bitcoin price will be a good purchasing point in order to gain handsomely once the Fed’s tighter monetary control comes to an end.

Stocks in Focus

We have narrowed our search to five bitcoin-oriented stocks that have strong potential for the rest of 2024.

CME Group Inc.’s CME options give the buyer of the call/put the right to buy/sell cryptocurrency futures contracts at a specific price at some future date. CME offers Bitcoin and ether options based on the exchange’s cash-settled standard and micro-Bitcoin and Ethereum futures contracts.