While the U.S. stock market opened mostly in the red on Monday, cryptocurrency-linked stocks appeared to be the exception Monday morning.
Some publicly traded companies posted double-digit rallies to round out the final month of the year. Galaxy Digital, Marathon Digital Holdings, and Riot Platforms each gained more than 10% in the first twenty minutes of Monday’s trading session.
Coinbase and MicroStrategy were not far behind, posting rallies of around 8% and 9%, respectively. In fact, Coinbase, Marathon, and Riot are set to post gains of over 300% for the year.
Cryptocurrencies were also in the green. Bitcoin (BTC) is up more than 4% on Monday morning over the past 24 hours, putting the largest cryptocurrency on track to post gains of more than 150% in 2023. Ether (ETH), which is up around 1.4% on Monday, it is up more than 85% so far this year.
Read more: MicroStrategy bought almost $600 million worth of bitcoins in less than 1 month
“Cryptocurrencies trade while stocks are closed, so they have to perform to maintain relative value,” said Roshun Patel, partner at Hack VC.
The current optimism around a spot bitcoin exchange-traded fund remains a key narrative driving the market, Patel added, and is serving as a tailwind for both cryptocurrencies and related stocks.
“Coinbase in particular benefits greatly from anyone getting approved for an ETF, as it will act as a reference custodian. I think stock market traders are finding it difficult to subscribe to BTC much higher, so their future profit expectations for stocks, especially mining stocks, are reduced to the expected reality,” Patel said.
Read more: Bitcoin ETF Spot Market Sees New Applicant Ahead of SEC Ruling
Bitcoin, which briefly hit $42,000 on Monday before hovering around $41,600 later in the morning, is obviously riding the ETF wave, analysts agree, and the rally is putting other cryptocurrencies in a favorable spot.
Bitcoin “remains the ‘gateway’ to the cryptocurrency market for many large and mainstream investors, as can be seen by its growing dominance of the market,” said Noelle Acheson, author of the newsletter Crypto is Macro Now.
Markets overall, on the other hand, fell at the start of the trading day. The S&P 500, Nasdaq Composite and Dow Jones Industrial Average indices opened in the red. The Russell 2000, which represents small caps, fared better, gaining about 3% at the open.
For traders considering other strategies to close out 2023, small caps may be a good place to look, analysts said.
A run for US small caps, which continued on Monday after the Russell 2000 posted a 3% rally on Friday, may not be the most impactful narrative, but it could foreshadow what’s to come for the rest of the year. .
“Russell’s rally on Friday, while not especially unusual, signals the possibility of a classic ‘race for the dumpster’ rally in small caps this month,” Nicolas Colas, founder of DataTrek Research, wrote in a note. on Monday.
“This portion of the U.S. stock market has lagged large caps in 2023, largely due to spotty profitability and concerns that high interest rates would limit the ability of smaller companies to raise capital. affordable incremental,” Colas added. “Now that rates appear to be falling, it makes sense that small caps could continue playing catch-up.”
