The US stock market started the week with mostly downward trends, but companies linked to cryptocurrencies went against the tide on Monday morning.
Several publicly traded firms witnessed significant surges in the opening moments of Monday’s trading session to conclude the year. Notably, Galaxy Digital, Marathon Digital Holdings, and Riot Platforms saw over 10% gains in the initial twenty minutes of trading.
Companies like Coinbase and MicroStrategy followed closely, with approximately 8% and 9% increases, respectively. Notably, Coinbase, Marathon, and Riot are set to mark more than 300% gains throughout the year.
In the crypto realm, Bitcoin surged over 4% on Monday morning, suggesting potential gains of over 150% for the year, while Ether also saw a 1.4% increase, accounting for an 85% rise year-to-date.
“Crypto operates while stocks are closed, prompting a surge to maintain its relative value,” noted Roshun Patel, a partner at Hack VC.
The prevailing optimism surrounding a spot Bitcoin exchange-traded fund (ETF) continues to drive the market, Patel added, benefitting both cryptocurrencies and related stocks.
“Coinbase stands to benefit significantly if an ETF is approved, serving as the primary custodian. Stock market traders find it challenging to evaluate BTC’s future trajectory, thereby tempering earnings expectations for stocks, especially mining companies,” explained Patel.
Analysts agree that Bitcoin, briefly touching $42,000 on Monday and then stabilizing around $41,600, is capitalizing on the ETF momentum, favorably positioning other cryptocurrencies.
“Bitcoin remains the entry point for many mainstream and large investors into the crypto market, evident in its increasing market dominance,” remarked Noelle Acheson, author of the Crypto is Macro Now newsletter.
In contrast, broader markets experienced early declines. While the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average started in the red, the Russell 2000, representing small-cap companies, exhibited strong gains, nearly reaching 3% at the opening.
Analysts suggested that for traders exploring different strategies to wrap up the year, small caps might offer potential opportunities.
The ongoing rally in US small caps, continuing from Friday’s 3% surge in the Russell 2000, might not be a surprising trend but could foreshadow the year-end market dynamics.
“Friday’s surge in the Russell index suggests the possibility of a traditional ‘dash for trash’ rally in small caps this month,” noted Nicolas Colas, founder of DataTrek Research. “The segment of the US equity market has lagged behind large caps in 2023 due to inconsistent profitability and concerns about higher interest rates hindering smaller firms’ ability to access affordable capital. With rates seemingly heading lower, it’s logical that small caps could keep catching up.”
