From Nasdaq, Inc.:

The cryptocurrency market took a breather in January, causing shares of Coinbase Global, Marathon Digital, and Riot Platforms to plummet. These three stocks fell 26.3%, 24.5%, and 29.5%, respectively, according to S&P Global Market Intelligence. The main issue was the disappointing Bitcoin price, despite the approval of Bitcoin ETFs. The companies are expecting a rebound as they anticipate the upcoming Bitcoin halving event in April. Coinbase, Marathon Digital, and Riot Platforms all anticipate potential benefits as Bitcoin prices rise.

Investors eagerly awaited the approval of a Bitcoin exchange-traded fund (ETF). The approval was expected to dramatically increase demand for Bitcoin, thus sending its price higher. Coinbase, Marathon Digital, and Riot Platforms were expected to benefit from this, but when the expected price increase did not materialize, the stock prices of these companies plummeted.

While investors are concerned about how the approval of a Bitcoin ETF will impact Coinbase, the company could still profit from Bitcoin ETFs due to its role as a custody partner for financial institutions.

Coinbase generated $289 million in transaction revenue in the third quarter of 2023, with 37% of that revenue coming from Bitcoin. If the price of Bitcoin increases, trading volumes and revenue for Coinbase is expected to increase. The same goes for Bitcoin mining companies such as Marathon Digital and Riot Platforms, which hold a substantial amount of Bitcoins and stand to benefit from its rising price.

Marathon Digital and Riot Platforms are increasing their mining power in anticipation of Bitcoin’s halving event in April. Previous halving events have sent Bitcoin prices soaring, prompting the companies to mine and hold more Bitcoin.

Investors may want to tread carefully before making any investment decisions, as events do not always unfold as anticipated. While the Bitcoin halving typically causes a surge in Bitcoin prices, this has not always been the case. Therefore, investors should carefully consider the potential reasons why their investment thesis may not materialize.

Before investing in Coinbase Global, investors should also consider the recommendations provided by The Motley Fool Stock Advisor, who recently identified 10 best stocks to buy for strong potential returns. Coinbase Global did not make the list, and investors should carefully weigh their investment options taking that information into account. The Motley Fool also has positions in and recommends Bitcoin and Coinbase Global.

As of January 29, 2024, Jon Quast has positions in Bitcoin. The Motley Fool has a disclosure policy, and the opinions expressed in the article are those of the author and not necessarily reflective of Nasdaq, Inc’s views.



Read more: Here’s Why Shares of Coinbase, Marathon Digital, and Riot Platforms All Fell in January