BTC Prices Continue to Soar, Miners' Shares Become Investors' Target

Bittime - The price of Bitcoin (BTC) took the world by storm again by breaking through the $72,000 mark, setting an all-time high. This price increase is like a magnet that attracts the attention of investors to invest in this well-known crypto asset.

However, in the midst of this euphoria, analysts from the research and brokerage company Bernstein actually offered an interesting alternative for investors: investing in shares of Bitcoin mining companies.

According to Gautam Chhugani and Mahika Sapra, Bernstein analysts, Bitcoin miner shares offer profit opportunities that are no less attractive than investing directly in Bitcoin itself. The reason is, Bitcoin miner shares have a close correlation with Bitcoin price movements, although they are not always in line.

"Often investors get caught up in the daily correlation between Bitcoin prices and miner shares," Chhugani and Sapra said in a note to their clients on Monday. "They only pay attention to their movements when Bitcoin prices are rising. This view is wrong because it ignores the broader picture."

Analysis of the Development of Bitcoin Miners

Bernstein analysts emphasize that Bitcoin mining companies have performed brilliantly during the bull market, even being able to outperform Bitcoin itself. On the other hand, when the market experiences a bear market, miner shares lag behind.

"Investors need to take a long-term view," they advise. "Currently, we are still in the middle of the 2024-2025 cycle. Any decline in miner share prices can be seen as a buying opportunity."

Another reason why Bitcoin miner stocks are attractive is the dominance of retail investors in the sector. Meanwhile, institutional investors are still hesitant to enter the realm of crypto assets.

"Traditional equity investors are still skeptical and looking at crypto with the benefit of the imagination," Chhugani and Sapra said. "The decline in the performance of Bitcoin miner shares when Bitcoin prices are high is actually an opportunity, because Bitcoin attracts retail liquidity from miner shares."

With the seemingly unstoppable rise in Bitcoin prices, Bernstein analysts predict that institutional investors' interest in Bitcoin-linked equities will increase rapidly. And, Bitcoin miner shares will be the favorites in this sector.

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Riot Platforms and CleanSpark: Main Targets of Investors

Bernstein analysts paid special attention to two Bitcoin mining companies, namely Riot Platforms and CleanSpark. They estimate that at current and future Bitcoin price levels, even if the production costs of these two companies double after the halving, Riot and CleanSpark will still be able to generate significant gross profit margins, reaching 70% for Riot and 60% for CleanSpark .

"The decline in mining capacity post-halving (we estimate 10-15% will close) will give RIOT and CLSK an advantage in terms of market share," they added.

The Bitcoin halving is an event programmed to occur automatically every 210,000 blocks, or about once every four years. The next halving is predicted to occur in April 2024. This event will cause the reward subsidy for miners on the Bitcoin network to fall from 6.25 BTC to 3.125 BTC per block. However, miners still earn additional transaction fees for each block mined.

On the other hand, increasing activity in the Bitcoin ecosystem through the development of Layer 2/sidechain solutions, DeFi, and NFT is predicted to encourage an increase in miner income from Bitcoin transaction fees. Currently, income from transaction fees only reaches 5%, but it is predicted to increase to 15% on an ongoing basis.

High Confidence In $150,000 Price Target

Even though Bitcoin prices have now surpassed their record high of $69,000 and entered price discovery territory, Chhugani and Sapra believe that Bitcoin prices will continue to rise after the halving. In fact, they are increasingly confident in their price target of $150,000.

This belief is based on estimates of institutional inflow into the Bitcoin market. Initially, they predicted inflows of $10 billion this year after the launch of a spot Bitcoin ETF in the US on January 11 and another $6 billion in 2025.

However, in fact net inflows have exceeded $9.5 billion, with a daily average of around $370 million. If this trend continues, the spot Bitcoin ETF will surpass Bernstein's forecast for 2025 within 166 trading days.

"While ETF inflows will fluctuate, we believe that leading ETF issuers have not yet fully exploited the potential of integration with traditional investment instruments such as IRAs, private banks, securities firms, and other capital pools such as governments and pension funds," the analyst noted. "This signals that the integration of Bitcoin into traditional asset portfolios is still at an early stage."

Analysts believe that the massive influx of institutional investors will be the main catalyst that drives the price of Bitcoin to the $150,000 level. Institutional investors are known for their long-term outlook and careful fund management. Their presence will increase Bitcoin's credibility in the eyes of retail investors and contribute to long-term price stability.

Also Read: CryptoPunk Sells for $16 Million: The Era of NFT Markets is Back?

BTC Price Today

Source: Bittime.com

On March 12 2024, the price of Bitcoin BTC/IDR was at IDR 1,132,973,840 per coin, up 1.16% in 24 hours.

Also Read How to Buy Crypto:

Challenges and Risks Remain

Even though the prospects for rising Bitcoin prices and Bitcoin miner shares look bright, investors still need to be aware of a number of challenges and risks. Strict government regulations on crypto assets could hinder the industry's growth.

Apart from that, cyber security risks are also a specter that haunts the crypto world. Crypto exchange hacks and digital asset theft still occur frequently, causing significant financial losses for investors.

High price volatility also poses a challenge for investors interested in entering the Bitcoin market . Bitcoin prices can experience drastic fluctuations in a short time, so investors need to have a high risk tolerance and a mature investment strategy.

Conclusion

Analysts from Bernstein concluded that investing in Bitcoin miner shares offers an attractive alternative for investors who want to participate in the growth of the Bitcoin ecosystem. Despite their correlation with the price of Bitcoin, miner stocks can sometimes provide superior performance, especially during bull markets.

However, it is recommended that investors implement diversification strategies in their portfolios. Combine investments in Bitcoin miner shares with other crypto assets or even traditional assets such as stocks and bonds to reduce the risk of price fluctuations.

Lastly, it is important to remember that investing in crypto assets, including Bitcoin miner shares, requires a long-term view. Investors need to understand the fundamentals of blockchain technology and the future prospects of crypto assets before making investment decisions.

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How to Buy Bitcoin (BTC) on Bittime

You can buy and sell  Bitcoin (BTC)  in an easy and safe way via  Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

Bitcoin (BTC)  is available on Bittime with  the market pair BTC/IDR . To be able to buy  BTC IDR  at Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Learn  the complete guide on how to buy Bitcoin (BTC) on Bittime . 

Monitor price  chart movements  for Bitcoin (BTC ) ,  Ethereum (ETH) ,  Solana (SOL)  and other cryptos to find out today's crypto market trends in real-time on Bittime.

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DISCLAIMER: This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.