Buy these high-risk crypto stocks to play what may prove an explosive year for bitcoin, Bernstein says
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Investors should take a long position in crypto now or be sorry later, says Bernstein. The Wall Street firm published an extremely bullish 2024 crypto market outlook this week, predicting bitcoin will hit a new all-time high in the second half and could close the year at about $80,000, or roughly 88% above current levels. It also forecasts bitcoin will reach $150,000 in 2025. “We expect 2024 to be a break-out inflection year for crypto,” Gautam Chhugani, Bernstein’s lead crypto analyst, wrote in the note. “Not being long crypto — strategically via a funds business or directly via digital asset ownership, or indirectly via crypto equities — would prove costly for investors.” Bernstein recommended bitcoin mining stocks, which offer a higher beta — or higher risk and higher potential reward — than bitcoin itself. Riot Platforms and CleanSpark are Bernstein’s preferred picks. Chhugani said both companies are “market share consolidators” whose self-mining capacity gives them a strong operational edge against rivals. They also benefit from low power and production costs, high liquidity and balance sheet flexibility. “We are also in a favorable macro[economic climate], with rates peaking, inflation declining and chances of monetary stimulus in a major election year globally,” Chhugani added. “We are not brave enough to be circumspect, and we like bitcoin and bitcoin mining stocks way too much here.” Bitcoin has been in an uptrend for months as traders grow more convinced that the U.S. Securities and Exchange Commission will soon approve a spot bitcoin ETF. Many expect approval as early as this month. Still, although the cryptocurrency is off to a rocky start in 2024, it climbed more than 12% in December and soared 157% for 2023. Elsewhere, the Bernstein note also said ether is poised to benefit this year following its underperformance relative to bitcoin in 2023, when it nonetheless almost doubled, surging 89%. “We expect the Ethereum narrative to get stronger post the Bitcoin ETF approval, as the focus shifts to the Ethereum spot ETF applications by the same group of asset managers,” Chhugani said. “We expect an Ethereum ETF approval by June 2024.” — CNBC’s Michael Bloom contributed reporting.
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