Bitcoin Breakout Looms: Which Crypto Stocks Will Ride the Wave?

Key Points

• Bitcoin is consolidating near its all-time high, trading at $67,100 and up almost 52% YTD. Key support is at $66,000, and resistance is at $72,000.
• MARA and RIOT have underperformed this year, have significant bearish sentiment, and do not possess a favorable technical setup.
• If Bitcoin breaks out, COIN, MSTR, and IBIT are better positioned for gains. MSTR is up 134% YTD, and COIN shows strong technicals and a recent earnings beat.

As Bitcoin continues to consolidate within reach of its all-time highs, many investors, speculators, and traders wonder if a breakout is on the horizon. Currently trading at $67,100 per bitcoin and up almost 52% YTD, Bitcoin's critical short-term support level sits at $66,000, with $72,000 acting as critical resistance. Should Bitcoin break through this resistance, it could spark significant moves in Bitcoin-related stocks. Let’s take a look at four popular Bitcoin-related companies and assess which ones are best set up for a move higher if Bitcoin breaks out.

Marathon Digital Holdings' Focus on Bitcoin Mining

Marathon Digital Holdings NASDAQ: MARA focuses on Bitcoin mining, having rebranded in 2020. Despite its surge earlier in the year, MARA has underperformed, with shares down almost 15% YTD. The stock has a bearish sentiment, with a 22% short interest and analyst consensus predicting further downside. Technically, MARA does not show a bullish setup at the moment, making it less favorable for a breakout.

Analyst Forecasts and Buy Rating for Riot Platforms

Riot Platforms NASDAQ: RIOT aims to be a leader in Bitcoin mining in North America. Like MARA, RIOT has underperformed, with its stock down almost 30% YTD. It has a notable short interest of over 17%. Recently, short seller Kerrisdale Capital released a critical report on RIOT, claiming its business model is inefficient. Despite this, analysts maintain a buy rating, forecasting a potential 65% upside with a price target of $18.10. However, technically, RIOT does not currently present a bullish formation.

Evaluating MicroStrategy's Premium to Bitcoin Holdings

MicroStrategy NASDAQ: MSTR, a global provider of enterprise analytics software, owns 214,400 bitcoins. Unlike MARA and RIOT, MSTR has outperformed, gaining 134% YTD. Trading at a premium to its Bitcoin holdings, MSTR could see a push over $1,800 if Bitcoin breaks out, potentially reaching new all-time highs above $2,000. However, notable short interest at almost 19% and significant insider selling over the past year suggest caution.

Coinbase Global: Leading Cryptocurrency Exchange

Coinbase Global NASDAQ: COIN is a major cryptocurrency exchange offering tools for trading over 200 cryptocurrencies. Technically, COIN looks the most favorable, currently consolidating above all major moving averages and 12% off its 52-week high. The stock is up over 40% YTD and has a relatively low short interest at 5%. Its recent earnings beat, reporting $1.65 EPS against an estimated $1.04 and revenue of $1.64 billion against $1.26 billion expected, positioning COIN well for further gains if Bitcoin breaks out.

The Bottom Line: Bitcoin-Related Stocks to Watch

As Bitcoin teeters on the brink of a potential breakout, certain Bitcoin-related stocks stand out for their readiness to capitalize on this move. While MARA and RIOT face bearish sentiment and technical setups, MSTR and COIN appear better positioned. MSTR could see significant gains if Bitcoin rallies, but caution is warranted due to insider selling, a hefty premium to its underlying and short interest. With its solid technical setup and recent earnings beat, COIN seems the best poised to benefit from a Bitcoin breakout.

Another option for a reactive move should Bitcoin break out is the iShares Bitcoin Trust ETF NYSE: IBIT, arguably the most popular and liquid Bitcoin spot ETF issued by Blackrock. Investors should, however, stay vigilant and cautious, as the cryptocurrency market’s volatility demands careful consideration and strategy.