JPMorgan predicts bitcoin mining stock cooldown: CoinDesk

Mining stocks tumbled in the first few hours of bitcoin spot ETF trading on Thursday

January 11, 2024 12:59 pm

JPMorgan Chase CEO Jamie Dimon | lev radin/Shutterstock modified by Blockworks

A research note from banking giant JPMorgan says bitcoin mining stocks may be “due for a breather” as bitcoin spot ETFs begin trading, CoinDesk reported.

Bitcoin and a host of stocks that tend to follow its price movements were red-hot in the months leading up to yesterday’s SEC approval. It remains unclear if the approval itself will amount to a “sell the news” event or if the assets have further to climb. In the eyes of JPMorgan analysts Reginald Smith and Charles Pearce, mining stocks in particular should slow down but will “track bitcoin prices over the coming weeks.”

In the first few hours of spot bitcoin ETF trading, the pair were proven partially right. Bitcoin mining stocks experienced a sell-off after weeks of positive sentiment. Marathon and Riot fell 13%, Bitfarms fell 12%, and Cleanspark and Terawulf both fell 8% by noon EST.

Bitcoin did not track with mining stocks, though, climbing past $49,000 Thursday morning and finding itself up overall on the day despite a pullback.

The JPMorgan note said mining stocks may be momentarily overextended, trading at near all-time highs relative to their reserves and estimated mining income. The report also said mining stocks could face tailwinds from investors leaving mining stock positions to get more direct bitcoin exposure via the new ETFs, CoinDesk reported.

Nevertheless, JPMorgan’s analysts wrote that mining company fundamentals remain unchanged, and the “stars are aligning for a big year in bitcoin mining.” Valkyrie’s Bitcoin Miners ETF, which has exposure to a host of mining stocks, is up 176% in the past year.

Get the news in your inbox. Explore Blockworks newsletters: