Bitcoin's rally ignites the lackluster performance of crypto stocks

Bitcoin (quotation BTC) rose by over a quarter, reaching $ 24.000, while Ethereum rose by around 55%, trading around $ 1.700.

In the first week of July, the price of BTC drove a sharp rise in the price of all cryptocurrencies. Not unexpectedly, this contributed to the rise in Bitcoin mining shares, as research by Arcane shows.

Cryptocurrency miners enjoy substantial income

As miners get revenue in the form of BTC, a rise in the price of the cryptocurrency should benefit their revenue and profits.

Added to this is the fact that miners hold a substantial amount of the tokens they mine, rather than instantly converting them into cash. This can be problematic when the cryptocurrency's price falls, but when it rises, the effect on their share prices is magnified.

According to new IMF research, the link between cryptocurrencies and traditional holdings, such as stocks, has strengthened significantly in response to increased usage, limiting the perceived benefits of risk diversification and increasing the danger of market instability. .

Emerging market economies, many of which have pioneered crypto-asset adoption, also show stronger correlation between cryptocurrencies and stocks.

The Bitcoin effect

If you have been following the cryptocurrency market, you will have noticed that when the price of Bitcoin falls, the prices of alternative cryptocurrencies (often known as altcoins) follow it. When the price of BTC rises, we expect altcoins to rise in value immediately thereafter.

As the price of Bitcoin has dropped by almost half this year, it is inevitable that cryptocurrency stocks have also experienced a negative first half. In 2022, the share prices of MicroStrategy (MSTR), a company that owns Bitcoin, fell 38%, Marathon (MARA), a cryptocurrency miner, by 55%, and Coinbase (COIN), a cryptocurrency exchange. 60%.

The solid run of Bitcoin spurs the rise of the cryptocurrency market

However, these stocks would be even lower were it not for their dramatic comeback last month, spurred by the recent and impressive performance of the cryptocurrency.

Since the beginning of July, Marathon has increased by nearly 180%, MicroStrategy by 102% and Coinbase by 100%. There has been no substantial difference between MicroStrategy and Marathon that has prompted these price increases, but the prices of both companies are heavily influenced by the price of BTC.

It is essential to recognize that Bitcoin often has the final say when it comes to investor confidence. Before buying or selling an altcoin position, experienced traders and investors closely monitor Bitcoin.

The future direction of the cryptocurrency markets will be determined by macroeconomic variables, but investors may expect to be on the alert in the coming weeks due to inflation, rising oil costs and fears of a recession.