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According to analysts at research and brokerage firm Bernstein, investing in Bitcoin miners could be the best stock play as Bitcoin heads towards $150,000. Bernstein analysts Gautam Chhugani and Mahika Sapra highlighted in a note to clients on March 11 that investors only look at the daily correlation of Bitcoin miners on days when Bitcoin is rising.
Halving and the Bull Cycle
The analysts pointed out that miners almost always outperform Bitcoin during bull markets and underperform during bear markets:
“Investors should have a cyclical perspective, and we are still in the middle of the 2024-25 cycle, viewing every weak window for miners as a buying opportunity.”
With Bitcoin surpassing its all-time high of $72,000 today, Bernstein analysts expect institutional interest in Bitcoin-related stocks to awaken, with miners being the biggest beneficiaries. The analysts specifically focused on Riot Platforms and CleanSpark stocks, arguing that at current and above Bitcoin price levels, Riot and CleanSpark will achieve gross profit margins of approximately 70% and 60%, respectively:
“Any reduction in miner capacity following the halving event will lead to RIOT and CLSK gaining relative market share.”
Bitcoin halving events are programmed to occur automatically every 210,000 blocks, or roughly every four years. The next halving event, expected to take place in April, will see the reward subsidy for miners on the network drop from 6.25 Bitcoins per block to 3.125 Bitcoins. However, they will continue to earn additional transaction fees for every block mined.
Optimism Continues for Bitcoin
Although Bitcoin has already surpassed its all-time high of $69,000, moving into price discovery, Chhugani and Sapra expect further breakouts post-halving and are now more convinced about their $150,000 Bitcoin price target. The analysts included institutional flows in their forecasts, expecting $10 billion this year and an additional $6 billion by 2025 following the launch of spot Bitcoin ETFs in the US on January 11. However, net inflows have already exceeded $9.5 billion, with a daily average of about $370 million. If this trend continues, spot Bitcoin ETF funds will surpass Bernstein’s 2025 predictions within 166 trading days. The analysts made the following comments:
“Although ETF funds will have a volatile trajectory, we understand that leading ETF issuers have barely scratched the surface in terms of integration with other traditional capital pools such as IRAs, private banks, broker-dealers, and state pensions. It’s still early days for the integration of Bitcoin into traditional asset portfolios.”
