The cryptocurrency rally that saw prices of Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE) and Cardano (ADA) soar in the first half of the year has suddenly come to a halt over the past month.
Markets have been volatile over the past few weeks owing to fresh concerns over the health of the nation’s banks and the economy after credit rating agency Moody’s downgraded several lenders and kept six banks on review for potential downgrades. Rising interest rates have a negative impact on growth-oriented assets like consumer discretionary and technology stocks, as well as cryptocurrencies.
Cryptocurrencies’ Rally to Continue
The Fed resumed its interest rate hike in July, which saw cryptocurrency prices retreating from their early July highs.
Moreover, the Fed kept itself open for more interest rate hikes depending on economic data.
If this was not enough, earlier this month, Fitch Ratings downgraded the U.S. long-term foreign-currency issuer default rating from AAA to AA+. The organization described the reason as being “expected fiscal deterioration over the next three years.” This once again dented investors’ sentiments.
However, inflation has sharply declined over the past 12 months from its peak of 9.1% in June 2022. This has raised hopes that the central bank could soon end its monetary tightening cycle.
Cryptocurrency prices have been on the decline lately, but things look bright for the second half. This is especially true as the crypto market made a solid rebound in 2023 after a disappointing 2022.
In fact, a lot of things are playing in the mind of the investors. Last week, Moody’s decision to downgrade several small-to-mid-sized banks sent cryptocurrencies on a rally once again. Understandably, the cryptocurrency market could face volatility in the near term but experts expect it to see brighter days once the macroeconomic conditions ease.
Currently, it’s advisable for investors to adopt a strategy of accumulating cryptocurrencies using a buy-on-the-dip strategy. Each price decline in the crypto market could present a favorable opportunity to purchase, with the potential for significant gains once the market’s interest rate stabilizes.
Stocks to Watch
Shopify Inc. (SHOP – Free Report) Shopify is an e-commerce corporation that provides a platform for merchants to accept cryptocurrencies as a form of payment. Additionally, SHOP has established integration with CoinPayments, a processor for cryptocurrency payments.
Shopify’s expected earnings growth rate for the current year is more than 100. The Zacks Consensus Estimate for its current-year earnings has improved 6.5% over the past 60 days. SHOP currently has a Zacks Rank #3 (Hold).
NVIDIA Corporation (NVDA – Free Report) is a major player in the semiconductor industry and has been one of the standout success stories of 2023. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence and the mining or production of cryptocurrencies.
NVIDIA’s expected earnings growth rate for the current year is 133.2%. The Zacks Consensus Estimate for its current-year earnings has improved 1.7% over the past 60 days. NVDA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HIVE Digital Technologies Ltd. HIVE-USD operates as a cryptocurrency mining firm. The company validates transactions on blockchain networks, as well as provides crypto mining and builds bridges between crypto and traditional capital markets.
HIVE Blockchain’s expected earnings growth rate for the current year is 78.1%. Shares of HIVE have gained 39.6% in the past three months. HIVE presently carries a Zacks Rank #3.
Coinbase Global, Inc. (COIN – Free Report) offers financial infrastructure and technology to support the global cryptocurrency economy. COIN provides a main financial account for consumers in the crypto space, a marketplace with liquidity for institutional crypto asset transactions, and technology and services for developers to build crypto-based applications and accept cryptocurrencies securely as payment.