Cryptocurrency remains a pretty tricky field when it comes to investing. We’ve seen this time and again over the last few years. The price of Bitcoin (CRYPTO: BTC), in particular, has been staggering, practically making it to US$100,000 before falling backwards.
Yet these days, it seems like there have been more upward movements rather than downward. This comes down to a few recent moves in the United States. So, let’s get into them and why there is only one crypto stock I would buy in support of them.
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What happened?
There were two major announcements this week that could be influencing the price of crypto, specifically Bitcoin. First, former president Donald Trump stated several pro-Bitcoin items.
At the Bitcoin 2024 Conference, he expressed strong support for Bitcoin, including a pledge to halt the sale of Bitcoin held by the U.S. government and advocating for a favourable regulatory framework. He also promised to support Bitcoin mining in the U.S. and uphold the right to self-custody for Bitcoin holders if re-elected. These statements are seen as part of his broader strategy to appeal to the cryptocurrency community.
Furthermore, there was another item that caused the price to move. The U.S. government recently seized a significant amount of Bitcoin connected to the Silk Road, and the possibility of auctioning off these assets could influence market dynamics. Less Bitcoin on the market can contribute to a price increase. When the supply of Bitcoin decreases, and demand remains constant or increases, it can create upward pressure on the price. The recent seizure of Bitcoin by the U.S. government and its potential removal from the market, even temporarily, can reduce the available supply.
Should you buy Bitcoin?
With more exchange-traded funds (ETF), positive momentum, and statements from the U.S. government in support of cryptocurrency, Bitcoin does look like a good investment — at least, if you can afford it.
The price as of writing stands at US$66,460, far from what most investors can afford. And while you could get into some ETFs, I would perhaps wait until the Bitcoin halving event occurs before diving in.
Yet, instead, there is another area of the cryptocurrency market to buy into, and that’s mining. Investing in Bitcoin mining companies can be a good idea for several reasons. Bitcoin mining can be highly profitable, especially during bull markets when Bitcoin prices are high. Mining companies often benefit from economies of scale, reducing costs, and increasing margins.
The demand for Bitcoin continues to grow, and mining companies are well-positioned to capitalize on this trend. Mining companies offer exposure to the cryptocurrency market without directly holding volatile assets. And when it comes to diversification, there is really just one I would pick up.
Hut 8 stock
Earnings are due this month for Hut 8 (TSX: HUT), and it’s why I would get in before the probable rise in price. Hut stock is a great investment for a variety of reasons. Hut 8 has secured significant investments, such as the recent $150 million from Coatue, to develop next-generation artificial intelligence (AI) infrastructure, enhancing its growth prospects.
Furthermore, it is a leading operator in large-scale energy infrastructure and has shown resilience and growth in the crypto-mining sector. Hut 8 is actively expanding its operations, including new sites and increased energy capacity.
As for earnings, the company continues to demonstrate strength. During the first quarter, Hut 8 stock reported revenue of $51.7 million, a net income attributable to Hut 8 of $250.9 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $297.0 million.
These results reflect significant profitability and operational efficiency improvements. The company highlighted its strategic investments in AI infrastructure and expansion plans as key drivers for future growth. This strong financial performance underscores Hut 8’s position as a leading player in the cryptocurrency mining sector.
Bottom line
Bitcoin is on the rise, but its price right now looks far out of reach. Meanwhile, the price can still be quite volatile. That’s why mining companies like Hut 8 stock are a great option, especially when they offer more diversification as well.
So, with shares up 6% this week, now could be a great time to get in on this crypto stock.
