Bitcoin Traders Yet to Price in Possible Donald Trump Victory: Bernstein
Bernstein analysts highlight that Bitcoin holders are yet to factor in Trump’s victory in the November election. A surge is likely in the days leading up to the speech at the annual Bitcoin Conference.
Bernstein analysts acknowledge monitoring key crypto stocks’ performance days as the Republican presidential candidate prepared to address the Nashville conference on Saturday. The Monday note by the research firm spotlights a bullish outlook on digital assets and a potential uptrend for select cryptos amid an improving US regulatory environment.
The Bernstein team—steered by Gautam Chhugani—notes the traders are yet to price in the positive shift in the US regulatory environment. The analysts indicate that traders will miss out on the regulatory environment change towards the pro-crypto stance if Trump wins the election in November.
Increase Allocation to Crypto and Crypto-Affiliated Stocks
Bernstein holds the opportunity for significant headroom that institutional investors can tap to increase allocation to digital assets and crypto-affiliated stocks.
The Bitcoin market is buoyant again as BTC has been up 13% in the past seven days, testing above 67,000, CoinGecko shows. The rebound is more substantial among the crypto stocks, up 22% from last week’s level, Bernstein writes.
Bernstein’s report tracks seven stocks classified in primary categories. The initial category, dubbed Bitcoin mining consolidators, features CleanSpark (CLSK), Marathon Digital (MARA), and Riot Platforms (RIOT). The second classification features the hybrid Bitcoin-AI data centers, namely Iris Energy (IREN) and Core Scientific (CORZ). Michael Saylors Microstrategy (MSTR) is tracked under the Bitcoin corporate treasury, while Robinhood (HOOD) is in the crypto exchange class.
Bernstein analysts consider the BTC mining consolidators to harbor significant growth potential. In particular, analysts view the large BTC mining consolidators as the high-beta proxies whose price action is fueled by the underlying asset price. The report adds that potential cashflows realized from the operating leverage are behind the price action.
Market yet to Factor Trump’s Victory
Bernstein analysts note that Riot Platforms holds Bitcoin at over $0.6 billion in value. Recently, the Nasdaq-listed miner and ticker symbol RIOT realized $500 million in equity capital round. It plans to fund the construction of the 1Gw Corsicana, making the Texas-based site the largest in the world.
The analysts reveal that CleanSpark portrays rapid expansion. The report notes the accelerated hash rate growth from 10EH/s to 20.4EH/s year-to-date and the potential to test 32EH/s by December 2024.
The analysts single out the strategic shift by Marathon Digital from its typical capital-light model. The miner engaged hosting partners in BTC mining, though now shifting towards owning and operating its mining sites.
The hybrid category featuring firms engaging in BTC mining and AI data centers occupies a unique market position, according to Bernstein analysts. They encounter disproportionate ‘power access’ given the constrained energy around the world.
The analysts highlighted the recent deal where Core Scientific secured a 12-year $4.7bn contract to co-host with CoreWeave. The latter involves an NVIDIA partner, besides being the top-ranked AI GPU cloud provider.
The analysts documented that Iris Energy concluded the execution of 500 GPU AI cloud for leading AI venture – Poolside.AI. The report acknowledges the IREN milestone in owning the 1.4GW site that features ready power interconnect within West Texas.
Bernstein’s report recognizes Robinhood’s potential within the crypto space. The analysts predict HOOD revenues will double in the next two years. They attribute over 70% earning growth to crypto-based transactions. The analysts expect the crypto revenues to account for 40$ of the earnings by the end of 2025 from the present 7%.
Bernstein analysts hailed MicroStrategy’s BTC strategy as illustrating an active capital market approach to becoming the leading corporate holder. The analysts observed that it currently owns 1.1% of the BTC supply.
The team noted that MSTR’s active strategy yields a higher Bitcoin per equity share (BTC/share), which has increased by 67% since the initial BTC adoption. Moreover, the team held a bullish stance tied to the ambitious BTC price target.
The analysts project a sharp surge in the 2025E EBITDA, fueled by the BTC bull cycle as the Bitcoin tests above $100K. The team anticipates Bitcoin will set a peak price of $200K owing to the accelerated institutional adoption via ETFs and corporate treasury investors.
Bernstein’s report considers the US elections as likely to impact Bitcoin, particularly given Trump’s stance on crypto. The analysts observed that BTC price will react positively to improvement in Republican win odds. The analysts indicated that the crypto space has faith in Trump and awaits his speech at the annual Bitcoin conference in Nashville on July 27.
