The year 2023 was a roller coaster ride for the cryptocurrency industry, with Bitcoin reaching new highs, regulatory hurdles, and innovation breakthroughs. The public companies that are exposed to the crypto sector also experienced a wild ride, with some of them outperforming the traditional market and the digital assets themselves.
One of the most prominent crypto stocks of 2023 was Coinbase, the largest cryptocurrency exchange in the US that went public through a direct listing in April. The company’s stock, COIN, started trading at $381 and reached a peak of $429 on its debut day. However, it soon faced a downward pressure as the crypto market entered a correction phase in May and June.
Despite the volatility, Coinbase managed to bounce back and deliver impressive results throughout the year. The company reported record revenues of $2.23 billion in the third quarter, up 27% from the previous quarter and 406% from the same period last year. Coinbase also added more than 13 million verified users in 2023, bringing its total user base to over 73 million.
Coinbase’s stock also reflected its strong performance, as it surged more than 400% in 2023 and closed at $200 on Dec. 31. Coinbase was one of the best performing tech stocks of the year, beating giants like Apple, Amazon, and Tesla. Coinbase also attracted the attention of many traditional investors, who saw it as a proxy for the crypto market and a way to gain exposure to the emerging industry.
Marathon Digital and Riot Blockchain ride the Bitcoin wave
Another category of crypto stocks that had a stellar year was the Bitcoin mining companies, which operate large-scale facilities that secure the network and generate new coins. Two of the most notable players in this field were Marathon Digital and Riot Blockchain, both based in the US and listed on Nasdaq.
Marathon Digital, formerly known as Marathon Patent Group, increased its hash rate (the amount of computing power dedicated to mining) by more than 10 times in 2023, reaching 3.56 exahashes per second (EH/s) by the end of the year. The company also mined 13,654 Bitcoins in 2023, worth over $600 million at current prices.
Riot Blockchain, on the other hand, boosted its hash rate by more than 7 times in 2023, reaching 3.8 EH/s by the end of the year. The company also mined 12,537 Bitcoins in 2023, worth over $550 million at current prices.
Both Marathon Digital and Riot Blockchain benefited from the rising price of Bitcoin, which reached a new all-time high of over $69,000 in November. Their stocks also soared, with Marathon Digital gaining over 500% and Riot Blockchain gaining over 400% in 2023. They also outperformed Bitcoin itself, which gained about 70% in 2023.
Other crypto stocks show mixed results amid regulatory uncertainty
Not all crypto stocks had a smooth ride in 2023, as some of them faced regulatory challenges and market fluctuations. For example, MicroStrategy, a business intelligence firm that holds over 120,000 Bitcoins on its balance sheet, saw its stock drop by about 20% in 2023. The company also faced scrutiny from the US Securities and Exchange Commission (SEC) over its accounting practices and disclosures related to its Bitcoin holdings.
Another example was Grayscale Bitcoin Trust, a fund that allows investors to gain exposure to Bitcoin without owning the underlying asset. The trust, which is one of the largest holders of Bitcoin with over 650,000 coins, saw its shares trade at a discount to the net asset value (NAV) for most of the year. This means that investors were paying less than the actual value of the Bitcoin held by the trust, indicating a lack of demand or confidence. The trust also faced competition from the potential launch of a Bitcoin exchange-traded fund (ETF) in the US, which could offer a more convenient and cost-effective way to invest in Bitcoin.
However, some crypto stocks managed to overcome the regulatory hurdles and deliver positive returns in 2023. For example, TMX Group, the owner of the Toronto Stock Exchange, acquired VettaFi, a platform that offers blockchain and cryptocurrency-themed ETFs, for $848 million in December. The deal was seen as a strategic move to tap into the growing demand for crypto-related products in Canada, which has approved several Bitcoin and Ethereum ETFs in 2023.
Another example was ARK Invest, a fund manager that is known for its bullish stance on disruptive technologies, including cryptocurrencies. The firm, led by Cathie Wood, increased its holdings of Coinbase, Block, and several blockchain ETFs in 2023, while reducing its exposure to Grayscale Bitcoin Trust. ARK Invest also filed for a Bitcoin ETF in partnership with 21Shares, a Swiss-based crypto firm, in June. However, the application is still pending approval from the SEC, which has delayed or rejected several Bitcoin ETF proposals in 2023.
Crypto stocks outlook for 2024
The crypto industry is expected to continue its growth and innovation in 2024, as more users, investors, and institutions adopt digital assets and blockchain technology. The crypto stocks are likely to follow the trend and reflect the performance and sentiment of the sector. However, they will also face some challenges and risks, such as regulatory uncertainty, market volatility, and competition.
Some of the factors that could influence the crypto stocks in 2024 are:
- The approval or rejection of a Bitcoin ETF in the US, which could have a significant impact on the demand and price of Bitcoin and related products.
- The adoption or resistance of central bank digital currencies (CBDCs), which could affect the role and value of cryptocurrencies as alternative forms of money.
- The development and innovation of the Web 3.0 ecosystem, which could create new opportunities and challenges for the crypto sector and its stakeholders.
- The emergence and evolution of new cryptocurrencies and blockchain platforms, which could offer new use cases and solutions for various industries and sectors.
The crypto stocks are likely to remain volatile and unpredictable in 2024, as they are influenced by multiple factors and events. However, they could also offer attractive returns and exposure to the crypto sector, which is one of the most dynamic and exciting fields of the 21st century.
