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2 stocks at the top of the chart for the next rise
This week, stock market indices once again reached new all-time highs, confirming the current bull market. The roughly 6% pullback seen in the S&P 500 in April was as broad as a bull could have wished, and the strong return to new highs should encourage investors looking to add risk to their portfolios.
Even though I was exclaiming on the dip that this was going to be a fantastic buying opportunity, if I didn’t buy on the dip there was no need to worry because I believe we are on the verge of another big bull run.
If this is the case and investors return to risk-on mode, there is an approach that will virtually guarantee outperformance.
TradingView
Image source: TradingView
Bitcoin is ready
Over the last year or so, Bitcoin has acted as a proxy for risk and has been closely correlated to US stocks, especially technology stocks. While correlations come and go, this one is still strong at the moment and for every 1% stock gain, Bitcoin can rise 3-5%.
On Wednesday of this week, Bitcoin price clearly broke out of a bullish wedge/flag pattern. If you look back at the chart, you can see that this would be the third such breakout in the cryptocurrency since October, so it falls within the standard bullish action.
TradingView
Image source: TradingView
Global Coinbase
Of course, you can go ahead and buy Bitcoin on the spot market, but another way to take advantage of this trend is with Global Coinbase CURRENCY.
Coinbase is the leading cryptocurrency broker in the United States and the main entry point to the crypto ecosystem for retail and some institutional investors. Coinbase Global beat its most recent quarterly earnings expectations, boosted by growing trading activity in Bitcoin and other cryptocurrencies.
Earnings estimates have soared over the past two months, with FY24 rising from $1.57 per share to $7.18 per share! Not surprisingly, this earned the title a Zacks Rank #1 (Strong Buy) assessment.
Zacks Investment Research
Image source: Zacks Investment Research
Like the underlying, Coinbase stock is also forming a compelling technical chart pattern. This descending wedge is a formation that COIN is familiar with, and if the stock can trade above the $220 level, it would signal a breakout.
A powerful breakout, accompanied by volume, should send the stock to new highs.
TradingView
Image source: TradingView
Cleanspark
Another way to gain exposure to Bitcoin in the stock market is through cryptocurrency miners. Cleanspark CLSK is a highly volatile, but potentially profitable miner for playing the Bitcoin theme.
While Cleanspark is a less followed name than some of the other cryptocurrency miners Digital marathon MARA e Riot Platforms Inc. RIOT, I believe Cleanspark is showing more promise in the near future.
The story continues
Over 3 months, 6 months, 12 months and year to date Cleanspark has significantly outperformed both Marathon Digital and Riot Platforms and is currently the only one of the group with positive year to date returns. This relative strength shows notable upside.
TradingView
Image source: TradingView
Additionally, Cleanspark saw some heavy revisions above its earnings estimates, giving it a Zacks Rank #2 (Buy) assessment. FY25 earnings were revised upward from $0.04 per share to $1.86, a staggering 4,550%.
Zacks Investment Research
Image source: Zacks Investment Research
Like Coinbase and Bitcoin itself, Cleanspark stock is building a compelling technical model. A break of this very large bullish flag should send the stock higher. The breakout level is $17.70.
TradingView
Image source: TradingView
iShares Bitcoin Trust
Alternatively, if you want direct exposure to Bitcoin, using the stock market exclusively, the iShares Bitcoin Trust IBIT ETF is a fantastic way to do this. Although the ETF does not currently have a Zacks Rank coverage, I believe it is the best Bitcoin ETF on the market.
IBIT has the second largest assets under management, second to Grayscale Bitcoin Trust ETF GBTC, but has significantly lower fees. GBTC has an annual fee of 1.5%, while IBIT is only 0.25%.
Bottom line
For investors who are looking to add some high-flying stocks to their portfolios and are also willing to put up with some additional volatility for those returns, Bitcoin and related stocks are a worthwhile consideration.
With big improvements in brokerage and mining stocks, along with bullish chart setups, now appears to be a timely opportunity to enter.
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Marathon Digital Holdings, Inc. (MARA) – Free Stock Analysis Report
Grayscale Bitcoin Trust ETF (GBTC): ETF Research Reports
Riot Platforms, Inc. (RIOT) – Free stock analysis report
Cleanspark, Inc. (CLSK) – Free stock analysis report
Coinbase Global, Inc. (COIN) – Free stock analysis report
iShares Bitcoin Trust (IBIT): ETF Research Reports