JPMorgan Predicts Respite for Bitcoin Miners Following Approval of Spot ETF

According to a recent report, the collective market capitalization of mining companies under the scrutiny of a prominent bank has experienced a remarkable surge of 131% since the conclusion of September.

The Securities and Exchange Commission (SEC) officially granted approval on Thursday for the inaugural U.S.-listed spot bitcoin exchange-traded funds (ETFs). JPMorgan, in a comprehensive research report, acknowledged the widely anticipated nature of this development. The bank highlighted the escalating buying pressure observed in both bitcoin and bitcoin mining stocks in the preceding months.

Analysts Reginald Smith and Charles Pearce, in their report, expressed uncertainty about the immediate impact of the SEC's announcement on bitcoin and mining stocks. They remarked, 

"It is unclear whether the announcement will spur further near-term upside in bitcoin and mining stocks, or if investors will sell the news."

The analysts suggested that mining stocks might be poised for a pause, anticipating their performance to align with bitcoin prices in the coming weeks.

Emphasizing the remarkable surge in bitcoin mining stocks over the past three months, the analysts noted that as of the SEC's approval, the aggregate market capitalization of the fourteen U.S.-listed miners under scrutiny reached nearly $17 billion. This signifies a substantial 131% increase since the end of September, contrasting with bitcoin's 71% gain over the same period.

While cautioning about potential selling pressure in the sector, given the proximity of mining stocks to historic highs concerning proved reserve and four-year rolling block reward revenue estimates, the analysts acknowledged the possibility of investors shifting away from cryptocurrency-related stocks. This potential shift could be towards more direct exposure to bitcoin through an ETF.

However, JPMorgan views any potential sell-off as an opportune moment for investment. The bank emphasized that the ETF's approval does not directly impact mining economics or competitive dynamics. Maintaining an optimistic outlook, JPMorgan stated that the "stars are aligning for a big year in bitcoin mining." Among their recommendations, Iris Energy (IREN), classified as overweight-rated, stands out as the bank's top value pick.

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