Tesla Pushes Bitcoin Price to New Highs: 3 Big Gainers
Bitcoin lately scaled northward to touch a record high, with the cryptocurrency witnessing a boom despite the coronavirus outbreak wreaking havoc on economies across the globe. In fact, the price of bitcoin surged as high as $48,226 on Feb 9 to finish at $46,450, which in itself is a record high, per CoinDesk, as mentioned in a MarketWatch article.
Bitcoin price for quite some time has been building on gains and had crossed the resistance level of $40,000 a while back. To put things into perspective, bitcoin so far this year gained in excess of 60% compared to a meager 4% rise of the broader S&P 500 index. Meanwhile, gold prices dropped around 3% while crude oil prices jumped 20%.
Nonetheless, bitcoin price touched as high as $48,000 yesterday after electric car maker Tesla, Inc. TSLA invested $1.5 billion in the world’s largest cryptocurrency. The MarketWatch article further noted that Tesla revealed plans to accept bitcoin “as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
In fact, institutional investors have begun to show keen interest in bitcoin, with global digital payments company PayPal Holdings, Inc. PYPL launching several cryptocurrencies, including bitcoin buying and selling features in its platform. Millions of PayPal users and merchants will now be making and receiving payments in crypto. Interestingly, PayPal once staunchly criticized cryptocurrencies but now is one of its biggest fans.
Similarly, Elon Musk, CEO of Tesla, also expressed serious interest in some of the cryptocurrencies, including bitcoin, on his Twitter account. Thus, support from Tesla and PayPal among several others boosted demand for the asset class, thereby contributing toward its price rally.
At the same time, many now perceive cryptocurrency, in particular, bitcoin, as a safe-haven asset. It is considered to act as a hedge against market gyrations and rise in prices of essential commodities. Moreover, given the coronavirus outbreak and its impact on economies worldwide, many companies are now holding less cash and converting their cash treasuries into cryptocurrency. For instance, American payment company Square, Inc SQ has bitcoin as part of its balance sheet reserve.
What’s more, the interest shown by big corporates should certainly egg on retail investors to show interest in bitcoin, something they have restrained from amid the pandemic. The rise in demand for bitcoin should lift its price further and things should look brighter for companies that are not only making direct use of bitcoin but also technologies that support it, like blockchain.
On such a positive note, let us keep an eye on some stocks that are benefitting from the rising bitcoin trend and are well poised to make the most of the growing demand for blockchain technology. Of course, as mentioned above, PayPal and Square are poised to gain at the moment.
PayPal, currently, has a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its current-year earnings has increased 0.89% over the past 60 days. The company’s expected earnings growth rate for the current year is 17%. Similarly, Square has a Zacks Rank #3 at present. The Zacks Consensus Estimate for its next-year earnings has risen 0.9% over the past 30 days. The company’s expected earnings growth rate for the next five-year period is 33%.
Separately, Microsoft Corporation MSFT for quite some time has been facing stiff competition in the cloud computing space from rivals like Amazon.com, Inc AMZN. As a result, the tech behemoth has introduced Azure blockchain service to stay ahead of its competitors.
Presently, Microsoft has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved 9.1% north over the past 60 days. The company’s expected earnings growth rate for the current year is 27.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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