Miners x9 Results: The Signal of Traditional Money Awaiting Crypto Entry

If you are an institutional investor you don’t have a lot of options to enter into the crypto market with certain regulated conditions. One of those solutions is investing in mining companies of Bitcoin.

The current climate in the crypto industry is marked by an eagerness among traditional and institutional investors to enter the space. The promise of regulation and a more secure investment landscape is attracting large funds, banks, and investment firms.

Bitcoin miners have been the primary beneficiaries of this trend, witnessing returns that are x9 times those of Bitcoin itself in average. In some cases x16 returns. Take a look at this graph:

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These miners act as the backbone of the Bitcoin network, validating transactions and maintaining its security.

As the demand for Bitcoin and cryptocurrencies continues to grow, so does the need for mining, driving the price and interest in miner stocks up. But mining has some extra risks as it combines the crypto market risks with the mining company risks, as we have seen, some companies are performing x16 while others are way under the average of x9. 

Theres an obious correlation between the BTC price and miners results, but the question is: How is it possible to make a x16 compared with BTC? My thesis is that investors are so eager for crypto that miners are reaping substantial benefits from this situation.

The x9 results are an indication of the broader market sentiment and the willingness of investors to back the foundational technologies of the crypto space.

Impact on the Market

  1. Increased Capital Flow: The entrance of institutional money increases liquidity and brings more capital into the crypto space. This can stabilize prices and create a more mature market environment.
  2. Greater Credibility: The presence of well-known institutional players adds legitimacy to the market, making it more appealing for other investors.
  3. Potential Regulation: The inflow of traditional money often comes with calls for regulation and oversight. This might mean that the wild west days of crypto are numbered, leading to a more stable but perhaps less exhilarating market landscape.
  4. Shift in Investment Strategies: With miners outpacing BTC in returns, there may be a shift in investment strategies towards these stocks, leading to a reevaluation of crypto portfolios.

If a spot Bitcoin ETF (Exchange-Traded Fund) is approved by the SEC (Securities and Exchange Commission in USA), institutional investors will have an easier time gaining direct exposure to BTC. An ETF is a type of investment fund that is traded on stock exchanges, much like individual stocks. It can hold assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism to keep its trading close to its net asset value. In the context of a Bitcoin ETF, it would allow investors to buy shares in a fund that holds Bitcoin, giving them exposure to the cryptocurrency without having to buy, store, and manage the actual digital currency themselves. The approval of such an ETF would mean potentially less capital inflow to Bitcoin miners, but a greate booster for the sector.

Some experts believe that approval is inevitable, and that some ETFs will be authorized within a year. There is even pressure on the SEC to approve all 9 ETFs simultaneously to try to mitigate the ‘first to market’ effect.

Yours in crypto and AI