Bitcoin early Friday hit a new all-time high and led cryptocurrency prices and related stocks higher as it trends back toward record levels set Tuesday. The recent cryptocurrency rally prompted an upgrade on Thursday from Goldman Sachs on Thursday to upgrade Coinbase stock. Elsewhere, investment management giant BlackRock plans to add bitcoin exposure to one of its major funds.
Coinbase Upgrade
Goldman Sachs on Thursday upgraded Coinbase to neutral from sell based on rallying crypto prices. Cryptocurrencies have surged to all-time highs while Coinbase daily volumes reached levels last seen in 2021. That drove a 48% increase to Goldman's revenue estimates since early February, according to the research note. Goldman previously expected Coinbase would underperform due to low trading volumes. In the longer term, adoption and trading volume remain key questions. Goldman Sachs has a $282 price target on COIN stock — not quite 10% above where shares closed Friday.
BlackRock To Buy BTC ETFs
Elsewhere, BlackRock on Thursday filed with the Securities and Exchange Commission to add bitcoin exposure to its BlackRock Global Allocation Fund. BlackRock said the fund may buy shares of the bitcoin exchange-traded products (ETPs), or the spot bitcoin ETFs, as well as invest in bitcoin futures. The Global Allocation Fund will only invest in BTC ETPs listed and traded on national security exchanges and may include its own iShares Bitcoin Trust, according to the filing.
BlackRock noted any bitcoin futures investments may include illiquidity risk as the BTC futures market is relatively new and not as heavily traded as other futures.
The Global Allocation Fund had $17.83 billion in assets under management as of March 8, according to BlackRock's website.
Bitcoin Price Action
Bitcoin on Friday reached a new record high of $70,136 before easing to $68,400 in the afternoon. The cryptocurrency surged more than 11% on the week, CoinMarketCap data shows, even as bitcoin's volatile nature was on full display. Bitcoin on Tuesday rallied to a record $69,208 before encountering resistance and reversing lower. The move surpassed bitcoin's previous all-time high of $68,990 from November 2021, according to CoinDesk data.
Bitcoin has soared 62% so far this year, with most of the gains coming after spot bitcoin ETFs launched in early January.
Ethereum on Friday hit a new 26-month high of $4,000, marking its highest price since December 2021 and surpassing its previous recent record set Tuesday. Ethereum leapt more than 15% on the week and vaulted 71.5% year-to-date.
BTC Outlook
Many industry analysts expect the upcoming bitcoin halving event expected in April drive prices even higher.
"Bitcoin demand is colliding with increasingly tight supply," Zach Pandl, managing director of research at Grayscale Investments told IBD last week. Pandl noted that U.S. spot bitcoin ETFs pulled in an average of $212 million per calendar day in February. Meanwhile, the bitcoin network currently produces around 900 coins per day, or about $54 million worth of bitcoin based on a price of $60,000.
"Given the bitcoin halving in April, issuance will fall by half — the equivalent of 450 coins or $27 million worth of bitcoin per day," Pandl said. "There is simply not enough bitcoin to accommodate all the new demand, and so natural supply/demand dynamics are driving prices even higher."
Bitcoin ETF Flows
Spot bitcoin ETF prices rose more than 2% Friday, adding to its slight gains Thursday after rebounding more than 8% Wednesday. The ETFs on Tuesday collectively fell around 8.5% as bitcoin reversed from its record highs.
The 10 spot bitcoin ETFs on Tuesday, excluding Hashdex's DEFI, saw a record $10 billion in trading volume Tuesday, Eric Balchunas, Bloomberg ETF analyst reported, smashing the previous Feb. 28 record of about $6 billion.
BlackRock's iShares Bitcoin Trust has been the clear leader in fund inflows since the spot bitcoin ETFs launched Jan. 11 with roughly $9.69 billion in inflows as of end of day March 7, according to BitMEX Research data. The Fidelity Wise Origin Bitcoin Fund ranks second at $6.02 billion in inflows. The ARK 21Shares Bitcoin ETF ranks third at $1.81 billion, followed by the Bitwise Bitcoin ETF with about $1.34 billion in inflows.
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Grayscale Outflows
Grayscale Bitcoin Trust has recorded $10.25 billion in outflows as of March 7, a large chunk of the outflows are due to remaining impacts from the crypto winter in 2022.
FTX at the end of January liquidated its GBTC position and sold about $1 billion worth of shares as part of its bankruptcy proceedings, CoinDesk previously reported. Elsewhere, a U.S. District Court for the Southern District of New York on Feb. 14 approved bankrupt crypto lender Genesis to sell $1.6 billion in GBTC shares in an effort to repay creditors, Reuters reported.
"The Grayscale team anticipated GBTC's diverse shareholder base would engage in profit-taking and deploy investment strategies that would impact the Trust's flows, and we are pleased that outflows have continued to stabilize — especially against forced selling from estate bankruptcies," said Jennifer Rosenthal, vice president of communications at Grayscale. "With market-leading liquidity, strong trading volume, and an unparalleled track record, we expect GBTC will continue to be a primary capital markets risk transfer tool for bitcoin."
Still, Grayscale remains the leader in terms of assets, with $27.11 billion in assets under management, followed by iShares Bitcoin Trust at $12.97 billion.
Despite GBTC's outflows, the new ETFs have recorded $9.368 billion in inflows since launch, according to BitMEX Research.
Spot bitcoin ETF shares are trading above their Jan. 11 launch-day highs.
Crypto Stocks
Coinbase jumped 5.8% Friday, adding to its 1.7% gain Tuesday. COIN stock rallied nearly 18% this week and is up 39.5% for the year.
Bitcoin miners Marathon Digital and CleanSpark rose to close out the week after dropping Tuesday.
Marathon Digital on Tuesday announced it produced 833 bitcoin in February as it operated on 61% of its total capacity due to maintenance issues at two of its production facilities, according to its monthly production update.
MARA stock leapt 7.7% Friday. Shares tumbled 13.4% Tuesday and are down 13% for the week. Still, Marathon Digital is flat on the year.
CLSK spiked 13.6% Friday, for a 13.3% weekly gain. CleanSpark dropped nearly 7% Tuesday. Still, shares soared 83.5% in 2024.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
