As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
CRYPTO NAMES DROP: In early Monday pre-market trading, shares of Riot Blockchain (RIOT) were down 7.2% at $29.87 while Marathon Digital (MARA) dropped 7.3% to $26.81 as the price of bitcoin fell over 7% to a two-week low below $32,200. Shares of Coinbase (COIN) were also down 2.8% at $222.88.
CHINESE CITY BEGINS CRYPTO CRACKDOWN: A Chinese city with abundant hydropower has begun a crackdown on crypto mining firms this week following the ban made by the central government, Bloomberg News reported Friday, citing a person with knowledge of the situation. A Ya'an government official has told at least one bitcoin miner the city plans to root out all bitcoin and ether mining operations within the next year. According to the Communist Party-backed Global Times newspaper, many mines in Sichuan were closed as of Sunday and the clampdown means 90% of the country's Bitcoin mining capacity will be shut down.
MICROSTRATEGY PURCHASES 13,005 BITCOINS: MicroStrategy (MSTR) announced Monday that it had purchased an additional approximately 13,005 bitcoins for approximately $489M in cash at an average price of approximately $37,617 per bitcoin, inclusive of fees and expenses. As of June 21, MicroStrategy holds an aggregate of approximately 105,085 bitcoins, which were acquired at an aggregate purchase price of approximately $2.74B and an average purchase price of approximately $26,080 per bitcoin, inclusive of fees and expenses.
COMPASS POINT INITIATES CRYPTO STOCKS: Compass Point analyst Michael Del Grosso initiated coverage of Galaxy Digital Holdings (BRPHF) on Monday with a Neutral rating and C$25 price target. While over time he sees Galaxy Digital as a first-mover in the crypto prime brokerage, trading, asset management, venture capital, investment banking, and mining finance businesses, he notes that the stock trades above peers and in the short-term Galaxy lacks visibility into increasing recurring revenue streams, which leaves him on the sidelines awaiting a more attractive entry point.
The analyst also initiated coverage of Marathon Digital with a Buy rating and $40 price target. Marathon Digital is one of a select few bitcoin miners with established scale, next-generation hardware and low-cost power purchase agreements in place, Del Grosso said. The analyst believes the company should continue to outperform given its significant scale. He forecasts Marathon Digital will be able to scale its operations through its recent agreement with Compute North, eventually becoming the largest miner in North America.
Del Grosso initiated coverage of Riot Blockchain as well with a Buy rating and $43 price target. The analyst believes the recent Whinstone acquisition is "transformational" for the company and provides additional capacity for miner deployment as well as optionality for alternative miner/ datacenter hosting. Riot should continue to outperform given its "significant scale," the analyst said.
In addition, the analyst initiated coverage of Voyager Digital (VYGVF) with a Buy rating and C$45 price target. Voyager's differentiated consumer app offers retail investors "a unique trading opportunity into the crypto asset class" with a strong value proposition given its zero-commission trading model, offering of a broader array of crypto trading pairs, and interest on a larger number of coins, Del Grosso said. He sees this value proposition driving about 1M incremental funded accounts by YE22 and believes the shares "represent one of the most attractive opportunities within the Blockchain / Cryptocurrency industry," he added.
PRICE ACTION: As of time of writing, Riot Blockchain was down roughly 4% to $30.92, Marathon Digital fell roughly 4% to $27.76, Coinbase (COIN) dropped about 4.3% to $219.54 and bitcoin fell about 4.3% to $32,700.
