The Stocks Outpacing Bitcoin’s Historic Rally

Following Donald Trump’s win in the U.S. presidential election on November 5, Bitcoin prices skyrocketed to new all-time highs, surging nearly 50% in just over a month and surpassing the historic $100,000 mark (at the time of writing).

However, some assets tied to the world’s most popular cryptocurrency have performed even better. In this article, we’ll take a closer look at four Bitcoin-related stocks that have outpaced Bitcoin’s impressive gains.

Bitcoin Miners Outperform the Cryptocurrency

The standout performers are stocks of Bitcoin mining companies. According to a recent JP Morgan research note, their daily gross profit in November increased by 64% compared to the previous month, outpacing Bitcoin’s own rally.

Among the leaders, Bitdeer Technologies posted a staggering 83% gain in November alone. Other notable outperformers include Hut 8 Corp., MARA Holdings, and Iris Energy, which recorded monthly gains of 77%, 64%, and 48%, respectively.

On average, Bitcoin miner stocks analyzed by JP Morgan climbed 52% in November — a performance the investment bank described as “stunning.”

These results highlight an alternative way for investors to profit from Bitcoin’s bullish momentum without diving directly into the unregulated world of cryptocurrencies or purchasing ETFs. Investing in mining stocks can sometimes offer an even more lucrative opportunity.

The Case of MicroStrategy

Another key player is MicroStrategy, led by Michael Saylor, which has seen gains of over 200% since September. The company holds a record-breaking 386,700 Bitcoins, valued at over $36 billion.

Recently, MicroStrategy issued $3 billion in zero-coupon five-year convertible bonds — the lowest yield for new convertible debt this year and a 55% conversion premium, the highest for any standard convertible bond in 2023.

This deal, completed at the end of November, enabled MicroStrategy to purchase an additional $5 billion worth of Bitcoin, supplementing proceeds from sales of its MSTR shares.

Convertible bonds are central to the company’s plan to raise $21 billion in bonds and $21 billion in equity over the next three years to fund further Bitcoin acquisitions, as outlined in a strategy presented in October.

This approach, however, carries substantial risk. MicroStrategy effectively acts as a leveraged Bitcoin holder. Nonetheless, investors currently support the strategy, as it allows the company to expand its Bitcoin holdings while minimally diluting its equity base, thanks to convertible bond sales.