Bitcoin Proxy Stocks Rise Alongside Digital Currency's FuturesBy
Cryptocurrency-related equities surge on bitcoin’s Cboe debut
Rally follows widespread sell-off in run-up to futures
Companies often seen as a safer alternative to investing directly in bitcoin are rallying in the wake of the successful introduction of futures for the biggest digital currency.
Overstock.com Inc., one of the first retailers to start accepting bitcoin, rose as much as 18 percent Monday to the highest in a month. Seven Stars Cloud Group Inc. and Riot Blockchain Inc. surged as much as 25 percent and 27 percent, respectively. Shares of MGT Capital Investments Inc., Digital Power Corp., and Social Reality Inc. are also trading higher, while the Bitcoin Investment Trust climbed as much as 9 percent.
The rally follows a widespread sell-off in the same equities in the run-up to bitcoin’s futures debut. Related stocks like Overstock.com had fallen more than 30 percent since Nov. 24, as investors speculated bitcoin proxies could be replaced by more direct bets on the cryptocurrency via derivatives.
“Investors wanted to see what would happen to bitcoin itself, because there was concern that the futures would cause the bitcoin price to fall,” Thomas Lee, who heads research at Fundstrat Global Advisors, said in a phone interview. When it continued to climb after the futures launched, he said, it gave investors another reason to take a "hard look" at the cryptocurrency.
Lee added that not all investors are able to directly invest in bitcoin, making related assets such as the Bitcoin Investment Trust or Overstock.com the best way to get in on the action. “Everyone is going to find their favorite flavor exposure,” he said.