Bitcoin stocks are moving higher as sentiment is shifting in favor of the digital asset. The price of Bitcoin has surged 140% in 2024 reaching the $100K milestone predicted by extreme bulls just 2 years ago. While the crypto friendly president elect bolstered the market it was also powered by the launch of Spot Exchange Traded Funds (ETF’s) in January along with the reduced supply due to the halving that took place in April. As an investment Bitcoin has been outperforming all the averaged in the long term. The market cap of Bitcoin is over $2 Trillion.
The bullish atmosphere with regards to Bitcoin was driven by one key factor. The launch of Bitcoin Spot Exchange Traded Funds (ETFs) in January 2024. It finally broke the proverbial glass ceiling and has made it easier for institutional and retail investors to gain exposure to Bitcoin, boosting demand. There are 37 Bitcoin ETFs and it’s hard to imagine that we started the year with just one. Institutional traders in Bitcoin are calling for a $200K price target by 2025. Going forward the rate of adoption by corporations and the idea of a national reserve could drive the next leg of growth. As an asset class it is tiny in comparison to other stores of value.
Leading the wave of corporate adoption of Bitcoin is Microstrategy (NASDAQ: MSTR) which holds 439,000 bitcoins worth an estimated $45.6 billion. It also joined the Nasdaq-100 ETF known as the QQQ. MSTR is primarily an enterprise level business intelligence company that created software to help enterprises make data driven decisions thereby optimizing their business processes. The company generates close to $500 million in revenue but it's losing $50 million annually which means most of the value is in the forward pricing of Bitcoin. They also co founded the Bitcoin for Corporations initiative to help accelerate the corporate adoption of Bitcoin.
The CEO of Microstrategy, Michael Saylor made a compelling case during the latest Microsoft (NASDAQ: MSFT) shareholder meeting for Microsoft to join in the Bitcoin investment trend by converting dividends, buybacks, and debt into Bitcoin. While the shareholder proposal was voted down it generated tremendous interest (3.6 million views) on twitter. While there is volatility associated with MSTR it has a current market cap of $89 billion.
Mining Stocks Holding Bitcoin
Some of the top Bitcoin mining stocks Like Marathon Digital (NASDAQ: MARA) and Riot Platforms (NASDAQ: RIOT) have been holding bitcoin and aggressively buying it as well. MARA holds 44,394 BTC and RIOT holds 5,117 BTC. They are leading the corporate trend in Bitcoin accumulation. Mining stocks have been highly correlated to the price of bitcoin along with Coinbase (NASDAQ: COIN) one of the largest exchanges holding 101,454 BTC.
Asset Management Stocks
Wealth management and asset management stocks don’t get as much retail exposure but they have considerable assets in play. DeFi Technologies (OTCMKT: DEFTF) is a financial technology company that provides asset management products for institutional clients investing in cryptocurrency. The company has revenues of C$120 million from their ETF business and most of it drops to the bottom line. Then add to it their C$100 million from their proprietary trading group. They also did an acquisition in October with Stillman designed to turbo charge revenues even more with at least $500 million in monthly trading volume. They have 204 BTC ($20 mil) and have a market cap of $1.0 billion. Given their top line growth and strong balance sheet there's a strong possibility of an uplisting in the United States now that Gary Gensler is gone. LQWD Technologies Corp (OTCMKT: LQWDF) holds 131 BTC ($13.1 mil) and has a market cap of $31 million. They are also members of the Bitcoin for Corporations.
Sol Strategies Inc. (OTCMKTS: CYFRF) is focused on the Solana Blockchain and ecosystem. They were one of the first Bitcoin related companies known as Cypherpunk Holdings before they rebranded. They generate revenue from their validator operations which process transactions and maintain the network. It’s almost like mining their solana balance sheet. They also completed 2 acquisitions this year, Orangefin Ventures and Cogent Crypto. They have 142,031 solana worth about $30 million and only 3 BTC. Their market cap is $315 million and you could call them the MSTR of Solana.
Undervalued Bitcoin Play
Our focus stock is Metalpha Technology Holding Ltd. (NASDAQ: MATH) which is a tightly held wealth management stock on the verge of profitability and has a record of considerable asset accumulation close to 300% annually over the past 2 years. The company is a complex derivative underwriter that layers on strategies for their wealth clients that work in bull markets, bear markets and sideways markets. They employ hedging strategies, market making, and derivatives as their subsidiary LSQ Capital is a licensed brokerage and futures dealer in Hong Kong which means it can also launch ETFs. Their clients include institutions, exchanges, mining companies, investment funds, and family offices. For many of the mining companies they offer a product that couples the financing of the mining rigs from partner Bitmain while offering returns off the digital assets. This is a win-win for miners and creates a sticky customer base for their strategic partner Bitmain.
Revenues for 2024 came in at $16.8 million for 2024 and they recorded a net loss of $.11 per share. Ironically the company also had a shareholder equity of $16.8 million. They had a net profit of $1.3 million for the year but it was offset by a large warrant expense which resulted in a small loss for the year. The balance sheet contained $126.5 million in crypto assets. As of March 2024 they had transaction volume of $1.6 billion in BTC. Given their trajectory this number could be closer to $3 - 4 billion based on the appreciation of BTC and their growth rate. There are 39.0 million shares outstanding and 20.6 million are held by partners and 5.5 million are held by insiders leaving almost 13.0 million shares left in the float.
The key to their success revolves around their management team which is led by CEO Adrian Wang who has a number of high level connections. Key shareholders in his company include Bitmain which is the primary hardware supplier of Bitcoin mining rigs and Antalpha which provides the technical support for the hardware and has a strategic partnership with them. The insiders and strategic partners hold 64.9% of MATH.
Other notable partners include Bloomberg, CoinDesk, Tether, Bloomberg, Morningstar, and Interactive Brokers Group (NASDAQ: IBKR).
Investment Summary
Based on a number of macro level factors BTC is gaining momentum and experts are predicting a lot more upside. MATH is grossly undervalued to its peers and the company has done little in the way of promotion. Look no further than the numerous press releases on their website and the lack of any news on Yahoo Finance. Given the low float nature and the Chinese connection this stock could have one of those large runs investors only dream about. Although not stated it's easy to infer that the company has over 200 BTC just like DEFI putting them on equal footing in terms of an asset base but MATH has a market cap of $38 million while DEFI which is not a NASDAQ company and has a much smaller growth rate scored a market cap of $1.0 billion. This is a massive divergence.
MATH has the potential to be the next MSTR because there are a lot of similarities like the holding of Bitcoin, but unlike MSTR there explosive revenue growth in their wealth management division and their balance sheet is rapidly expanding and they are likely to enter profitability in the coming quarter. The company is extremely undervalued and trades at 1 times sales and 1 times book value while their peers trade multiples of their asset value and are nowhere near profitability. Investors who like explosive upside and little downside risk and looking for exposure to Bitcoin should strongly consider a position. A $1.0 billion valuation is $25.00/sh. The biggest risk is to the upside because this company has virtually no following and will soon be generating profit that could go into a strong awareness campaign. With such a tight share structure the stock could zoom with the price of Bitcoin.
WHEN INSIDER FINANCIAL HAS A NEW COMPANY TO RESEARCH, IT IS IMPORTANT TO PAY ATTENTION. AFTER ALL, OUR FREE NEWSLETTER PROFILED MANY TRIPLE-DIGIT WINNERS FOR SUBSCRIBERS. WE ALWAYS ARE LOOKING FOR MOMENTUM BEFORE IT HAPPENS!
Disclosure: We have not been compensated for this article/video. Insider Financial is not an investment advisor; this article/video does not provide investment advice. Always do your research, make your own investment decisions, or consult with your nearest financial advisor. This article/video is not a solicitation or recommendation to buy, sell, or hold securities. This article/video is our opinion, is meant for informational and educational purposes only, and does not provide investment advice. Past performance is not indicative of future performance.
Discover Hidden Gems
Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.
