Crypto stocks surge as ether reaches six-month high
The crypto-focused stocks rose Friday after ether reached a six-month-high following the passage of a bill to create stablecoins by the U.S. House of Representatives.
The bill is expected to be signed by President Donald Trump and marks a turning point for the digital asset sector, which has pushed legislators to create rules regarding digital assets. They argue that a clear structure could lead to a greater use of stablecoins, crypto tokens, etc.
Stablecoins, which are dollar-pegged tokens, have increased in popularity. Stablecoins, which are backed by the U.S. dollar and issued on Ethereum's blockchain, drive up demand for ether.
BitMine shares, where tech billionaire Peter Thiel, and Fundstrat's Tom Lee are the chairman, have soared by 12.7%. Bit Digital, BTCS and other ether holding companies Bit Digital and BTCS each added 6.5% to their shares. SharpLink shares dipped 0.6%.
SharpLink Gaming announced on Thursday, that it has added $5 billion to the $1 billion plan for its share sale.
The recent success of Circle IPO has further accelerated stablecoin growth, according to Matthew Dibb. He is the CIO of Astronaut Capital, a Singapore based crypto asset manager.
Stablecoins are a major benefit to Ethereum.
Circle Internet, a stablecoin provider, gained 6%. Coinbase Global, a crypto exchange, gained 7.6%. It also hit its highest level since the IPO of 2021.
ETHER TREASURY STATEGY
Ether reached $3,675.81 - its highest level since January 6 - and lastly gained 6.6% to $3,643.09. This outperformed bitcoin, which fell 0.5% to $118.870, after reaching a record high this week of $123,153.
Ether also received a boost when a number companies added the digital asset into their balance sheets in recent times, following Strategy's example. The shares of the biggest corporate bitcoin holder have soared more than 3,000% in value since 2000, as its underlying asset has exploded.
Astronaut Capital's Dibb stated that "time will tell if these treasury firms outperform the core ETF ETH, but the success (Strategy has had) in the past years won't deter them from trying."
Many companies have copied the bitcoin strategy, which has a maximum supply of 21 million coins. It is often seen as a digital currency. However, the switch to ether, with its unlimited supply, has caused some concern.
Michael O'Rourke is the chief market strategist of JonesTrading. He said: "It's hard to understand why so many investors are denying themselves this cardinal benefit when they buy their crypto exposure through an equity wrapper which issues new shares on a regular basis."
"While the fixed-supply cap is the bitcoin's cardinal characteristic, the cardinal feature of a digital Treasury Company business model is perpetual diluting through share issuance." (Reporting and editing by Saumyadebchakrabarty, Anil D'Silva and Medha Singh from Bengaluru)
(source: Reuters)
