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After a solid 2023, cryptocurrencies have started this year on a high. Bitcoin, the world’s most prominent cryptocurrency, has particularly been on a dream run over the past couple of months and the rally is set to gain pace in the coming months as multiple positive developments have given investors’ sentiment a boost.

Bitcoin rallied past $43,000 in December 2023, and on Jan 2, it surged past the $45,000 mark for the first time since April 2022. Although the cryptocurrency retreated from its 21-month high, it hovered around $44,200 on Jan 4.

Over the past three months, Bitcoin has rallied more than 61%. The Federal Reserve didn’t hike interest rates in its last three FOMC meetings in 2023 after raising interest rates by 525 basis points, as its aggressive monetary tightening campaign has seen inflation decline sharply.

Cooling inflation has also raised hopes that the Federal Reserve will soon end its monetary tightening campaign and start cutting rates this year, which could be as early as in March. Higher interest rates have adverse effects on growth-focused sectors like technology, consumer discretionary and cryptocurrencies.

Also, investors are optimistic about the imminent approval of a Bitcoin exchange-traded fund (ETF) by the Securities and Exchange Commission (SEC). This approval is expected to have a significant positive impact, providing strong support to the cryptocurrency market.

Investors are currently looking forward to the potential approval of a spot Bitcoin ETF by the SEC as early as the first half of 2024.

Stocks to Watch

Coinbase Global, Inc. (COIN) offers financial infrastructure and technology to support the global cryptocurrency economy. COIN provides a main financial account for consumers in the crypto space, a marketplace with liquidity for institutional crypto asset transactions, and technology and services for developers to build crypto-based applications and accept cryptocurrencies securely as payment.

Coinbase Global’s expected earnings growth rate for the current year is 92%. The Zacks Consensus Estimate for current-year earnings has improved 16.7% over the last 60 days. Coinbase currently carries a Zacks Rank #2 (Buy).

NVIDIA Corporation (NVDA) is a major player in the semiconductor industry and has been one of the standout success stories of 2023. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence, and the mining or production of cryptocurrencies.

NVIDIA’s expected earnings growth rate for the current year is 268%. The Zacks Consensus Estimate for current-year earnings has improved 14.4% over the last 60 days. Currently, NVIDIA has a Zacks Rank #2. 

PayPal Holdings, Inc. (PYPL) provides digital wallet services that enable users to purchase, transfer, and sell various cryptocurrencies, such as Bitcoin, Ethereum, Bitcoin Cash and Litecoin. Through PYPL, users can use cryptocurrencies to pay for goods and services from online merchants. Additionally, PayPal’s mobile wallet platform, Venmo, also allows users to engage in cryptocurrency buying and selling activities.

PayPal Holdings’ expected earnings growth rate for the current year is 20.6%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days. PYPL currently has a Zacks Rank #3 (Hold).

Block Inc. (SQ) is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications to run on programmable blockchains. SQ is also one of the largest Bitcoin investors.

Block has an expected earnings growth rate of 90% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the last 60 days. SQ currently carries a Zacks Rank #3.

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