The key rate of the US Federal Reserve System (FRS) shows what interest commercial banks pay on loans. The higher it is, the more expensive the borrowed money. When rates fall, loans fall in price, making investors more willing to invest in risky assets.
As a result of the recent key rate cut, Bitcoin rose by 6% and Ethereum by 11%. Let’s consider what happened to the stock quotes of the largest companies that hold, mine or accept Bitcoin as a means of payment.
CleanSpark (NASDAQ:CLSK)
The list opens with the mining company CleanSpark with a market capitalization of $2.56 billion. It conducts its main activities in the eastern part of the United States, and resolves legal issues in the west. Since the end of March, there has been a strong decline in the company’s shares – securities fell in price by 67%. However, Jerome Powell’s speech on the key rate cut changed the trend, and after September 18, CleanSpark shares rose 14.53%.
Source: tradingview.com
Core Scientific (NASDAQ: CORZ)
In ninth place is the mining company Core Scientific with a capitalization of $3.13 billion. Over the past three years, it has mined more bitcoins than any of its competitors.
In addition to mining, Core Scientific provides its data centers for third-party miners and develops services based on artificial intelligence. By estimates CEO of the company Adam Sullivan, this could lead to an increase in capitalization to $25-$30 billion.
After the announcement of the key rate cut, Core Scientific shares reached their all-time high several times, reaching $12.95. However, due to the decline in the last three trading sessions, the price increase since September 18 is not so impressive – only 1.08%.
Source: tradingview.com
Galaxy Digital Holdings (TSX:GLXY)
The eighth largest crypto company by capitalization is Galaxy Digital Holdings with $4.6 billion. Its main activities are digital asset management, consulting and lending. After the key rate cut, the company’s shares rose by almost 24%. Thus, they came close to the maximum of $19.16.
Source: tradingview.com
Marathon Digital Holdings (NASDAQ: MARA)
The seventh on the list of the largest crypto companies is Marathon Digital Holdings with a capitalization of $5.15 billion. After Powell’s speech, its shares added 12.72%, although before that – from mid-July to early September – they fell by more than half. The main reason was expectations of weak financial results for the third quarter of 2024. For example, EPS (earnings per share), according to data analysts at the Zacks research platform, should collapse by 580% compared to the same period a year earlier.
Source: tradingview.com
MicroStrategy (NASDAQ: MSTR)
Sixth place goes to MicroStrategy, a software services company. Its capitalization is $33.63 billion. In the crypto industry, MicroStrategy is primarily known as a large investor in Bitcoin, and quite successful at that: the company’s income recently reached $7 billion. MSTR shares responded best to the Fed’s key rate cut – they added more than 32% from 18 September.
Source: tradingview.com
Grayscale Bitcoin Trust (NYSE: GBTC)
Fifth place in the ranking is occupied by the Bitcoin spot ETF from Grayscale with a capitalization of $36.21 billion. In September, the outflows of funds from GBTC finally slowed down, and on some days even their inflows were observed. For example, on September 27, investors immediately invested $26.15 billion into the fund.
The situation in GBTC shares is gradually improving. If from March to August 2024 they lost almost 40%, then from August to the end of September the shares gained more than 30%. Moreover, 9.46% of the total growth occurred in the period after the announcement of the key rate reduction.
Source: tradingview.com
Block (NYSE: SQ)
In fourth place is Block, a company that sells financial services and products. Its capitalization is $40.95 billion. In terms of cryptocurrency, Block’s activities are quite diversified. Thus, at the end of the first quarter of 2024, 9% of the company’s liquid assets were Bitcoin. In addition, Block is also involved in the mining sector after signing an agreement with Core Scientific in July.
In recent months, the company’s shares have been quite stormy. This is largely due to the fact that investors greeted Block CEO Jack Dorsey’s statement with distrust. According to him, there is a lot that needs to be corrected in the company. Therefore, even the Fed rate cut did not have a serious impact on the price of Block securities – in ten days they added a modest 0.34%.
Source: tradingview.com
Coinbase (NASDAQ: COIN)
The largest American crypto exchange Coinbase with a capitalization of $47.51 billion is in third place. Since September 6, its shares have risen in price by 30%. Most of the rise – 17.58% – occurred after the Fed cut its key rate.
Source: tradingview.com
PayPal (NASDAQ: PYPL)
The second place is occupied by the PayPal payment service, whose market capitalization is $79.61 billion. Using PayPal, you can make transfers in cryptocurrency and the company has its own stablecoin (PYUSD). In addition, PayPal has allowed trading and storage of digital assets on business accounts.
After the key rate cut, PYPL shares reached their yearly highs, exceeding $80. Now they have corrected slightly to $77.88. Thus, the growth since September 18 was 6.51%.
Source: tradingview.com
Tesla (NASDAQ: TSLA)
The leader among crypto companies remains the electric car manufacturer and one of the largest holders of Bitcoin Tesla with a capitalization of $832.07 billion. Since Powell’s speech, the company’s shares have added more than 14.64%, coming close to the July highs.
Nevertheless, the dominant role was played by news from China. Firstly, local authorities introduced quite strong incentive measures: they reduced mortgage rates and bank reserve standards. Secondly, Tesla has extended its 5-year zero-interest loan program for the purchase of Model 3 and Model Y cars until October 31. This should stimulate sales in China and, as a result, improve financial results. The news had a positive effect on investor sentiment.
Source: tradingview.com
Conclusion
The reduction in the key rate had a positive impact on shares of crypto companies. All securities rose. The largest increase was demonstrated by MicroStrategy – 32.83%, and the smallest increase in price was shown by Block – 0.34%.
This material and the information contained herein do not constitute individual or other investment advice. The opinion of the editors may not coincide with the opinions of analytical portals and experts.
Source: Bits
I am an experienced journalist, writer, and editor with a passion for finance and business news. I have been working in the journalism field for over 6 years, covering a variety of topics from finance to technology. As an author at World Stock Market, I specialize in finance business-related topics.
