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Why Canaan Stock Jumped 17% This Morning

By Anders Bylund - Mar 29, 2021 at 12:31PM

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The cryptocurrency mining hardware specialist rose as a traditional financial giant took some baby steps into the crypto market.

What happened

Shares of Canaan (CAN -8.28%) jumped as much as 17.2% higher on Monday morning. The Beijing-based developer and maker of cryptocurrency mining machines didn't have any company-specific news to share today or over the weekend, but the stock benefitted from a positive development in the crypto space.

So what

Payment-processing giant Visa (V 0.84%) just announced that it will start to settle payments over the Ethereum (ETH 2.52%) network later this year. In particular, Visa's bridge between the cryptocurrency and fiat currency worlds will rely on the Ethereum-based USD Coin (USDC -0.38%), whose value is pegged to the U. S. Dollar through Ethereum's smart contracts.

Visa's cautious step into the blockchain market is generally seen as a positive sign for the large-scale viability of cryptocurrencies and related services, driving many cryptocurrencies higher today. Ethereum is up by 4.3% at noon, EDT. Bitcoin (BTC 2.42%) has gained 3.2%. The USD Coin remained as stable as ever, staying within 0.1% of yesterday's dollar value.

A green charting arrow on the rise on top of a table on well-known cryptocurrency names.

Image source: Getty Images.

Now what

Canaan's popular Avalon miners are tailor-made for Bitcoin mining, not Ethereum. The big idea here is that traditional finance powerhouses like Visa are starting to take the cryptocurrency market seriously as a whole, which should lead to increased demand for Bitcoin miners down the road.

Canaan's shares have now gained 830% in six months, but the skyrocketing journey has not been smooth. The stock also stands 54% below the all-time highs that were set earlier this month, when Bitcoin prices topped out above $61,000 per token.

Canaan is a volatile ticker and should be treated with caution. There are many ways to invest in the Bitcoin and Ethereum markets with far lower market risk.

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Stocks Mentioned

Canaan Inc. Stock Quote
Canaan Inc.
$3.10 (-8.28%) $0.28
Visa Inc. Stock Quote
Visa Inc.
$199.03 (0.84%) $1.66
Bitcoin Stock Quote
$30,264.64 (2.42%) $713.78
Ethereum Stock Quote
$2,037.83 (2.52%) $50.16
USD Coin Stock Quote
USD Coin
$1.00 (-0.38%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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