Heading into 2024, the biggest story in crypto continues to be Bitcoin (BTC -2.28%), which is up more than 150% this year. But the best may be yet to come. The arrival of the first spot Bitcoin ETF is now expected in the first quarter of 2024, and that will be followed by one of the most highly anticipated events in the crypto industry: the Bitcoin halving.
While it's not a guarantee that these two catalysts will extend the Bitcoin rally into 2024, there is one way that you can get access to the potential upside of Bitcoin without having to deal with the risk and volatility of the crypto market. And that's by buying crypto stocks that are highly correlated with Bitcoin's price. Two of the best options right now are MicroStrategy (MSTR 3.38%) and Riot Platforms (RIOT -1.49%).
MicroStrategy
Let's start with MicroStrategy, which is the largest public holder of Bitcoin in the world, by a long shot. About 0.75% of the entire Bitcoin supply in the world is now on MicroStrategy's balance sheet.
Image source: Getty Images.
At the end of November, MicroStrategy scooped up another 16,130 Bitcoins and now holds 174,530 Bitcoins. By way of comparison, that's 12 times more Bitcoin than held by Marathon Digital Holdings, the largest publicly traded Bitcoin mining company. And it's 17 times more Bitcoin than held by Coinbase Global, the second-largest cryptocurrency exchange in the world.
In short, MicroStrategy is just about as good of a proxy for Bitcoin as you're going to get in the stock market. Right now, the market values MicroStrategy at about $9 billion. The amount of Bitcoin on its balance sheet is valued at $7.5 billion. So most of the value of the company is based on the value of Bitcoin! This explains why MicroStrategy is up more than 300% this year. As long as the company continues to add to its Bitcoin position in 2024, its value should also continue to skyrocket.
Riot Platforms
While Riot Platforms is not the largest Bitcoin mining stock, it's generally acknowledged as among the best run and the most cost effective. In large part, this is due to Riot's strategy of continually upgrading to the most efficient and powerful Bitcoin mining rigs.
Every month, Riot Platforms releases a Bitcoin production update, and the numbers continue to look good. In November 2023, the amount of Bitcoin mined increased 21% on a month-over-month basis. At the same time, the number of mining rigs deployed increased by 6% on a month-over-month basis. There are plans to deploy even more mining rigs in 2024, and all signs point to Riot Platforms going all in on the Bitcoin halving next year.
While Riot Platforms is up more than 350% this year, there may still be more room to run. According to J.P. Morgan, analyst price forecasts for Riot range as high as $23. That would be a 50% increase from today's price of a little moire than $15.
And if you look at how Riot Platforms performed during the last Bitcoin halving in 2020, there's even more room for hope. The stock went from $2 in May 2020 to $10 by year-end. And then, in 2021, the stock went parabolic, more than quadrupling in value. Just keep in mind, though, that past results are no guarantee of future performance. But it's certainly instructive for seeing just how much of an impact the Bitcoin halving might have on Riot's price.
But is it too late?
The main caveat, of course, is that these stocks are not hidden gems. Everybody in the crypto industry knows about them. That's why both are up so much this year. So it could be the case that they have already gone up too far, too fast, and won't be able to replicate the same type of performance in 2024.
But I don't think that's the case. There are two strong catalysts in place for Bitcoin next year, and it's likely that Bitcoin will continue to gain in value next year. That's why I've specifically highlighted two stocks that are directly tied to Bitcoin's price. If Bitcoin is ready to rise even higher next year, then these two stocks are likely to go along for the ride.
