Bitcoin Jumped 24%: Is the Bull Market Back?

Bitcoin’s rebound could be great news for Banxa Holdings (TSXV:BNXA) stock.

| More on:
cryptocurrency, crypto, blockcahin

Image source: Getty Images

Bitcoin surged past US$40,000 (CA$48,000) over the weekend. That’s a 24% jump in just a few days. Bitcoin-related stocks have had a similar experience. Investors are now bracing for a resumption of the digital asset’s multi-year bull market. But is that too optimistic? Here’s a closer look. 

Why did Bitcoin jump?

Price action in the crypto industry is notoriously opaque. No one can say for sure why Bitcoin’s price fluctuates the way it does. However, there are two theories for the move this weekend. 

First, there was a rumour that e-commerce juggernaut Amazon was looking to add crypto payments to its platform and launch its own digital currency. These rumours were triggered by a job posting uncovered by a major publication. However, Amazon’s management team have since issued a statement dispelling the rumours. 

Another theory is that the price action was triggered by investors fleeing Tether. The industry’s most popular stablecoin faces legal challenges that were amplified over the weekend. Some experts believe that Tether’s stablecoin (USDT) is riskier than it seems, which is why investors may have been selling their USDT to buy BTC as a safe haven. 

Where could BTC go?

The road ahead is much less certain. Tether is a real systemic risk for Bitcoin. Meanwhile, Amazon has clearly denied that it will integrate crypto onto its platform. There are no major upgrades to the network in the near future either. The digital asset could be range bound for several years, as it was between 2018 and 2020. 

Nevertheless, some experts believe BTC should be over US$100,000 before the end of the year. Their predictions are based on the stock-to-flow or Puell Ratio models. These models seem to predict past performance well. But there’s no guarantee they can accurately predict future returns. 

If the models deliver what they promise, the asset could double in value before the end of the year. That means this is the perfect time to add some long-term investments in the digital assets space. 

Long-term investments

A crypto services company like Banxa Holdings (TSXV:BNXA) could be an ideal bet if you believe Bitcoin is undervalued. Banxa is a payment processor that helps major corporations accept cryptocurrencies. The network helps users convert their fiat currencies into digital tokens. That means growing adoption and higher market values for BTC should unlock value. 

Banxa stock is currently trading 62% below its all-time high from earlier this year. That means it has underperformed Bitcoin, which has only lost 40% of its value over the same period. A rebound in BTC should trigger a stronger rebound in Banxa stock in the near future.  

Bottom line

Bitcoin’s recent rebound doesn’t necessarily mean it’s in a bull market again. The triggers seem temporary. However, if the digital asset can sustain its momentum Banxa stock should be one of the primary beneficiaries. Keep an eye on this stock. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Fool contributor Vishesh Raisinghani  owns shares of Banxa Holdings.

More on Tech Stocks

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

4 Reasons to Buy Kinaxis Stock Like There’s No Tomorrow

Kinaxis stock has a strong past. But there is even more to look forward to from this top tech stock.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

The Future of AI: Best Canadian Stocks to Buy Now

Here are two of the best AI-focused stocks in Canada that you can consider adding to your portfolio before it’s…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 TFSA Stocks to Buy Right Now With $7,000

Are you looking for growth stocks that can help you maximize the tax-free withdrawals of the TFSA? This article is…

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $1,000

Not all tech stocks are the risky investments that many think they are. Which is why we're focusing on the…

Read more »