Although many investment professionals and other wise people caution us never to put all our eggs in one basket, at times the strategy can really pay off. On Monday, numerous publicly traded businesses dependent on a certain cryptocurrency saw sharp gains along with that foundational asset.
Crypto mining specialists Cleanspark(NASDAQ: CLSK) notched a nearly 20% gain, while its peer Riot Platforms(NASDAQ: RIOT) saw its share price improve by over 9%. Topping both was crypto ultra-bull Michael Saylor's Microstrategy(NASDAQ: MSTR), which ended the day nearly 22% higher.
All in on the top crypto
There are no prizes for guessing which star crypto each of those businesses depends on. Yes, it's Bitcoin(CRYPTO: BTC), the coin that both Cleanspark and Riot Platforms enthusiastically mine, and Microstrategy feverishly pours its capital into buying.
This laser focus can be limiting, sure, but not when that asset is flying so high. For the first time in its relatively long (15-year-plus) history, Bitcoin crossed the $70,000 price mark Monday morning. And so far, as of this writing late afternoon that day, it was holding there.
This surely caught more than a few investors off guard. After all, the securities that helped push Bitcoin to new heights earlier this year -- the recently introduced spot Bitcoin exchange-traded funds (ETFs) -- saw net outflows last week.
According to a Coinbase research report published on Friday and cited by crypto outlets like Coindesk, between March 18 and March 21, these totaled $836 million for the clutch of spot Bitcoin ETFs on the market. That was the first week of outflows recorded by Coinbase in two months.
You can't keep a good cryptocurrency down, though. Yes, many investors traded out of Bitcoin as capital drained from the spot Bitcoin ETFs, but the resulting price weakness in the coin attracted bargain-hunters. Bullishness abounds in the crypto world, as the Federal Reserve is apparently still determined to cut its key interest rate several times this year, and inflation continues to moderate (at least to some degree).
Proving the skeptics wrong
We should also bear in mind that in the very near future, Bitcoin will undergo quite a major change. This is the latest "halving" of the cryptocurrency, which simply means that the rewards for mining the coin will be cut in half. This might seem a distant memory to some, as the last halving occurred nearly four years ago.
Nevertheless, a notably lower reward for mining Bitcoin is leading to a rush into the cryptocurrency. Miners, after all, are eager to crank up their engines to make more of it before that remuneration drops.
I've been a Bitcoin skeptic over the years, but now there are many green lights for the top cryptocurrency. Unless we see a red one or two flash in the coming days and weeks, it should hold its current value fairly well. Ditto for the Cleansparks, Riots, and Microstrategys that are mostly -- or entirely -- dependent upon it.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
