- Wall Street is keen on Bitcoin but not on crypto mining stocks
- D.A. Davidson analyst Christopher Brendler recently revealed that crypto mining stocks are too overvalued
- Stocks are heavily linked to the Bitcoin price which worries Wall Street
Wall Street may be warming to cryptocurrencies but it is far from accepting of crypto mining stocks. That’s the view of Christopher Brendler, analyst at Wall Street firm D.A. Davidson, in a widely reported note to investors. Several cryptocurrency mining firms are listed on exchanges with more added in 2021, but even though Bendler believes the crypto mining sector will soon “explode”, Wall Street investors are wary over valuations of crypto mining stocks and their relation to Bitcoin’s price.
Bitcoin ETF Has Allowed Wall Street to Board the Train
Bitcoin has been making headlines this year primarily on the back of last week’s Bitcoin futures ETF approval which has seemed to form a short term top at $67,000. These ETFs were quickly bought up in record numbers after their launch, with Wall Street clearly waiting for its chance to jump into the Bitcoin market.
The same can’t be said of crypto mining stocks which Bendler says Wall Street is still treating with caution:
…we found close to 100% agreement with our near-term bull case, but also plenty of skepticism, mostly around valuation. We admit traditional valuation metrics may not apply in this sector as future cash flows are exceedingly difficult to predict.
Crypto Mining Stocks Linked to Price
Cryptocurrency mining stocks are linked to the valuation of Bitcoin given that this figure directly relates to miners’ income, so when Bitcoin is in a bull market as it is now it makes sense to assume that valuations are inflated. Once Bitcoin has been through another full market cycle we may have more of an idea of the true value of crypto mining stocks when Wall Street might be looking to step in.
