Cryptocurrencies Proxy Stocks Rally as Bitcoin Rebounds Above $15,000: In the latest development, Bitcoin’s rebound from a five-day rout has drawn investors back to stocks related to cryptocurrency and blockchain technology.
Riot Blockchain Inc. jumped 18 percent, while LongFin Corp. added 20 percent. Both had fallen more than 30 percent in the past four days as bitcoin plunged from a record. The biggest cryptocurrency rose 14 percent to $15,674 as of 9:40 a.m. in New York.
Bitcoin’s more than 1,500 percent rally this year has prompted investors to snap up shares in companies often seen as a safer alternative to investing directly in the cryptocurrency itself.
The trend turned into a frenzy in the past few weeks, as obscure microcap companies reoriented to focus on some aspect of the crypto craze, resulting in astronomical stock gains sparked simply by a name change.
The phenomenon reached a peak last week when Long Island Iced Tea Corp. shares rose 238 percent after the company rebranded itself Long Blockchain Corp.
The company’s stock added 1.5 percent Tuesday and is up almost 200 percent since the name change. Bitcoin Investment Trust, a structured note that tracks the price of the digital token, jumped 21 percent. The publicly traded vehicle’s price exceeded the value of the bitcoin it holds by almost 100 percent three days ago.
On Track Innovations Ltd. rose 8.7 percent, while Seven Stars Cloud Group Inc. added 10 percent and Digital Power Corp. advanced 6.3 percent. Overstock.com Inc. and Xunlei Ltd. also gained.
SOURCE: BLOOMBERG