Reasons Crypto Mining Stocks Exploded This Week

Although crypto mining stocks and cryptocurrencies don't always move in sync, miners perform well when cryptos do.

This week, the Great Crypto Rally of 2024 accelerated, attracting miners. S&P Global Market Intelligence said that CleanSpark (NASDAQ: CLSK) gained nearly 9%, Cipher Mining (NASDAQ: CIFR) gained over 12%, and Hut 8 (NASDAQ: HUT) gained just under 27%.

The halving should enhance Bitcoin demand. Bitcoin's latest halving is imminent. For those unfamiliar, a halving cuts bitcoin mining incentives in half. A halving reduces the supply of a coin or token, specifically Bitcoin, which will be capped at 21 million coins. When 210,000 blocks of transactions are created, the coin halves.

Each new block on the chain will earn miners 3.125 Bitcoin, down from 6.25. The halving will likely happen in April. Any investor knows that demand rises as supply decreases. This is the core of price increases.

Bitcoin's price rose significantly after its three prior halvings. In May 2020, six months after the latest event, Bitcoin's price rose 79%. The price rose 547% in a year after the half.

Following the leader We've all heard that past performance doesn't guarantee future success in investing. Bitcoin and related assets are good bets right now.

Although the stampede into Bitcoin exchange-traded funds has subsided, their coffers are still bursting and supporting the coin's high price. The U.S. and worldwide economy continue to provide tailwinds, with inflation falling daily and Federal Reserve officials remaining determined to decrease interest rates, albeit not immediately.

For many investors, Bitcoin is the only crypto asset they'll buy. It helps that spot ETFs are easy to invest in. This strongly supports Bitcoin miners. Bitcoin prices should defy gravity as long as investors believe in them.

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