Trump's win sparks interest in these crypto-linked stocks
Nov. 09, 2024 4:10 PM ET
By: Max Gottlich, SA News Editor
 Chip Somodevilla/Getty Images News
Donald Trump's presidential win marks a major boost for the crypto sector, with Wall Street eyeing several related stocks as potential winners in a friendlier regulatory landscape.
Trump, who once criticized digital assets, has shifted to an openly supportive stance, proposing to make the U.S. “the crypto capital of the planet and the bitcoin ( BTC-USD) superpower of the world."
Since defeating his Democratic opponent Kamala Harris on Nov. 6, bitcoin ( BTC-USD) touched a new all-time high, briefly surpassing the $75K mark, and crypto-tied stocks surged. Investors are factoring in the potential for the Trump administration to roll back crypto regulations, with a pro-crypto shift in Congress that could pass legislation to support industry growth.
"Changes in the [Securities and Exchange Commission] posture, along with the passage of a crypto-industry regulatory framework, could set the stage for much broader adoption of digital assets across the mainstream financial services sector and among large enterprises," Canaccord Genuity analyst Joseph Vafi wrote in a note to clients.
Trump has said he will fire SEC Chair Gary Gensler once he takes office, and hire regulators who support crypto. Vafi sees such a change as "a major positive" for the space, with particular benefit to crypto exchange Coinbase Global (NASDAQ: COIN) and crypto investment manager Galaxy Digital Holdings ( OTCPK:BRPHF).
Coinbase (NASDAQ: COIN) has shouldered much of the impact from SEC enforcement actions since the regulator sued the company in June 2023 for allegedly operating as an unregistered securities broker. At the core of this prolonged legal battle is the SEC's stance that most crypto tokens are unregistered securities, making Coinbase's facilitation of crypto trading on its platform illegal.
"With this overhang lifted and a regulatory framework in place, we believe Coinbase could further solidify its positioning as the leading US-domiciled crypto exchange," the note said.
For Mike Novogratz's Galaxy Digital ( OTCPK:BRPHF), the analyst thinks regulatory clarity would help the company "continue to build its leading market position both in institutional trading and asset management and potentially be a catalyst in enabling a US listing of its stock."
Another campaign promise by Trump is to hold bitcoin ( BTC-USD) in a strategic national stockpile, a move that Vafi reckons should bode well for MicroStrategy (NASDAQ: MSTR), as well as BTC miners Cipher Mining (NASDAQ: CIFR), Core Scientific (NASDAQ: CORZ), HIVE Digital technologies (NASDAQ: HIVE), Hut 8 (NASDAQ: HUT) and Iris Energy (NASDAQ: IREN).
Piper Sandler analyst Patrick Moley laid out several Overweight-rated names that offer investors exposure to the crypto space, including Robinhood Markets (NASDAQ: HOOD), Virtu Financial (NASDAQ: VIRT), CME Group (NASDAQ: CME) and Cboe Global Markets (BATS: CBOE).
Robinhood (NASDAQ: HOOD) is his most favored way to place the crypto space in his coverage, as "its monetized crypto offering is significantly more robust than traditional retail brokerage peers." He sees the trading app boosting the number of tokens available for trading on its platform and launching new products like staking when a comprehensive crypto regulatory framework comes to fruition in the U.S.
In Q3, the company's transaction-based crypto revenue jumped 165% Y/Y and declined 25% Q/Q to $61M.
Virtu (NASDAQ: VIRT), meanwhile, is "positioned well to benefit" from the evolution of crypto's presence in traditional finance. The market maker is an authorized participant of all publicly traded spot bitcoin ( BTC-USD) and ether ( ETH-USD) exchange-traded funds, "and we think the future launch of options on these spot crypto ETFs could add another layer to VIRT's crypto revenues."
Seeking Alpha analysts had weighed in on how the U.S. election results will impact crypto.
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