Cryptocurrency Sector Gains in Pre-Market Trading

Equities associated with the cryptocurrency sector saw gains in pre-market trading, with MicroStrategy leading the upward trend. Among the major crypto and blockchain-related stocks trading on the Nasdaq:

• MicroStrategy climbed around 6.5% to $224.68.
• Coinbase gained 4.5% to $184.29.

Crypto mining companies also advanced:

• Bitfarms rose 3.8% to $1.92.
• Riot Platforms increased by 4.6%.
• Marathon Digital rose 5% to $16.93.
• Hut 8 gained 4.5% to $12.30.

At the time of writing, the broader Nasdaq 100 futures index was up 0.33%. The rally in crypto-related stocks comes as bitcoin rose by more than 3% in the last 24 hours, now trading above the $64,500 mark, according to The Block's Price Page.

MicroStrategy’s NAV Premium Hits Three-Year High

MicroStrategy’s net asset value (NAV) premium relative to its bitcoin holdings has increased to its highest level in three years, currently valued at approximately 2.7 times the company's bitcoin holdings. This represents a NAV premium increase of 188% since the start of 2024, according to MSTR-Tracker.

The NAV premium is calculated by dividing MicroStrategy’s market capitalization by the value of its bitcoin holdings. A higher NAV premium indicates that investors are valuing MicroStrategy shares significantly above the value of its bitcoin assets, reflecting confidence in the company's overall strategy, including its software business and its approach to leveraging its bitcoin holdings.

Positive Inflation Data Bolsters Market Sentiment

The rally in cryptocurrency stocks is supported by recent positive inflation data. On Friday, the U.S. Producer Price Index (PPI) surprised markets by coming in lower than expected at 0% versus a forecast of 0.1%. Similarly, core CPI, which excludes volatile food and energy prices, was lower than anticipated at 0.1%, compared to the expected 0.2%. The year-over-year PPI rate came in at 1.8%, suggesting easing inflationary pressures, which can boost investor sentiment in risk assets like cryptocurrencies.

BRN analyst Valentin Fournier highlighted the significance of Friday's PPI report for bitcoin’s price trajectory. "Bitcoin, alongside equities, has been propelled by the reassuring PPI report, which tempered concerns raised by the higher-than-expected CPI data released on Thursday. The digital asset is gaining momentum, currently hitting $64,500 and showing signs of increased volatility," he said.

He further noted that bitcoin is testing a critical resistance level between $64,500 and $65,000. "A breakout past this zone could trigger a rapid acceleration, especially as various catalysts align for a potential year-end rally."