Bernstein says to buy the dip in Bitcoin mining stocks ahead of the BTC price reversal

Bitcoin (BTC) mining stocks have underperformed in recent weeks, but any short-term weakness represents a potential buying opportunity, broker Bernstein said in a research report on Monday: Mining stocks look to bounce back following spot approval Bitcoin exchange faces two headwinds: traded funds (ETFs). First is investors' “reduced willingness to use them as a proxy” and second is a weaker BTC price leading to further underperformance, the report said.

The Valkyrie Bitcoin Miners ETF (WGMI), which invests in publicly traded bitcoin mining stocks, fell nearly 38% this year while the bitcoin price and broader stock markets remained more or less stagnant.

However, this underperformance could be a window for investors looking for an opportunity to buy into mining stocks. “Just like with Bitcoin, the next two months present a buying opportunity for Bitcoin miners,” as stocks will provide “higher beta trading” for the next Bitcoin price reversal, analysts Gautam Chhugani and Mahika Sapra wrote. According to the report, Bitcoin could see further temporary weakness, with a potential short-term bottom in the $38,000-$42,000 range for the world's largest cryptocurrency. Still, investors should be “structurally long” ahead of the next halving, expected in April. In a separate note on Wednesday, Bernstein reiterated his bullish assessment of miners. The broker recommends “gaining Bitcoin exposure through Bitcoin miners that offer higher beta than Bitcoin, driven by EBITDA expansion and market multiple growth in the bull cycle.” Bernstein states that it is the above-average valued stocks Riot Platforms (RIOT) and CleanSpark (CLSK) preferred. Read more: Bitcoin Miner CleanSpark Reduced to Neutral, Riot Platforms Upgraded to Neutral: JPMorgan

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