The world’s largest digital currency Bitcoin continued its upward momentum this week as it crossed $11,000 valuation in early morning trades on Monday. The coin reached its 15-month highs, making 170% gains year-to-date. The excellent performance has led to a rise in stock prices of Asian crypto companies as well.
Investors Cheer for Cryptocurrencies
In Tokyo, GMO Internet Inc. posted a staggering 7% price rise, making the stock move to its highest levels since October. Remixpoint Inc. moved up by 6.2% while Ceres Inc. rose by 4.4%. The most significantly impacted stock was Metaps, which climbed 11% on Monday morning. Stocks in Seoul, South Korea, experienced a similar rise in price. Vidente Co. jumped by 5.4%, and Woori Technology Investment Co. climbed by 4.6%.
LightStream analyst Supun Walpola said that the bullish sentiment in Bitcoin is the “definite reason” behind the gains. The firm publishes Smartkarma. Walpola said that investors prefer to go long on stocks with exposure to digital currencies. This is a common practice in Bitcoin bull runs. The method allows investors to remain invested in the digital currency ecosystem without suffering the volatility of unregulated markets.
How Does Cryptocurrency Affect Firms?
According to Walpola, the price rise affects different firms differently. Larger companies experience smaller bottom-line boosts than their smaller counterparts. In an email to Bloomberg, he noted that stock price rises don’t often correspond with the actual benefits that the company will receive due to crypto price rise. Therefore, immediate corrections can be seen in the market.
He also warned that investors who turn to crypto stocks instead of crypto coins to avoid volatility, often fall into a trap when markets start turning red.
Cryptocurrency stocks jumped alongside crypto prices in late 2017, but the crypto winter of 2018 led to a decline in their prices as well. GMO, one of the biggest web-related service providers that benefited from the crypto price rise, has also gone back to its Bitcoin mining business again. The company’s shares have risen 34% year-to-date.