The rising tide of Ethereum (CCC:ETH-USD) is lifting “all boats” for cryptocurrency miners on Monday morning after Goldman Sachs analysts published research that showed related stocks’ returns are nearly four times greater than the broader market this year. That’s good news for blockchain stocks like Marathon Digital Holdings (NASDAQ:MARA) and Riot Blockchain (NASDAQ:RIOT), which are jumping in morning trading.
Ethereum topped $3,000 in price over the weekend, gaining 8.46% in the last 24 hours. This move extended a seven-day gain of almost 27% and took the market capitalization of the coin to $366.2 billion.
Bitcoin (CCC:BTC-USD) has seen a 9.55% boost in the same one-week period. The total market capitalization for decentralization finance (DeFi) recently topped $100 billion, with some of the most popular DeFi projects being built on the Ethereum blockchain.
Goldman tracked the returns of 19 companies with exposure to the blockchain or cryptocurrencies and with a market capitalization of more than $1 billion. Those stocks have outperformed the S&P 500 by 34 percentage points this year, up 46% vs. 12%, according to the screen. MARA and RIOT were among the companies screened.
Blockchain Stocks: Strong Correlation Lifts MARA Stock
“On average, these stocks have dramatically outperformed the S&P 500 during the last several months alongside the surge in the price of Bitcoin,” Goldman strategists wrote in a note to clients. “An equal-weighted portfolio of the stocks has demonstrated roughly 60% correlations with Bitcoin and the Bloomberg Galaxy Crypto Index during the last several months, compared with 20% correlations for the S&P 500.”
As MARA stock investors already know, there is a high correlation between MARA stock and Bitcoin. In fact, if you were to overlay the price chart for Marathon Digital Holdings with that of Bitcoin in the last 12 months; they’d look remarkably similar. However, observers have worried about crypto miners, focusing on the cost and the environmental impact of mining Bitcoin.
That may be about to change. According to crypto media reports over the weekend, Bitcoin’s mining difficulty fell 12.6%, the network’s largest downward correction of the year, following mass miner outages in China’s coal-rich provinces. Investors see that helping Chinese emerging blockchain stock SOS (NYSE:SOS) and HIVE Blockchain Technologies (OTCMKTS:HVBTF).
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including stints with Bloomberg News and as a sell-side equities research editor.