Four Stocks to Watch Amid Recent Pullback in Crypto Prices

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The cryptocurrency market’s rally, which had been gaining momentum, seems to have hit a roadblock since the end of July. The release of the July FOMC minutes led to a further downturn in the cryptocurrency market. Federal Reserve officials maintained their hawkish stance, indicating the need for more interest rate hikes to combat inflation.

Major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Dogecoin (DOGE) have all witnessed significant price drops. Bitcoin, for instance, started July at $31,500 but has since retreated and managed to hold above the $26,000 mark.

Cryptocurrency Market Pressure

The Federal Reserve’s decision to raise interest rates by 525 basis points, bringing the benchmark rate to the range of 5.25-5.5%, has created headwinds for growth-oriented assets including cryptocurrencies. Rising interest rates negatively impact consumer discretionary, technology stocks, and cryptocurrencies.

The minutes from the July FOMC meeting reveal that officials are open to further rate hikes, as inflation, although lower than its peak, remains above the Fed’s 2% target.

The release of the FOMC minutes also triggered a rise in Treasury yields, with the 10-year and 30-year Treasury yields reaching multi-year highs. This move has implications for the broader financial markets.

Additional Concerns Impacting Cryptocurrencies

Beyond the FOMC minutes, other concerns have added to the pressure on cryptocurrencies. S&P Global Ratings downgraded several regional U.S. banks, indicating that the banking crisis earlier this year is still having ripple effects on the economy.

Fitch Ratings recently downgraded the U.S. long-term foreign-currency issuer default rating, and Moody’s has also downgraded multiple lenders. These actions contribute to the uncertain environment for cryptocurrencies.

Investment Strategy Amidst Volatility

Given the current market conditions, a recommended strategy is to consider accumulating cryptocurrencies through a buying-on-the-dip approach. Each price decline in the cryptocurrency market could present an opportunity for investors to enter at more favorable levels, potentially yielding significant gains as market volatility stabilizes.

Stocks to Monitor

Here are four stocks worth watching as the cryptocurrency market experiences a pullback:

  1. Coinbase Global, Inc. (COIN): COIN offers financial infrastructure and technology to support the global cryptocurrency economy. The company’s expected earnings growth rate for the current year is 84.8%, and its shares have increased by 31.8% in the past three months. Coinbase currently holds a Zacks Rank #3 (Hold).
  2. Accenture plc (ACN): ACN is a global system integrator providing consulting, technology, and various services. The company is actively promoting Ethereum-based blockchain solutions to businesses, particularly in payment processing. Accenture’s expected earnings growth rate for the current year is 8.2%, and its shares have gained 7.1% in the past three months. Accenture currently carries a Zacks Rank #3.
  3. NVIDIA Corporation (NVDA): NVDA is a major player in the semiconductor industry and a standout success story in 2023. As a leading designer of graphic processing units (GPUs), the company benefits from a thriving crypto market due to GPUs’ role in data centers, AI, and cryptocurrency mining. NVIDIA’s expected earnings growth rate for the current year is 134.7%, and its shares have gained 47.7% in the past three months. The company holds a Zacks Rank #1 (Strong Buy).
  4. Robinhood Markets, Inc. (HOOD): HOOD operates a financial services platform allowing users to invest in stocks, ETFs, options, gold, and cryptocurrencies. The company buys and sells cryptocurrencies, including Bitcoin, Ethereum, and Dogecoin, through its Robinhood Crypto platform. Robinhood Markets’ expected earnings growth rate for the current year is 57.3%, and its shares have gained 22.7% in the past three months. The company currently holds a Zacks Rank #2 (Buy).

As the cryptocurrency market navigates through the current volatility, these stocks could offer potential opportunities for investors to consider.

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