The recent price retrenchment of bitcoin had the predictable impact of pressuring shares of companies that mine the largest cryptocurrency. But at least one an analyst remains constructive on the space.
In a recent report, H.C. Wainwright analyst Mike Colonnese noted the sell-off experienced by bitcoin miners, including those residing in ETFs like the CoinShares Valkyrie Bitcoin Miners ETF (WGMI ), “has created a very attractive buying opportunity.”
Should his thesis prove accurate, it could be positive for investors considering ETFs like WGMI. That’s because the underlying holdings in those funds epitomize “crypto correlated.” That fact is confirmed by the recent price action of bitcoin mining equities.
Brighter Days Could Be Ahead for WGMI
When considering bitcoin, other digital currencies or an ETF such as WGMI, it’s worth noting the recent sell-off in the space is largely the result of macroeconomic factors. And it’s not a commentary on the fundamentals sported by WGMI holdings.
“Tariffs, sticky inflation, a hawkish Fed, and austerity measures the government is taking through the Department of Government Efficiency (DOGE) have worked together to create a risk-off environment for equities and cryptocurrencies,” wrote Colonnese.
Another alluring element in the WGMI equation is the point that investors can get involved and not be subjected to lofty valuations. In fact, Colonnese points out that valuations for bitcoin miners are “unreasonably low” at 3.5x expected 2025 sales. The analyst said that is a depressed multiple for “this stage of the cycle.”
Among WGMI holdings favored by the analyst is Hut 8 (HUT). He noted the company’s high-performance computing and artificial intelligence competencies as avenues that can potentially diversify its revenue stream and reduce dependence on crypto mining.
WGMI holdings garnered more sell-side support Friday when Rosenblatt analyst Chris Brendler initiated coverage of several stocks in the group. Those include some WGMI components. He tagged Hive Digital Technologies (HIVE), Hut 8 and MARA Holdings (MARA) with “buy” ratings. That trio combines for about 14% of the WGMI portfolio. He’s also constructive on the hyper-computing arms of Hive and Hut 8. His price targets on all three names imply significant upside from current levels.
Speaking of price targets, Colonnese reiterated his 2025 bitcoin target of $225,000, implying the king of crypto could more than double from current levels. That would imply substantial upside could be in store for WGMI holdings.
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