As 2023 winds down, cryptocurrency stocks Coinbase Global Inc. (NASDAQ: COIN) and MicroStrategy Inc. (NASDAQ: MSTR) are in rally mode.

Smaller crypto stocks such as Riot Platforms Inc. (NASDAQ: RIOT) and Marathon Digital Holdings Inc. (NASDAQ: MARA) are also showing substantial uptrends. 

Can this rally be sustained into the new year, and should investors continue to hold or buy crypto-related equities? 

One piece of good news for crypto investors is the Federal Reserve’s indication that it will begin cutting interest rates in 2024. Higher interest rates can chase investors away from investments such as crypto, which they perceive as more risky.

Coinbase rally coincides with broad market

For example, Coinbase began a strong rally in late October, right around the time when the broader SPDR S&P 500 ETF Trust (NYSEARCA: SPY) began trending higher. 

That coincided with broad market sentiment that inflation was easing enough for the Fed to pause rate hikes.

Another factor with potential to affect crypto stocks is the anticipated launch of at least one bitcoin ETF in 2024.

Asset managers including Bitwise, BlackRock, Fidelity and VanEck are among companies that have filed the paperwork, including proposed ticker symbols, for spot bitcoin ETFs. Analysts believe regulatory approval could increase demand for bitcoin over time, rather than as a one-time spike higher. 

"Hold on for dear life"

That’s good news for crypto investors, although the proposed ticker of VanEck’s planned ETF is HODL, which stands for "hold on for dear life." In crypto circles, that term refers to a buy-and-hold strategy for digital assets, regardless of how crypto is trading.

In other words, serious crypto investors are accustomed to some volatility, so they may not be scared of the usual roller coaster ride.

One other factor could affect bitcoin prices in 2024: Bitcoin halving. That’s the process of reducing new bitcoin supply, which impacts miners and market dynamics. If fewer Bitcoins are available, the price is likely to rise, assuming constant or growing demand. 

However, it’s not necessarily the case that one year’s leading asset classes will continue leadership into the next calendar year, and that could be true of cryptocurrencies. 

Buyers loading up on Coinbase

Buyer momentum can be an indication. 

For example, Coinbase is up 62.41% in the past month, 88.40% in the past three months and 325.15% year-to-date.

MarketBeat’s Coinbase ownership data show that 354 institutional buyers accounted for $2.57 billion in inflows in the past 12 months, while 197 institutional sellers accounted for $1.03 billion in outflows.

The stock has been trading higher amid better-than-average volume in recent weeks. 

MicroStrategy sells intelligence software and cloud services, but is now known primarily as a bitcoin company, as it holds a sizeable amount of bitcoin on its balance sheet. That aligns its value more closely with crypto markets than with techs. 

The stock is up 16.07% in the past month, 71.43% in the past three months, and 313.93% year-to-date. 

Analysts have mixed views on Coinbase

It’s clear that investors have been bidding up bitcoin and crypto stocks in general, but with a market capitalization of $36.76 billion, Coinbase is the largest-cap stock to watch.

MarketBeat’s Coinbase analyst forecasts show a consensus view of “hold” on the stock, which is hardly a sign of unbridled exuberance. 

Digging deeper into analysts’ views, you can see that analysts are mixed. Some, such as Goldman Sachs, consider the stock a sell, while other, smaller investment banks, tend to hold a more bullish view. 

One thing investors might consider watching: The broad market, including crypto, is in rally mode largely due to forecasts of lower interest rates in 2024. 

With any asset or asset class, investors should always be aware that a selloff follows a rally. Selloffs aren’t the same as crashes or corrections; frequently, they occur when investors simply pare back holdings to pocket some profits after a run-up. 

The pending launch of bitcoin ETFs could indeed bode well for crypto-related stocks, but as with any investment, watch for a price progression over time, rather than a rocket ride.