• Stocks tied to digital assets have seen sharp rallies year-to-date.
  • Coinbase, MicroStrategy, Riot Platforms, and Marathon Digital shares are up more than 250% in 2023.
  • Bitcoin, meanwhile, has climbed about 130% this year, and ether is up 73%.

Artificial intelligence names like Nvidia and Microsoft have commanded Wall Street’s attention in 2023, but there’s another corner of the market that’s enjoying impressive gains as well this year. 

A handful of stocks tied to cryptocurrency and digital assets have notched triple-digit returns, all while bitcoin has surged and the market has gone through a shakeup in the wake of legal troubles among some of the biggest players. 

Shares of Coinbase have climbed more than 280% this year. In November alone — a month that saw FTX founder Sam Bankman-Fried convicted of fraud charges and Binance founder Changpeng Zhao pleading guilty to criminal chargers — the crypto exchange rallied 62%. 

Michael Saylor's MicroStrategy, which holds a trove of bitcoin worth $6.5 billion, has seen its stock jump 260% in 2023. Meanwhile, crypto miners Riot Platforms and Marathon Digital have rallied about 295% and 260%, respectively. 

Crypto investor Anthony Pompliano and Bitwise's Alyssa Choo highlighted the sharp rise in crypto stocks this week. 

In a note on Thursday, Pompliano said he's had financial exposure to Coinbase for years on the view that the company would emerge as the top US-based regulated exchange. 

"[Coinbase] had great brand awareness, the team continued to innovate on the product in an impressive way, and the institutional offerings were starting to serve as the default for large capital allocators as they came into the market," he wrote. "Each of these components of the thesis still remains true today."

In the background of the sector's strong run, bitcoin, the world's largest cryptocurrency by market cap, touched an 18-month high to end November, climbing above $38,160 to bring its year-to-date returns near 130%.

Ether, too, has notched a solid 73% gain in the same stretch.

Both tokens have been fueled by bullish market signals and optimism around regulators' potential approval of crypto spot ETFs.

Industry experts point to the bitcoin halving event as another bullish tailwind. Scheduled for April 2024, the halving event will see the amount of bitcoin reward to miners reduced by half. Pompliano, for his part, said he does not recommend "selling anything in crypto pre-halving."

Halvings in 2012, 2016, and 2020, were all followed by new all-time highs for bitcoin in the following 12 months. 

"Taking a conservative view, if bitcoin stays around $30K until the halving, even a 12-month post-halving increase of 250% — which, again, is conservative relative to previous halvings — would price bitcoin at $105K," Joe Kelly, the chief executive of crypto financial services company Unchained, said in a recent note.