Why has the DigitalX (ASX:DCC) share price rallied 57% in a month?

Cryptocurrency fund manager DigitalX’s shares have been on fire lately…

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The DigitalX Ltd (ASX: DCC) share price is certainly enjoying a strong start to the trading week this Monday. At the time of writing, DigitalX shares are up a very pleasing 10%, rising from 10 cents to 11 cents a share. In contrast, the S&P/ASX 200 Index (ASX: XJO) is also up, but by a far tamer 0.34% so far this Monday.

But that’s not where the party ends for DigitalX shareholders. Over the past month, this company has risen from 7 cents a share to today’s 11 cents. That’s a rise of an incredible 57% in just four weeks or so. On 1 October, the company hit 6 cents a share. That means its gains from that date stand at an even more impressive 83%.

So what’s gone so right for DigitalX in recent times?

Bitcoin boom lifts DigitalX share price?

To answer that, let’s rehash what this company actually does. So DigitalX is a fund manager on the ASX, and one of the only ones that invests directly in Bitcoin (CYYPTO: BTC) and other cryptocurrencies. It has two flagship funds.

The DigitalX Bitcoin Fund enables access to “titled and audited ownership” of Bitcoin through a “traditional unit trust”.

The DigitalX Digital Asset Fund invests in Bitcoin and other “liquid, large capitalisation digital assets with a combination of smart beta strategies and active investment selection”.

Both of these funds are only available to sophisticated/wholesale investors.

So it’s pretty clear the fortunes of this company are intertwined with Bitcoin and other cryptocurrencies. So it’s perhaps no surprise that DigitalX’s share price has boomed over the same period that Bitcoin has rallied an incredible 42.5% (in US dollar terms).

Pink sheets and impressive returns

The company’s latest asset exposure report (to 30 September) told us that it had $45.02 million worth of Bitcoin and other “digital assets” as of 30 September. That portfolio is probably worth a lot more today, seeing as Bitcoin and other cryptocurrencies have rallied so strongly over past few weeks. The company also stated that its 12-month returns now stand at 266.82% for the Bitcoin Fund. And 463.86% for the Digital Asset Fund

These might be some reasons behind why the DigitalX share price has appreciated so enthusiastically over the past month.

Another recent development may also be helping. Back on 6 October, DigitalX announced that it is now trading on the OTCQB markets over in the US. That’s an upgrade from its old home on the ‘pink sheets’.

The OTCQB is an over-the-counter (OTC) share market in the US. But one home to less speculative investments than the bottom-tier pink sheets. The company estimates that this new OTC listing will give it “the opportunity to further build visibility, expand liquidity and further diversify its shareholder base in the US which has shown a deep understanding of blockchain and blockchain related companies…”.

This might have also given investors a sentiment boost over the DigitalX share price.

Whatever the true reasons behind this company’s stellar month, there will be a lot of happy shareholders out there. At the current DigitalX share price of 11 cents, this company has a market capitalisation of $81.36 million.

Should you invest $1,000 in DigitalX right now?

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Motley Fool contributor Sebastian Bowen owns shares of Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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