Why Galaxy Digital Stock Triumphed on Tuesday

On the back of a run-up in cryptocurrency prices and a new, bullish analyst note, crypto stock Galaxy Holdings (NASDAQ: GLXY) had a fine Tuesday on the stock exchange. The company's share price increased by over 11%, outperforming the relatively flat S&P 500 index.

All eyes on the Fed

Tuesday was one day before the latest Federal Reserve (Fed) Open Market Committee meeting was scheduled to wrap up.

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Since many economists and other Fed watchers expected the body to cut key interest rates, investors were cautiously optimistic about relatively high-risk assets, such as cryptocurrencies. All things being equal, risky plays become more popular and attractive when rates decline, as safer assets like bonds look less appealing.

It wasn't exactly shocking, then, that many cryptocurrencies and related investments, such as Galaxy, saw price upticks on Tuesday.

Compounding this was the analyst report. Well before market open, Citizens prognosticator Devin Ryan initiated coverage of Galaxy with a market outperform (i.e., buy) recommendation and price target of $60 per share. That's more than double its current level.

Twin revenue streams

Ryan's very optimistic take on Galaxy is based largely on a sum-of-the-parts valuation, according to reports. He believes the market is significantly undervaluing the company, which has considerable assets in both cryptocurrency and data center operations. In his view, this exposes Galaxy to not one, but two megatrends it can profit handsomely from.

Although I'm less bullish on the cryptocurrency end than Ryan, I'd agree with his evaluation of the potential in data centers. I don't envision the company doubling its share price in the next year, but having said that, I'd be optimistic about its future nevertheless.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.