Cryptocurrencies
5 Best Bitcoin Stocks And Crypto Plays To Buy And Watch
The price of Bitcoin has seesawed over the past month. A number of Bitcoin stocks — or companies that have business tied to the cryptocurrency — have wobbled as well. Given the on-a-whim price swings in the crypto world, finding the best stocks out of that bunch can be difficult.
For now, based solely on IBD’s chart analysis, the best crypto stocks and Bitcoin stocks to buy or watch include Coinbase (COIN), Silvergate Capital (SI), ProShares Bitcoin Strategy (BITO), a Bitcoin futures ETF, Bitfarms (BITF) and Signature Bank (SBNY).
However, none of those stocks are currently in bases. And with the market in correction, none are buys.
Fluctuations In Bitcoin, Bitcoin Stocks
The price of Bitcoin currently stands at around $39,000. But it’s down from around $57,000 at the start of December and a record $68,990.90 in early November.
Bitcoin’s gyrations have arrived as Russia’s invasion of Ukraine brings the cryptocurrency’s different investment narratives to the forefront.
The price of Bitcoin, at times since the invasion, has fallen as more traditional investors dump what they consider a volatile “risk asset” in a time of rising prices and economic uncertainty. At other moments, its price has rebounded, amid signs ordinary people in the two nations may have been using crypto to shield their money as the currencies in both reel.
President Biden last week announced an executive order geared toward “responsible development” of digital assets like cryptocurrencies. The order directed regulators to “develop policy recommendations to address the implications of the growing digital asset sector and changes in financial markets for consumers, investors, businesses, and equitable economic growth.” Bitcoin’s price jumped on the news.
Mainstream Adoption
Prior to the invasion, the industry had made progress toward mainstream adoption. More exchange traded funds tied to Bitcoin futures and companies — the closest things to a direct Bitcoin ETF — have debuted recently. Major corporations are taking interest.
ProShares Bitcoin Strategy ETF (BITO) began trading on the NYSE Arca in October. That launch helped drive Bitcoin to a record high. The Valkyrie Bitcoin Strategy ETF (BTF) made its trading debut shortly after. VanEck has launched its VanEck Bitcoin Strategy ETF on CBOE. Those funds offer exposure to Bitcoin futures.
Among other Bitcoin-related ETFs, Invesco Alerian Galaxy Crypto Economy ETF (SATO), made up of shares of companies engaged in crypto-related activity, also debuted in October. So did the Volt Crypto Industry Revolution and Tech ETF (BTCR), which also gives investors access to Bitcoin-exposed companies.
Grayscale has filed to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. But the SEC has concerns, and has pushed back its decision on the matter.
The way Bitcoin and cryptocurrencies are used now — largely for investing — is also a big departure from Bitcoin’s original intent as a currency, free from central banks, that people could use to buy things.
Observers also still raise concerns about security, market manipulation, and whether cryptocurrencies, and by extension Bitcoin stocks, have a place in mainstream investing. More regulation could hasten adoption. But it could dampen some of the big gains that have made Bitcoin popular.
Bitcoin Stocks
Bitcoin stocks are not all the same.
Some, such as Riot Blockchain (RIOT), are in the business of mining Bitcoin. Some, like MicroStrategy (MSTR), simply buy Bitcoin, giving investors a way to play the cryptocurrency on the major exchanges. The rise of Bitcoin ETFs may make such companies that buy Bitcoin less appealing.
Bitcoin miners and buyers are directly tied to Bitcoin and the cryptocurrencies they hold.
Other Bitcoin stocks serve as cryptocurrency’s financial plumbing. Silvergate Capital (SI) is known as a “crypto bank” and runs a digital-currency exchange platform. Coinbase is a leading Bitcoin and cryptocurrency exchange, and makes money from fees on transactions. But the companies’ stock prices are still affected by the day-to-day fluctuations of Bitcoin and other crypto prices.
Other companies, like the trading platform Robinhood (HOOD), can sometimes function as crypto stocks. Block (SQ), formerly known as Square, as well as PayPal (PYPL) also allow their users to buy Bitcoin.
Coinbase Stock
Cryptocurrency exchange Coinbase has a 46 Composite Rating. Its EPS Rating is 76.
Coinbase stock began trading on April 14. COIN stock fell almost immediately, tumbling from an opening day high of 429.74 to 208 on May 19. The stock rebounded through October, but later gave up those gains.
Coinbase last month reported fourth-quarter results that soundly beat expectations. However, the company noted that for the first quarter, it had seen “a decline in crypto asset volatility and crypto asset prices compared to all-time high levels in Q4 2021.”
“Recent market performance has been driven by macroeconomic factors such as tightening financial conditions (particularly after the U.S. Federal Reserve raised the possibility of quantitative tightening in 2022) and geopolitical instability in parts of the world,” Coinbase said.
The company has said it wants to become the “Amazon (AMZN)” of digital assets. But putting more of those assets on its platform could bring complications with compliance, and currencies that pose bigger risks to investors.
Silvergate Capital Stock
Silvergate Capital is the holding company for Silvergate Bank, which provides financial services for digital currencies that try to keep up with the 24/7 pace of cryptocurrency trading.
SI stock broke out of a loose cup-with-handle base in late October as Bitcoin powered to record highs. But the stock sold off after consolidating. Silvergate has an 86 Composite Rating and a 98 EPS Rating.
Along with traditional commercial and residential lending services, Silvergate runs an exchange network that allows its digital-currency clients and institutional investors to send money to accounts of other Silvergate clients at any time. Its digital-currency customers include digital-currency exchanges and institutional investors, and the network is used for cryptocurrency settlements.
Silvergate’s network also allows digital-currency customers to borrow dollars from the bank to buy Bitcoin, using Bitcoin as collateral. Silvergate plans to launch a so-called stablecoin this year.
“Through conversations with our customers, we identified a need for a U.S. dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers,” it said in a recent release.
In January, the company reported fourth-quarter earnings per share and revenue that missed expectations. Digital-currency customers increased 6% from the prior quarter to 1,381.
ProShares Bitcoin Strategy
The ProShares Bitcoin Strategy ETF began trading in October, not long before Bitcoin’s peak. It has since seesawed in tandem with Bitcoin. The BITO ETF does not have ratings from IBD.
The SEC has been reluctant to approve an ETF directly tied to Bitcoin’s twists and turns. But last year, SEC Chair Gary Gensler indicated that the agency could be more receptive to applications for ETFs tied to Bitcoin futures.
Still, the U.S. government has remained wary of Bitcoin’s volatility, energy consumption and its role in illicit financial activity.
Bitfarms Stock
Bitfarms, a Bitcoin miner, is down from highs reached in November.
The stock has a 41 Composite Rating. Its EPS Rating is 59.
Signature Bank Stock
Signature Bank stock has retreated from record highs. The stock has a 94 Composite Rating. Its EPS Rating is 85. Shares were testing support at their 200-day line, after slicing below their 50-day line.
Signature has a blockchain-based digital payments platform called Signet. The company’s fourth-quarter results beat expectations. Its digital-asset banking team helped boost deposit growth.
