Markets
Enter the Bitcoin Bull Market with These 3 Crypto Stocks – May 21, 2024
Bitcoin is the best-performing asset over the past decade and its performance has shown little sign of abating – and some of the major cryptocurrency stocks are in trouble too.
Year to date, the world’s first and largest cryptocurrency has grown by nearly 60%, gaining nearly 150% in the past twelve months. Despite regulatory hurdles, cryptocurrency exchange closures, and a brutal bear market, Bitcoin has climbed the proverbial “Wall of Worry” and is just a few thousand dollars away from its all-time high of $73,798.
Looking ahead to the second half of 2024, Bitcoin and Bitcoin proxies should benefit from two major bullish catalysts, including:
Bitcoin halving fuels record gains
The Bitcoin “Halving” event occurs every four years and halves the number of newly “minted” Bitcoins. Bitcoin’s unique monetary policy separates it from currencies issued by central banks and makes it an attractive investment for many. While central banks have no limits on how much they can inflate their currency, the supply of Bitcoin is limited. Historical price movements illustrate the benefits of halving. The first three halvings produced gains of 9,133%, 281% and 562% one year later!
Institutional adoption grows with Bitcoin ETFs
A 13F is a disclosure required by the U.S. Securities and Exchange Commission (SEC) that companies with assets under management in excess of $100 million must file. This quarter, more than 600 institutions disclosed their positions in Bitcoin spot ETFs, including a who’s who of top-tier firms like JP Morgan (JPM), Wells Fargo (WFC), and Millenium (reported as a $2 billion position), to name a few.
3 cryptocurrency-related stocks to buy now
Coinbase (CURRENCY)
Coinbase is the leading cryptocurrency exchange in the United States, achieving the best possible Zacks Rank #1 (Strong Buy).
Milking cow
Seth Klarman is a legendary value investor, billionaire, and one of the highest earning money managers in the world. In an interview last year, Klarman said he avoids cryptocurrencies but sees value in Coinbase, saying: “Coinbase has $5 billion in cash, has less debt, and is doing some smart things.” Well, now that number has grown to over 7 billion. I bring this to your attention because not many people who trade stocks like COIN probably understand how fundamentally sound the company is.
Coinbase shatters people’s expectations
On May 3, the major cryptocurrency exchange announced EPS of $4.4, beating the Street estimate of $1.07. Here’s a snippet from the EPS transcript that struck me:“Our financial performance in the first quarter reflects our focus on product expansion, continued operational discipline and strong cryptocurrency market conditions. We generated $1.6 billion in total revenue and $1.2 billion in net income*. Adjusted EBITDA was $1.0 billion, more than we generated in all of 2023.” Finally, we continue to promote regulatory clarity for cryptocurrencies through grassroots advocacy, advocacy, and ongoing efforts to seek clarity through the courts.
COIN has exceeded expectations for five consecutive quarters and is not just beating them, but destroying them. Over the last five quarters the average EPS surprise was 364.63%!
Robinhood Markets (HOOD)
Zacks Rank # 2 (Buy) shares Robin Hood (HOOD – Free report) is one of the most popular brokers in the United States. Robinhood was the first major broker to “democratize” trading by offering a commission-free investing app. The app rose to fame during the meme stock craze spurred by retail investor groups on the social media platform Reddit (RDDT) and included lightning-fast moves in stocks like GameStop (GME).
Bull Catalyst: Cryptocurrency
HOOD recently added cryptocurrency-enabled trading. Although HOOD is late to the cryptocurrency game, the company has the perfect customer base to take advantage of a Bitcoin bull market.
Consistent positive EPS surprises
HOOD reported first-quarter earnings that beat the Zacks Consensus Estimate by 260%. Over the past four quarters, positive earnings have become the norm, with EPS averaging 230%!
Record net deposits
Net deposits are one of the most important metrics for brokers to monitor. HOOD’s net deposits reached a record $11.2 billion in the first quarter, translating into an annualized growth rate of 44% and contributing to a 30% growth rate over the trailing twelve months. Meanwhile, CEO Vlad Tenev announced on May 14 that Robinhood has reached $5 billion in stock trading volume.
Robinhood Gold Rises
Robinhood recently announced a new “Gold” credit card. HOOD has already gained as many as 260,000 new subscribers.
MicroStrategy (MSTR)
MicroStrategy has been around for years and is a leading provider of business intelligence software.
Adoption of the Bitcoin standard
Former CEO and billionaire Michael Saylor made waves on Wall Street a few years ago when he obtained MSTR on the “Bitcoin Standard.” Instead of sitting on inflationary assets like US dollars, Saylor realized that MSTR would be better off on a “Bitcoin sail”. Essentially, MSTR is a leveraged Bitcoin bet. The results speak for themselves: MicroStrategy has grown by more than 1,000% in the last five years!
On the contrary, a good option for investors who do not want a leveraged bet but want to take advantage of Bitcoin’s potential upside is iShares Bitcoin Trust (IBIT)ETF. IBIT has some of the lowest fees and highest liquidity among all Bitcoin ETFs.
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