Dec 2, 2021
Top 5 Best Bitcoin Stocks To Buy
The price of Bitcoin has wobbled over the past month. A number of Bitcoin stocks — or companies that have business tied to the cryptocurrency — have followed suit. Given the on-a-whim price swings in the crypto world, finding the best stocks out of that bunch can be difficult.
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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 Riot Blockchain (RIOT).
But investors should take caution. Those stocks live and die by Bitcoin price gyrations. Some have troubled pasts.
Other companies, like the trading platform Robinhood (HOOD), can sometimes function as crypto stocks. Square (SQ) and PayPal (PYPL) also allow their users to buy Bitcoin.
Fluctuations In Bitcoin, Bitcoin Stocks
The price of Bitcoin currently stands at around $58,000, well up from where it stood at the end of 2020.
But Bitcoin has taken multiple hits along the way, due to a crypto crackdown in China, concerns about the Fed backing away from its economic-support measures, Tesla backing away from using the currency and fears of tighter regulations in the U.S.
Meanwhile, cheaper coins — including meme-based cryptocurrencies Dogecoin and Shiba Inu — have become more popular. But their moves higher or lower can happen at any time and without any reason.
Still, the industry has 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.
More companies — from Mastercard (MA) to Bank of New York Mellon (BK) — are also offering services related to digital assets. Coinbase is working with meta Platforms’ (FB) Facebook to provide storage and security services for a test of Facebook’s digital wallet.
But the way Bitcoin and cryptocurrencies are used now — largely for investing — is 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. Grayscale Bitcoin Trust ( GBTC) has filed to transition into a spot Bitcoin ETF.
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 significantly affected by the day-to-day fluctuations of Bitcoin and other crypto prices.
Coinbase Stock
Cryptocurrency exchange Coinbase has a 98 Composite Rating, similar to some of the other Bitcoin stocks here. Its EPS Ratingis 84.
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.
But after swinging near lows for a few months, COIN stock surged past trend line entries and then out of a bottoming base in mid-October. The Bitcoin stock has continued to rise, extended from any buy point.
Shares recently rebounded, after moving closer to their 10-week line. Investors could wait for a new base to form before considering taking a position.
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 less proven currencies posing bigger risks to investors.
Coinbase in September also said the SEC threatened to sue it if it launched a lending program allowing users to earn interest on some crypto assets. The company later halted that program.
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.
The stock has consolidated near highs over the past month, potentially making for a buying opportunity later on.
Among the Bitcoin stocks mentioned here, it’s the only one that has Composite and EPS ratings of 99.
Along with traditional commercial and residential lending services, Silvergate runs an exchange network that allows its digital-currency clients and institutional investors to send U.S. dollars to accounts of other Silvergate clients at any time. Its digital-currency customers include digital-currency exchanges and institutional investors.
The company earned 88 cents per share in the third quarter, a 138% gain, according to FactSet. The company said it had 1,305 digital currency customers at the end of the quarter, up around 7% from the number it had on June 30.
ProShares Bitcoin Strategy
The ProShares Bitcoin Strategy ETF began trading in October, not long before Bitcoin’s peak. It has since fallen 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 the Bitcoin price’s twists and turns. But over the summer, 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, has moved back within range of a consolidation with a 7.57 entry. The stock is also rebounding from its 50-day line.
The stock has a 92 Composite Rating. Its EPS Rating is 55. The company recently reported third-quarter earnings that missed estimates.
Riot Blockchain
Riot Blockchain, another crypto miner, fell after the company reported third-quarter results that missed expectations.
The move lower erased a breakout and put the stock back below a 40.90 buy point of a cup base. But shares have recently found support near their 50-day line.
The stock has a 78 Composite Rating. Its EPS Rating is 23.
Riot Blockchain, which had a previous life as a biotech company, had eight full-time employees as of March 25. Riot has focused on mining and brought in new leadership, after its onetime CEO left following market-manipulation charges from the SEC that related to other companies.
In that case, which was unrelated to Riot Blockchain, former CEO John O’Rourke and others last year agreed to settle with the SEC over allegations, brought in 2018, of what the agency called “classic pump-and-dump schemes.”
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