Bullish on Crypto? Here Are 2 Bitcoin Stocks To Buy Now

TradingKeyNov 20, 2024 3:14 AM

TradingKey - Cryptocurrencies are a “hot” asset right now. That’s down to a number of reasons but the main catalyst over the past month has been the election of Donald Trump as President of the US for a second time.

His victory has seen asset prices, from stocks to Bitcoin, soar on hopes that regulation will loosen for both general businesses and crypto-focused firms.

In the past month, that optimism has been most obvious in the price of Bitcoin – the world’s largest cryptocurrency. The price of Bitcoin is now trading at around US$92,000 and is up over 34% in just the past month alone.

But if you want to benefit from the Bitcoin (and broader crypto) bull story through the stock market, there are certain companies that can give investors this exposure. Here are two big stocks that are involved in Bitcoin that investors can buy now.

1.Coinbase

Coinbase Global Inc (NASDAQ: COIN) is one of the world’s largest cryptocurrency trading exchanges and it only recently came to the public markets when the company carried out an IPO in April 2021.

Users can buy and sell all the largest cryptocurrencies on the exchange, such as Bitcoin, Ethereum, Solana, and Tether to name just a few. Coinbase permits trading of up to 250 altcoins giving users of its platform serious breadth when choosing what to trade.

Indeed, it’s become such a key player in the exchange space that institutional investors now make up over 80% of the total trading volume of US$185 billion that it posted for Q3 2024. While the US$151 billion of institutional trading volume was down 20% year-on-year during the quarter, management cited that this was down to low volatility that kept traders on the sidelines.

Of course, since Trump has been elected as President of the US, crypto prices have soared (along with volatility), setting up Coinbase to benefit in the current quarter. Indeed, Bitcoin still makes up the majority of trading volume on its platform at 37% of the total in Q3 2024.

Snapshot of Coinbase’s Q3 2024 results

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Source: Coinbase Q3 2024 shareholder letter

Furthermore, one of the fastest-growing areas of the business for Coinbase is its subscription and services portion. How it makes money from this is that Coinbase charges an annual fee for the total value of assets held on its platform, similar to a large traditional asset manager.

This recurring stream of income allows the company to keep growing its crypto asset base while also offering new products. For example, Coinbase takes a small fee on all staking rewards earned by its users. In its latest quarter (Q3 2024), subscription and services revenue fell 7% quarter-on-quarter to US$556 million but that was mainly down to lower average crypto prices.

With the soaring price of crypto more broadly since Trump has been elected, coupled with potentially looser regulation in the crypto space, Coinbase is set to benefit in the years ahead.

2.MicroStrategy

MicroStrategy Inc (NASDAQ: MSTR) is a unique business in that it’s actually a business and intelligence software provider. However, what marks it out from other software businesses is that its co-founder & Chairman Michael Saylor is a big proponent of Bitcoin.

So much so, that in 2020, he decided to invest a portion of the firm’s cash in the cryptocurrency as a hedge against inflation. This initial move into Bitcoin has now turned into its core strategy, whereby a Bitcoin Treasury Company sits atop a pyramid of funding from the company’s underlying financials.

As a result, MicroStrategy issues debt and equity, as well as using any excess cash, to buy and hoard more Bitcoin over time. By doing this, the company aims to increase its overall value of Bitcoin holdings while also rewarding shareholders with a higher stock price.

Thus far, that has worked out well given MicroStrategy shares are up over 2,700% in the past five years – outperforming even Nvidia Corp (NASDAQ: NVDA). In total, as of the end of September 2024, MicroStrategy’s Bitcoin reserve holds over 252,000 Bitcoin (see below).

MicroStrategy’s Bitcoin holdings (Q3 2020 – Q3 2024)

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Source: MicroStrategy Q3 2024 earnings presentation

As of the end of October, the company’s Bitcoin holdings were estimated to be worth around US$18 billion but that has now shot up to US$30 billion post-the election of Trump.

It also acquired more Bitcoin in November, with a filing with the US Securities & Exchange Commission (SEC) showing that it acquired a total of 51,780 Bitcoin between 11-17 November. That would take its overall reserve to over 300,000 Bitcoin.

With further de-regulation likely in the cryptocurrency space, Bitcoin’s price (along with that of other crypto assets) could rise further in the months ahead and MicroStrategy will be one big beneficiary of this.

Looking to stocks as a proxy for crypto

If you’re interested in cryptocurrencies, and particularly Bitcoin, then Coinbase and MicroStrategy provide unique ways to trade this overall market enthusiasm for the asset.

Each business has a unique approach to the crypto space and while Coinbase is a broader play on the development of the crypto market, MicroStrategy provides more concentrated stock market exposure to those of us wanting to benefit directly from the price rise in Bitcoin.

Disclaimer: The content of this article solely represents the author's personal opinions and does not reflect the official stance of Tradingkey. It should not be considered as investment advice. The article is intended for reference purposes only, and readers should not base any investment decisions solely on its content. Tradingkey bears no responsibility for any trading outcomes resulting from reliance on this article. Furthermore, Tradingkey cannot guarantee the accuracy of the article's content. Before making any investment decisions, it is advisable to consult an independent financial advisor to fully understand the associated risks.