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Cryptocurrencies have rapidly gained mainstream adoption and have become a hot investment opportunity. The market for digital currencies like Bitcoin and Ethereum has grown into a massive industry, reaching a peak market value of $3 trillion in fall 2021. This sudden surge in value has created immense wealth for early crypto investors and has sparked significant interest in finding and investing in the next cryptocurrency unicorn.
With over 20,000 different cryptocurrencies on the market and the world becoming increasingly digital due to the COVID-19 pandemic, investing in technologies that bridge the gap between the digital blockchain space and society could be even more lucrative than trying to predict which token will become the next Bitcoin or Ethereum. Fortunately, there is no shortage of innovative companies working to bridge this gap.
The Potential of Digital Currency Companies
The original idea behind blockchain technology was to create a borderless, peer-to-peer electronic cash payment system that is efficient and secure. While investors can purchase cryptocurrencies themselves, a better way to gain exposure to the sector is by investing in bigger and more established companies that benefit from the increased popularity of blockchain and crypto assets.
Companies that adopt blockchain technology, especially in finance, may gain a considerable edge over traditional competitors in processing payments. Additionally, brokers offering digital assets may attract more customers than exchanges offering traditional assets like stocks and bonds. However, it’s important to note that the crypto sector is subject to sharp market swings, as seen when its peak value of $3 trillion slipped to less than $1 trillion in June 2022 due to rising inflation and investor concerns. As with any investment, it’s crucial to only invest money you don’t need in the short term and be aware of the risks involved in the highly volatile crypto sector.
Top Cryptocurrency Stocks to Consider
Here are some of the best cryptocurrency stocks to consider in 2022:
1. Coinbase Global
Coinbase Global (COIN) is a top cryptocurrency trading exchange that made its initial public offering (IPO) in April 2021. The platform is popular for purchasing major cryptocurrencies like Bitcoin, Ethereum, and Cardano, and it allows users to trade over 250 altcoins. Coinbase earns transaction fees whenever someone buys or sells a cryptocurrency, but it also offers additional services like a debit card for spending from digital wallets and a cloud platform for companies using and storing digital currencies.
Coinbase has introduced game-changing innovations, such as asset loans that allow users to pledge their cryptocurrencies as collateral to receive low-interest loans. This feature enables investors to cover expenses without selling their assets, allowing their principal to continue compounding. Coinbase’s blockchain analytics have also gained traction among governments and financial institutions for monitoring illicit transactions and wallet addresses, building greater trust in the crypto space.
2. Block and PayPal Holdings
Block (formerly Square) and PayPal saw a significant business opportunity in enabling users to purchase and hold cryptocurrencies within digital wallets. Block’s Cash App began allowing Bitcoin trading in 2017, and while the trading feature didn’t significantly impact the company’s bottom line, it has fostered the use of Bitcoin among its business users. Cash App’s support for the Bitcoin Lightning network allows customers to transfer Bitcoin faster and without transaction fees, contributing to the usability of Bitcoin as a global monetary transmission network.
PayPal’s Venmo digital wallet and peer-to-peer payments app also offer crypto trading tools, supporting major cryptocurrencies like Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. With its large user base, Venmo has the potential to become a leading cryptocurrency platform, serving as an access point for investors to buy major cryptocurrencies and access decentralized finance applications.
3. Canaan and Hut 8 Mining
Bitcoin mining has evolved over the years, and companies like Canaan design high-powered machines specifically for brute-force guessing the network’s correct hash. Canaan’s next-generation Avalon ASICs can make tens of trillions of guesses every second, making them significantly more powerful than traditional graphics processing units (GPUs). Hut 8 Mining, one of the most popular Bitcoin mining stocks, commands a sizable minority stake on the overall Bitcoin network and generates strong cash flows by lending out mined Bitcoin and farming yields.
4. Nvidia and AMD
Nvidia and AMD are leading semiconductor companies that design graphics processing units (GPUs) used for various applications, including data centers, artificial intelligence, and crypto asset creation. GPUs are well-suited for cryptography and blockchain creation, making them essential for managing and creating crypto assets. Both companies have experienced stock price increases due to the booming demand for GPUs during the cryptocurrency price surge in 2018. Nvidia even launched a new lineup of chips specifically for crypto mining. Acquisitions and advancements in chip technology position Nvidia and AMD to continue dominating the semiconductor industry and emerging technologies like blockchain ledgers.
5. Meta Platforms and Shopify
Meta Platforms (formerly Facebook) attempted to develop a new cryptocurrency called Diem but faced setbacks due to regulatory concerns. However, the project is still ongoing under new ownership, and Meta is reportedly considering different options for entering the cryptocurrency market. Meta’s ambition to control blockchain infrastructure aligns with its vision for the Metaverse.
Shopify, an e-commerce infrastructure provider, allows merchants to accept cryptocurrencies as payment. The integration with cryptocurrency payments processor CoinPayments strengthens Shopify’s capability to support digital assets. Meta and Shopify are well-positioned to benefit from the adoption of digital assets among small businesses and entrepreneurs.
6. Robinhood Markets
Robinhood Markets is a popular discount brokerage app that allows users to buy stocks, options, precious metals, and cryptocurrencies. The platform offers commission-free trading of over a dozen cryptocurrencies, including Bitcoin, Ethereum, and Dogecoin. Robinhood’s commission-free model and the ability to scale the number of cryptocurrencies on the platform give it a competitive advantage over traditional and decentralized exchanges. The company’s crypto trading revenue has become a significant portion of its overall sales.
7. CME Group
CME Group operates the world’s largest financial derivatives exchange, allowing investors to trade futures and options on a diverse range of assets, including cryptocurrencies like Bitcoin and Ether. By establishing markets for cryptocurrency derivatives, CME Group has provided legitimacy to Bitcoin and Ethereum and a way for digital currency owners to mitigate risk from price changes. While cryptocurrency derivatives are still a small market for CME Group, the potential for more exchanges for crypto assets in the future is likely.
The Beauty of Crypto Stocks
The beauty of cryptocurrency stocks is that they offer ample diversification since most of them are not pure plays on the industry. Cryptocurrencies are highly volatile, which can lead to significant swings in the revenue and earnings of companies with sector exposure. As the crypto realm continues to gain mainstream adoption, more companies are expected to join the blockchain revolution. However, it’s crucial to stay updated on the evolving regulatory framework and the global economy’s impact on the crypto market.
Investing in cryptocurrency stocks provides an opportunity to participate in the digital currency market while also benefiting from the significant business operations of these companies beyond the crypto sector. By considering these top cryptocurrency stocks, investors can make smart investments in digital currencies and potentially earn substantial returns.
Crypto Investment Advice: If you’re looking to invest in the cryptocurrency market, consider these top cryptocurrency stocks that provide exposure to the industry while offering diversification and potential for significant returns. Remember to research and understand the risks involved in the highly volatile crypto sector before making any investment decisions.
