Investing In Bitcoin: Top Stock Picks

Bitcoin and other cryptocurrencies have become a hot investment, gaining mainstream adoption in recent years. While investors can purchase cryptocurrencies directly, another way to gain exposure to the market is to invest in publicly traded companies that have some level of involvement in the crypto space. These companies may include crypto exchanges, crypto miners, blockchain technology specialists, or businesses that hold cryptocurrency on their balance sheets.

Some examples of stocks that offer exposure to Bitcoin include PayPal Holdings, Inc. (PYPL), Interactive Brokers Group Inc (IBKR), and Marathon Digital (MARA).

Crypto stocks vs. cryptocurrency

Stocks and cryptocurrencies are very different investment assets. While both are generally liquid assets that belong on the speculative side of your portfolio, there are key differences to be aware of.

Stocks represent ownership in a publicly traded company. Each share of stock you buy confers a percentage of ownership in that company. For example, if a company releases 50% of its ownership in the form of 50 shares of stock, and you buy one of these shares, you will own 1% of that company.

An investor can make money by selling their stock shares to other investors, known as capital gains. Stocks can also gain value by paying dividends to investors, through voting power held by shareholders, and other rights of ownership.

Cryptocurrency is a purely digital asset. It has no physical component but exists as entries in an online ledger that records ownership. The individual unit of a cryptocurrency is called a token.

Cryptocurrencies come in two main varieties: those intended as pure currencies, such as Bitcoin, which exist only to be traded, bought, and sold; and "utility tokens", such as Ethereum, which function as part of a more complex piece of software but are also meant to be bought, sold, and traded.

Crypto stocks

Crypto stocks are publicly traded companies that operate businesses highly exposed to the cryptocurrency market or its underlying blockchain technology. These include crypto exchanges, crypto miners, blockchain technology specialists, and companies that hold crypto on their balance sheets.

Key differences

The main difference between crypto stocks and cryptocurrencies is that stocks are regulated financial products, whereas cryptocurrencies are not. Stocks are also traded on large, centralized exchanges, whereas cryptocurrencies are traded on a network of independent companies that run their own small exchanges.

Another difference is that stocks are generally less volatile than cryptocurrencies. Individual stocks can be more volatile than a portfolio of stocks, but the stock market as a whole tends to be stable and predictable. Cryptocurrency, on the other hand, is likely the single most volatile asset you can invest in.

In terms of profit, you can generally profit from stocks in two ways: capital gains and dividends. With cryptocurrencies, you can only profit through capital gains, as there are no dividends.

Finally, when it comes to safety, stocks are backed by a company's assets and cash flow, and have a long history of delivering solid returns. Cryptocurrencies, while offering the potential for substantial gains, are highly volatile and lack the backing of tangible assets.

This depends on your risk tolerance and financial goals. If you want a stable asset, an S&P 500 index fund is usually a safe bet. If you want something more speculative, an individual stock or crypto could be a good choice.

If you're looking for a mix of growth and risk management, consider stock market index funds, which are not subject to the same risks as cryptos or individual stocks, but also not exposed to the same rewards.

Remember, it's not always an either-or choice between crypto and stocks. You can weight your portfolio according to your risk tolerance and time horizon. Given its risks, cryptocurrency works better as a small allocation in your portfolio (around 5% or less).

Crypto stocks that pay dividends

While day trading is the most common way for investors to make money from cryptocurrency, there has been a recent shift towards long-term crypto investments that pay dividends.

Crypto dividends are similar to traditional dividends, where a company distributes a portion of its profits to shareholders. In the case of crypto, the dividends are paid out from the project's profits, fees, or revenue to the token holders. These dividends can take the form of staking rewards, token burns, or direct distributions of additional tokens.

It's important to note that crypto dividends are not the same as staking rewards. Staking rewards are paid to users for maintaining the network, while dividends are paid out from the project's profits. Additionally, staking awards consist of fees, while dividend payouts do not involve fees.

How to Get Crypto Dividends

There are two main ways to receive passive income from cryptocurrencies:

• Buy and hold tokens of an exchange that pays dividends in crypto.
• Stake your crypto and receive passive income.
• Kucoin (KCS)

Kucoin is a Hong Kong-based exchange that introduced the practice of paying crypto dividends to those who buy and hold its exchange tokens, KCS. The exchange shares 50% of its transaction fees with token holders, so the higher the exchange turnover, the higher the crypto dividends. To start receiving these dividends, you need to hold at least six KCS tokens on the platform.

FTX

FTX is a crypto derivatives exchange that allows users to earn passive income from their cryptos. The platform offers staking tiers, and the more you stake, the more you are paid. The first tier is for users who don't stake any coins, and they receive a referral rate of 25%. The top tier is for users who stake 1,000,000 FTT and they get a referral rate of 40%, along with benefits like a maker fee rebate, bonus votes, relative airdrop increase, free daily FTT withdrawals, and IEO tickets.

BitMax (BTMX)

BitMax is another exchange that pays dividends to holders of its BTMX tokens. It pays around 80% of transaction fees in crypto dividends, with an annual return on investment of 35-50% in passive income.

Decred (DCR)

Decred is a multi-platform cryptocurrency that uses a hybrid consensus mechanism of proof-of-work and proof-of-stake protocols. DCR stakers can receive up to 30% per annum in dividends.

Ontology

Ontology is a blockchain-based network and cryptocurrency that offers a peer-to-peer trust infrastructure. Along with staking benefits, users can expect an annual income of around 4%.

Reddcoin (RDD)

Reddcoin is a digital currency for social media platforms like Reddit and Twitter, allowing users to tip others for their contributions. Thanks to Reddit's PoS protocol, Reddcoin stakers can earn up to 5% per annum on their holdings.

Neblio (NEBL)

Neblio is a blockchain-based platform that supports Dapps and smart contract development, as well as ICO launches. NEBL stakers can earn around 10% annually in dividends, and there is no lower limit for the number of staked coins.

NEO

NEO allows its holders to receive daily payouts in GAS. For each NEO token, you can expect to receive 0.0003 GAS every day. Make sure to use a wallet that allows GAS payouts, as some wallets keep the payouts instead of passing them on to token holders.

VeChain (VET)

VeChain offers dividends for staking its token, VET. The dividends are paid in VTHOR, and for staking one VET, a holder can expect to receive 0.00042 VTHOR daily.

PIVX

PIVX is a network and token known for its privacy protocol, which also makes it one of the fastest-developing tokens. PIVX staking can bring users around 4.8% of dividend coin income annually. However, a potential drawback is that a node must be online constantly, although this can be solved with cloud staking.

Komodo (KMD)

Komodo uses a proof-of-work protocol and offers crypto dividends on staked coins. To receive dividends, you need to stake at least 10 KMD. Komodo offers the benefit of not requiring users to stay online 24/7 to receive dividends. Stakers can expect around 5% annually from their staked sum.

It's worth noting that some traditional stocks, such as Mastercard and IBM, have also started to venture into the blockchain and cryptocurrency space, and they pay dividends.

Crypto stocks with strong buy ratings

Crypto stocks are publicly traded companies that operate businesses that are highly exposed to the cryptocurrency market or blockchain technology. These stocks include crypto exchanges, crypto miners, blockchain technology specialists, and companies that hold large amounts of cryptocurrency on their balance sheets. Crypto stocks can be extremely volatile and unpredictable, and they are highly correlated with cryptocurrency price fluctuations. However, they can offer significant upside potential and are a good alternative to investing directly in cryptocurrencies. Here are some crypto stocks with strong buy ratings:

Marathon Digital Holdings (MARA)

Marathon Digital is a leading digital asset technology company and one of the largest and most valuable pure-play Bitcoin mining companies. In the first quarter of 2023, the company's fleet of over 105,000 Bitcoin miners produced a record 2,195 BTC coins. Marathon also held a total of 11,466 Bitcoins, worth approximately $326 million. The company has a "Strong Buy" rating based on 6 analyst ratings, with 6 Buys, 0 Holds, and 0 Sells. Marathon Digital is committed to sustainability and has invested heavily in renewable energy sources.

Riot Platforms (RIOT)

Riot Platforms is a Colorado-based cryptocurrency mining company that provides independent Bitcoin mining and critical infrastructure for related operations. The company has a "Strong Buy" rating based on 10 analyst ratings, with 10 Buys, 0 Holds, and 0 Sells. In 2024, Riot Platforms is focusing on expanding its Bitcoin mining capacity and efficiency, anticipating a total self-mining hash rate capacity of 29 EH/s by the end of the year. The company's shares have decreased by about 3% over the past year, creating a potential buying opportunity.

Block (SQ)

Block, formerly known as Square, is a leading digital and mobile payment platform and the parent company of Cash App. The company has a strong focus on blockchain technology and digital assets, with its Cash App platform allowing users to buy, sell, send, and receive Bitcoin. Block holds around $235 million in Bitcoin on its balance sheet. It has a "Strong Buy" rating based on 23 analyst ratings, with 19 Buys, 3 Holds, and 1 Sell. While Block's shares have underperformed relative to other crypto stocks in 2023, aggressive investors may view this as a buying opportunity.

MicroStrategy (MSTR)

MicroStrategy's core business provides business intelligence, mobile software, and cloud-based enterprise technology services. However, the company has gained attention for its heavy reliance on digital assets to boost its corporate balance sheet. In 2020, then-CEO Michael Saylor announced his intention to stop holding cash and instead fund its corporate treasury with crypto, starting with a $250 million investment in Bitcoin. MicroStrategy currently holds approximately 140,000 Bitcoin. The company has a "Strong Buy" rating based on 6 analyst ratings, with 6 Buys, 0 Holds, and 0 Sells.

Nvidia (NVDA)

While Nvidia is not a direct crypto play, it is a high-octane momentum stock that is almost indispensable to the cryptocurrency and blockchain industries. Nvidia manufactures graphics processing units (GPUs), which are now used for data-intensive tasks such as AI, machine learning, and cryptocurrency mining. The company has a "Strong Buy" rating based on 41 analyst ratings, with 37 Buys, 4 Holds, and 0 Sells. Nvidia's performance in 2023 and its crucial role in the crypto space make it a top performer worth considering.

Crypto stocks with high returns in 2023

Crypto stocks are publicly traded companies that operate businesses with high exposure to the cryptocurrency market or blockchain technology. Here are some of the crypto stocks with high returns in 2023:

CME Group (CME)

CME Group, formerly known as the Chicago Mercantile Exchange, operates one of the largest markets for trading futures and other derivatives. The company was one of the first international stock exchanges to offer Bitcoin futures trading in late 2017. CME Group maintains a wide moat with its regulated business model and has a market cap of over $1 billion.

PayPal Holdings, Inc. (PYPL)

PayPal is a leading technology platform that facilitates digital and mobile payments for consumers and merchants. It allows users to buy, transfer, and sell cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. PayPal's mobile wallet, Venmo, also enables cryptocurrency trading. The company has a lot of potential despite taking a hit in 2022 and 2023.

Block (SQ)

Block, formerly known as Square, is an online digital and mobile payment platform for consumers and merchants. Its Cash App allows users to buy, sell, send, and receive Bitcoin. Block also holds around $235 million in Bitcoin on its balance sheet and is a significant investor in blockchain technology.

Interactive Brokers Group Inc (IBKR)

Interactive Brokers Group is an international brokerage that offers a wide array of products, including commodities futures trading for cryptocurrency. With a single-digit market cap, IBKR has the potential for tremendous growth.

SoFi Technologies Inc (SOFI)

SoFi Technologies is a financial services company offering a range of services, including a secure platform for trading cryptocurrencies. It provides private loans, mortgages, credit cards, banking, and insurance to its customers, making it a well-diversified company with crypto exposure.

Marathon Digital (MARA)

Marathon Digital is a digital asset technology company and one of the largest Bitcoin mining stocks. In the first quarter of 2023, the company mined 2,195 BTC and held a total of 11,466 Bitcoins. Marathon Digital is committed to energy efficiency and sustainability in its mining operations.

Crypto stocks with high returns in 2024

Crypto stocks have been soaring in 2024, with some crypto-related stocks up by over 200% year-to-date. While there was talk of a "crypto winter" in 2022, it seems that spring has sprung for digital assets in 2023 and 2024.

Coinbase Global Inc. (COIN)

Coinbase is a top cryptocurrency trading exchange that made its initial public offering (IPO) in April 2021. The company allows users to trade more than 250 cryptocurrencies, including major ones like Bitcoin, Ethereum, and Cardano. Coinbase earns a small transaction fee whenever someone buys or sells a cryptocurrency on its platform. It also offers a debit card that allows consumers to spend from their digital wallet and has launched a cloud platform for companies using and storing digital currencies. Coinbase's year-to-date returns are an impressive 195.5%.

Marathon Digital Holdings Inc. (MARA)

Marathon Digital is one of the largest bitcoin mining companies in the U.S. It also provides general services to the crypto industry, including transaction and custody verification, as well as blockchain security work. The company operates around 150,000 miners at various locations and has produced over 5,000 BTC year-to-date in 2023. Marathon Digital also bills itself as one of the most sustainable miners in the world, investing heavily in renewable energy sources. Its year-to-date returns are an impressive 391.5%.

MicroStrategy Inc. (MSTR)

MicroStrategy's core operations include providing business intelligence, mobile software, and cloud-based enterprise technology services. However, it has gained attention due to its heavy reliance on digital assets to boost its corporate balance sheet. In 2020, then-CEO Michael Saylor announced his intention to stop holding cash and instead fund its corporate treasury with crypto, starting with a $250 million investment in bitcoin. MicroStrategy currently holds around 140,000 bitcoin, and its year-to-date returns are 214.9%.

Nvidia

Nvidia is a semiconductor manufacturer that produces graphics processing units (GPUs) for high-end video gaming graphics cards. GPUs are now also used for data-intensive tasks like running artificial intelligence and machine learning software, as well as cryptocurrency mining. Nvidia has become a nearly indispensable player in the crypto space, and its year-to-date returns are 225.1%.

Block Inc. (SQ)

Block Inc., formerly known as Square, is a leading digital and mobile payment platform. Its Cash App consumer-facing application allows users to buy, sell, send, and receive bitcoin. Block has invested heavily in blockchain technology and digital assets, and its latest quarterly filings show a cumulative investment of $220 million in bitcoin. Block's year-to-date returns are 25.8%.

Riot Platforms Inc. (RIOT)

Riot Platforms is a Colorado-based cryptocurrency mining company that independently mines bitcoin and provides co-location services for institutional-scale bitcoin mining companies. The company changed its name and business model in 2017 to focus on the crypto space, and it is now valued at over $3 billion. Riot Platforms' year-to-date returns are an impressive 439.2%.

While these stocks have performed well in 2024, it is important to remember that the cryptocurrency market is highly volatile and subject to sharp swings. It is always recommended to do thorough research before investing in any crypto-related stocks or assets.

Frequently asked questions