Investing In Cryptocurrency: Stock Options For Beginners

Cryptocurrencies are not traded on Wall Street like stocks are, but several publicly traded companies are closely tied to the world of cryptocurrency or other digital assets. Cryptocurrency stocks are shares in companies that operate crypto exchanges, invest in cryptocurrencies themselves, or create computer equipment used to mine Bitcoin and other cryptocurrencies.

Some of the most popular crypto stocks traded on U.S. exchanges include Coinbase Global Inc., MicroStrategy Inc., NVIDIA, Marathon Digital Holdings Inc., Block, Riot Platforms Inc., Advanced Micro Devices Inc., PayPal Holdings Inc., and CME.

Crypto stocks vs. crypto

Investing in stocks and cryptocurrencies are both popular choices, but they are fundamentally different. Here is a detailed comparison of crypto stocks vs. crypto to help you understand the key differences and make informed investment decisions.

Crypto stocks and cryptocurrencies share some similarities, including risk and volatility. Both assets can be volatile, with crypto prices experiencing more significant fluctuations driven by speculative trading and investor sentiment. The transaction experience is also similar, as investors can buy and sell both stocks and cryptocurrencies on the same platforms, blurring the lines between these asset classes. Additionally, both assets have a common investor base, with more institutional investors entering the cryptocurrency market and treating it similarly to stocks. Lastly, both stocks and cryptocurrencies carry the risk of scams, such as "Pump and Dump" schemes.

While there are similarities, crypto stocks and cryptocurrencies have several fundamental differences. Here are the key distinctions:

• Supply: Some cryptocurrencies, like Bitcoin, have a limited supply, while others do not. In contrast, the number of shares in stocks is controlled and backed by the operations of the issuing company.
• Technology: Cryptocurrencies are based on blockchain technology, a decentralised ledger system that enables peer-to-peer transactions without intermediaries. Stocks do not utilise blockchain technology.
• Purpose: Cryptocurrencies are designed as a medium of exchange or digital currency, while stocks represent fractional ownership in a company.
• Regulation: Stocks are heavily regulated and traded on established exchanges, while cryptocurrencies have varied global regulation, with some countries banning them outright.
• Dividends: Stocks often pay dividends to shareholders, while cryptocurrencies do not offer dividends.
• Trading Hours: Crypto markets are accessible 24/7, allowing trading at any time, whereas stocks are traded during specific market hours.
• Returns: Cryptocurrencies offer the potential for high returns due to their volatility and newness, but they also carry a higher risk of losses. Stocks generally provide more stable and solid long-term returns.
• Intrinsic Value: Stocks have intrinsic value as they represent ownership in a company with tangible assets and earnings. Cryptocurrencies, on the other hand, do not have intrinsic value as they are not backed by underlying assets or earnings.
• Cybersecurity: Cryptocurrencies face cybersecurity risks, and it can be challenging to recover stolen funds. Stocks do not carry the same level of cybersecurity risk.

Final Thoughts

Both crypto stocks and cryptocurrencies have their pros and cons. Stocks provide a sense of security with regulatory oversight, potential dividends, and an established market presence. On the other hand, cryptocurrencies offer the allure of high returns, constant market access, and exposure to technological innovations. The choice between investing in crypto stocks or crypto depends on your risk tolerance, financial goals, and understanding of each asset class. Remember to conduct thorough research and due diligence before making any investment decisions.

Crypto stocks to buy now

While cryptocurrencies are not traded on Wall Street like stocks are, several publicly traded companies are closely tied to the world of cryptocurrency and other digital assets. These stocks can be a good option for investors who want exposure to the crypto market while still investing in traditional stocks. Here are some of the top crypto stocks to consider buying now:

Coinbase Global Inc. (COIN): Coinbase runs one of the largest crypto exchanges in the US and became the first pure-play crypto trading platform to go public in April 2021. The company makes money when people buy and sell digital assets on its platform.

MicroStrategy Inc. (MSTR): MicroStrategy is an analytics software company that has built up a large reserve of Bitcoin, the most valuable cryptocurrency. As of September 24, 2023, MicroStrategy owned 158,245 Bitcoins.

NVIDIA (NVDA): NVIDIA is a well-known producer of graphics cards for computer gaming, but it has also expanded into cryptocurrency mining. Their technologies are used in the energy-intensive process of mining, which helps cryptocurrencies operate without a central monetary authority.

Marathon Digital Holdings Inc. (MARA): Marathon is a company heavily involved in Bitcoin, giving investors a way to gain exposure to the asset without buying it directly. The company mines Bitcoin and also invests cash in the digital asset. As of September 30, 2023, Marathon owned 13,726 Bitcoins.

Block Inc. (SQ): Block, formerly known as Square, is a financial services and payment processing company with several lines of business related to blockchain technology and Bitcoin. Its Cash App product allows users to invest in stocks and Bitcoin, and as of November 1, 2013, Block owned almost $300 million worth of Bitcoin.

Riot Platforms Inc. (RIOT): Riot Blockchain is a company focused on Bitcoin mining, with its facility in Rockdale, Texas, being the largest such operation in North America. As of Q3 2023, Riot's mining operations resulted in a Bitcoin balance of 7,327 coins, worth $255 million.

Advanced Micro Devices Inc. (AMD): Advanced Micro Devices makes computing equipment, including gaming processing units (GPUs). GPUs are often used in cryptocurrency mining, and the company has seen elevated demand for these products as interest in crypto has increased.

PayPal Holdings Inc. (PYPL): PayPal is a well-known technology company focused on digital payments, an area of development in cryptocurrency. PayPal has added crypto payment and investing tools to its PayPal and Venmo apps, allowing users to buy, transfer, and sell various cryptocurrencies.

CME Group Inc. (CME): CME Group is a financial services company that provides clearinghouse services and operates derivatives exchanges. The company offers trading in Bitcoin futures and has exposure to cryptocurrencies like Bitcoin and Ethereum.

These stocks offer a way to gain exposure to the crypto market while investing in traditional stocks. However, it's important to remember that individual stocks carry risks, and crypto stocks may be vulnerable to downturns in the volatile cryptocurrency markets.

Crypto stocks for 2024

Crypto stocks are publicly traded companies that operate businesses with high exposure to the cryptocurrency market or blockchain technology. They include popular crypto exchanges, cryptocurrency miners, blockchain technology specialists, and companies with large cryptocurrency holdings on their balance sheets.

CME Group Inc. (CME)

CME Group, formerly known as the Chicago Mercantile Exchange, operates one of the largest markets for trading futures and other derivatives. CME Group was one of the first international stock exchanges to offer Bitcoin futures trading in late 2017. As one of the few regulated futures trading organisations in the U.S., CME Group maintains a competitive advantage in the market.

PayPal Holdings, Inc. (PYPL)

PayPal is a leading technology platform that facilitates digital and mobile payments for consumers and merchants. It operates its own digital wallets and allows users to buy, transfer, and sell various cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. PayPal's mobile wallet, Venmo, also enables users to trade cryptocurrencies.

Block Inc. (SQ)

Block Inc., formerly known as Square, is a financial services and payment processing company. It has several lines of business related to blockchain technology and Bitcoin. Its Cash App platform allows users to buy, sell, send, and receive Bitcoin. As of November 1, 2013, Block held almost $300 million worth of Bitcoin.

Interactive Brokers Group Inc. (IBKR)

Interactive Brokers Group is an international brokerage firm that electronically trades stocks, options, futures, and more. With a market cap still in the single digits, IBKR offers a vast array of products, and its commodities futures trading desk allows customers to trade cryptocurrency futures.

SoFi Technologies Inc. (SOFI)

SoFi Technologies is a San Francisco-based financial services company that started in the student loan refinance business. It now offers a secure platform for trading cryptocurrencies and a range of other financial offerings, including private loans, mortgages, credit cards, banking, and insurance.

Marathon Digital Holdings Inc. (MARA)

Marathon Digital is a digital asset technology company and one of the largest and most valuable pure-play Bitcoin mining stocks. As of the first quarter of 2023, the company's fleet of over 105,000 Bitcoin miners had mined a record 2,195 BTC coins. Marathon held about 11,466 Bitcoins, worth approximately $326 million, as of the same period.

Other Notable Crypto Stocks:

• Riot Platforms Inc. (RIOT)
• Advanced Micro Devices Inc. (AMD)
• MicroStrategy Inc. (MSTR)
• Coinbase Global Inc. (COIN)

Crypto stocks to consider

Cryptocurrency stocks are shares in companies that operate crypto exchanges, invest in cryptocurrencies themselves, or create computer equipment used for crypto mining. Here are some of the top crypto stocks to consider:

Coinbase Global Inc. (COIN)

Coinbase runs one of the largest crypto exchanges in the U.S. and became the first pure-play crypto trading platform to go public on Wall Street in April 2021. Coinbase makes money when people buy and sell a wide variety of digital assets on its platform.

MicroStrategy Inc. (MSTR)

MicroStrategy is an analytics software company that has built up a vast reserve of Bitcoin, the first and most valuable cryptocurrency. As of September 24, 2023, MicroStrategy owned 158,245 Bitcoins. The company has become popular due to its heavy reliance on digital assets to boost its corporate balance sheet.

NVIDIA (NVDA)

NVIDIA made its name as a producer of graphics cards for computer gaming but has since expanded the use of its technologies into cryptocurrency mining. This process uses specialized equipment to solve complex mathematical problems as part of the energy-intensive bookkeeping that helps some cryptocurrencies operate.

Marathon Digital Holdings Inc. (MARA)

Marathon is a company heavily involved in Bitcoin, giving investors a way to gain exposure to that asset without buying it directly. Marathon mines Bitcoin directly and invests some cash in the digital asset. As of September 30, 2023, Marathon owned 13,726 Bitcoins.

Block Inc. (SQ)

Block, formerly known as Square, is a financial services and payment processing company. It has several lines of business related to blockchain technology and Bitcoin, and its popular Cash App product allows users to invest in stocks and Bitcoin. As of November 1, 2013, Block owned almost $300 million worth of Bitcoin.

Riot Platforms Inc. (RIOT)

Riot Platforms is a company focused on Bitcoin mining, with its facility in Rockdale, Texas, being the largest such operation in North America. The company's mining resulted in a Bitcoin balance of 7,327 coins by the end of Q3 2023, then worth $255 million.

Advanced Micro Devices Inc. (AMD)

Advanced Micro Devices makes computing equipment, including gaming processing units (GPUs). GPUs are often used in cryptocurrency mining, and the company has seen elevated demand for these products as interest in crypto has increased.

PayPal Holdings Inc. (PYPL)

PayPal is a well-known technology company that has long been focused on digital payments, a key area of development in cryptocurrency. PayPal has added crypto payment and investing tools to its PayPal and Venmo apps in recent years.

CME Group Inc. (CME)

CME Group is a financial services company whose businesses include clearinghouse services and derivatives exchanges. Among the products covered by these services are cryptocurrencies, including Bitcoin and Ethereum. CME Group was one of the first international stock exchanges to offer trading in Bitcoin futures, opening the door for a host of new investors and exchange-traded funds to join the community.

How to choose crypto stocks

Crypto stocks are publicly traded companies that operate businesses with high exposure to the cryptocurrency market or blockchain technology. These stocks include popular crypto exchanges, cryptocurrency miners, blockchain technology specialists, and companies with large cryptocurrency holdings on their balance sheets.

• Diversified Business Model: Look for companies with a diversified business model that offers a range of financial services beyond cryptocurrency. This can help mitigate the volatility associated with crypto markets.
• Attractive Valuations: Evaluate the stock's price-to-earnings (P/E) ratio and price-to-sales ratio to determine if the valuation is attractive relative to its earnings and revenue.
• Leading Market Share: Consider companies with a strong market position and a competitive advantage in the crypto or blockchain industry.
• Positive Analyst Coverage: Pay attention to analyst ratings and recommendations. A "buy" rating or positive coverage from reputable analysts can indicate a stock's potential for growth.
• Low Debt Levels: Choose companies with relatively low debt levels, as high debt can impact their financial health and stability.
• Fundamental Analysis: Assess the intrinsic value of the company by evaluating its development team, practical uses, underlying technology, market adoption, partnerships, and compliance with regulations.
• Technical Analysis: Study past price movements, trading volumes, and market data to identify patterns and make short-term trading decisions based on trends.
• Risk Management: Understand the risks involved and only invest what you can afford to lose. Diversify your portfolio and set limits to manage your risk exposure.

Frequently asked questions