With the recent spike in bitcoin prices, investors are now looking towards cryptocurrencies and associated crypto stocks for greater gains.
When bitcoin first made its debut in the financial markets, many people did not know what to make of it. Some questioned the technology behind it while others took the plunge. Some Investors made a fortune from investing in cryptocurrencies, but some markets have cooled off considerably.
More recently, stocks that are tied to cryptocurrencies have performed well, resulting in renewed interest among investors. In December bitcoin prices soared to $28,000.
Adding to this rally, some fintech platforms have embraced the crypto trend and enable its users to trade the currency on its platform. If you are looking to ride the crypto wave, here are three stocks worth investing in.
Crypto Stocks to Buy: Square (SQ)
Square, famous for being a payments technology company is in the spotlight for a different reason. Investors are now looking at the company’s bitcoin features after the currency hit a value of $28,000.
In the last few years, Square has been making some moves in the crypto space. Most notably, investors can now invest in bitcoin on its subsidiary, Cash App. In the third quarter of 2020, the platform generated $1.63 billion in bitcoin revenue.
Square is a big name in the crypto stock space and has reiterated its belief in the currency many times over. Just this year, the company said that this is the right time to “make a meaningful impact with bitcoin.” In addition to its bitcoin trading platform on Cash App, the company also has a team of employees termed “Square Crypto.” This team is dedicated to developing a number of independent bitcoin projects.
The payment platform can earn significant revenue on bitcoin trades making Square stock one of the best crypto stocks to buy.
Another big winner of the mainstream adoption of bitcoin is PayPal. In October, the company’s stock hit an all-time high after it announced that customers can buy, sell and hold the currency on its platform. Following the news, PYPL stock surged 5.5%.
PayPal plans to integrate cryptocurrency at a larger scale on its platform. It plans to eventually enable its 26 million customers to pay for goods and services using cryptocurrencies. This will be a huge incentive for more people to put their money behind crypto.
Experts believe that PayPal’s adoption of cryptocurrency will do wonders for its bottom line. Evercore ISI analyst, David Togut says that this move will “substantially increase both customer engagement and transaction margin.” Even PayPal’s own CEO, David Schulman claims to be increasingly bullish on bitcoin as a currency. As more people engage with cryptocurrencies in the future, there’s no doubt that it will be a huge revenue source for the company.
PayPal is a leader in the payments technology space with a huge customer base. The adoption of crypto as a mainstream currency will mean big gains ahead for investors in the sector.
A new asset making its way into the cryptocurrency market is Diem. Backed by Facebook, the currency which used to be called Libra is getting a rebrand.
Diem is called a cryptocurrency but operates a little differently from currencies like bitcoin. Unlike traditional cryptos, Diem is backed by a central organization as well as a fiat currency. Those are two features that are not commonly found in this sector.
Given the novelty of the currency, Diem has come under high scrutiny by regulators. However, Facebook’s finance team believes it be given the benefit of doubt. The new currency will be held in Facebook’s wallet Novi, which used to be called Calibra.
The social media giant’s goal to launch its own digital currency will become a reality early next year. Given the size of Facebook’s user-base, Diem will enhance the current offering for small businesses on the platform. It will also play a key role in reshaping the use of digital currencies as more people make the shift away from traditional cash. In anticipation of Diem’s launch, Michael Morris, an analyst at Guggenheim increased his price target to $365 from $340.
The currency is currently awaiting its approval by the Swiss Financial Market Supervisory Authority before it can make its debut. Investors looking for a fresh play in the cryptocurrency market will find this an interesting buy.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.