Earlier this month, Citigroup (NYSE:C) opined that Bitcoin (CCC:USD-BTC) is at a “tipping point.” Citi believes that the crypto can become a preferred currency for international trade or face “speculative implosion.”
I personally don’t have an extreme view. I believe that Bitcoin will gradually see wider acceptance in the coming years. It might not be a preferred currency for international trade, but I don’t see the crypto facing an implosion.
There are clear indicators that point to a growing acceptance for crypto. Mastercard (NYSE:MA) has already announced that the company is bringing crypto to its network. Mastercard also made it clear that the move is not about supporting crypto. It’s more to do with consumers having a wider choice.
Similarly, Visa (NYSE:V) is already a network of choice for digital currency wallets. The company is also preparing to handle a full range of crypto assets.
There is an ever-growing list of increase interest in crypto from the private sector and the household sector. It seems clear to me that crypto is here to stay. And this conclusion also implies some attractive investment opportunities.
These four crypto stocks stand out from the crown and are worth considering.
- Square (NYSE:SQ)
- PayPal Holdings (NASDAQ:PYPL)
- Riot Blockchain (NASDAQ:RIOT)
- Marathon Digital (NASDAQ:MARA)
Crypto Stocks to Buy: Square (SQ)
SQ stock would top my list of crypto stocks. With the markets in a correction mode, SQ stock has declined from a high of $283 to current levels of $240. Gradual exposure to the stock can be considered.
Specific to making inroads in the world of crypto, the company’s Cash App has seen three million people transact in Bitcoin in fiscal year 2020. Just for January 2021, one million users bought Bitcoin for the first time using the app. This is an indication of growing adoption of the crypto.
In addition to this, the Bitcoin volume per customer for the fourth quarter of 2020 was 2.5x higher on a year-on-year basis. This translated into $1.76 billion in Bitcoin revenue and $41 million in Bitcoin gross profit for the fourth quarter of 2020.
Further, Square also announced recently that it purchased $170 million worth of Bitcoin. Back in October 2020, the company purchased 4,709 Bitcoins. Growth in Cash App transactions coupled with the Bitcoin purchases indicates that Square is committed to growth in the crypto space.
On March 4, the company announced the acquisition of majority stake in Tidal, a global music and entertainment platform. I would not be surprised if the company pursues inorganic growth in the crypto segment in the coming quarters.
PayPal Holdings (PYPL)
PYPL stock is another name that can make it big in the crypto space in the next few years. PYPL stock has also seen a steep correction after touching an all-time-high of $309. The stock currently trades at $259.
Recently, Bloomberg reported that PayPal is in talks to acquire Curv. The latter is a crypto transfer and storage firm. The potential acquisition would be another big move for PayPal in the crypto space.
In October 2020, PayPal had announced that it will “enable cryptocurrency as a funding source for digital commerce at its 26 million merchants.” The company will initially allow Bitcoin, Ethereum (CCC:ETH-USD), Bitcoin Cash (CCC:BCH-USD) and Litecoin (CCC:LTC-USD) transactions. With a strong user base, PayPal is well positioned to benefit as the adoption of crypto increases.
PayPal has received a BitLicense by the New York State Department of Financial Services. Working in a centralized framework is likely to help PayPal as countries are increasingly look at creating their own digital currencies.
PayPal Ventures, the company’s venture capital arm, invested in crypto companies in 2019. The first investment was in TRM Labs, which is focused on helping financial institutions prevent cryptocurrency fraud and financial crime. Further, the VC arm also invested in Cambridge Blockchain, which is a blockchain based identity management company.
Clearly, PayPal has made significant moves in the crypto space. PYPL stock is worth considering on further correction.
Crypto Stocks to Buy: Riot Blockchain (RIOT)
RIOT stock skyrocketed by 5,700% in the last year. This is not a surprise considering the fact that the company is a pure play in the crypto industry.
After surging to an all-time high of $79.50, RIOT stock current trades at $62. These are attractive levels for fresh exposure.
As an overview, Riot Blockchain is focused on the mining of Bitcoin. For the first nine months of 2020, the company produced 730 newly minted Bitcoins. Being among the low-cost miners, the company increased cryptocurrency mining revenue margin to 38% for the same period.
In December 2020, Riot Blockchain also purchased 15,000 Antminers. The company expects that this expansion will translate into a “65% increase in bitcoin mining hash rate capacity.” Therefore, the growth visibility looks strong for the current year and for the next year.
From a financial perspective, the company reported $39.1 million in cash and cryptocurrencies as of September 2020. This provides Riot with ample financial flexibility for pursuing expansion in mining activities.
Overall, RIOT stock is worth considering after a deep correction. With wider adoption and limited supply of Bitcoin, the crypto is likely to remain in an uptrend. And Riot Blockchain stands to benefit with next-generation miners.
Marathon Digital (MARA)
MARA stock is another name to consider among crypto stocks. The stock has gone ballistic in the last one year. During this period, the stock has surged by 5,000%. After a recent correction, the stock looks attractive for fresh exposure.
Marathon Digital is another Bitcoin mining company that is set for robust growth through the year. To put things into perspective, the company had 2,060 miners in operation during Q3 2020. During this period Bitcoin was trading at $10,000 and the company generated $650,000 in Bitcoin revenue.
By Q2 2021, the company is expecting to have 23,560 miners deployed. This would imply a 1,100% growth in mining capacity. Clearly, the company is positioned for multi-fold growth in year-over-year revenue. This explains the big surge in MARA stock.
Of course, with a broad market correction, the stock has declined. However, I expected renewed upside in the next few quarters.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.