You’re at the right place if you’re seeking stocks for indirect crypto exposure. While Bitcoin (BTC-USD) ETFs are witnessing unprecedented inflows and nudging towards all-time highs, not all investors are convinced of crypto viability as a long-term investment. For instance, Vanguard Group executives view Bitcoin as too speculative for inclusion in buy-and-hold portfolios (hence their lack of interest in launching a Bitcoin ETF). But, even for crypto skeptics, opportunities for indirect crypto exposure and traditional stock stability abound.
Investing in companies with significant involvement in blockchain-related activities provides indirect exposure to crypto while allowing for diversification across various applications beyond blockchain, such as identity verification and contract settlements.
The rising interest in artificial intelligence has overshadowed blockchain technologies, yet companies in this space present numerous investment opportunities with substantial long-term growth potential. These investments allow those hesitant about direct cryptocurrency investments to benefit from Bitcoin’s performance. They may also provide superior returns compared to direct cryptocurrency holdings over an extended period.
Stocks for Indirect Crypto Exposure: MercadoLibre (MELI)
Crypto’s popularity is surging in Latin America, with countries like El Salvador integrating Bitcoin into their legal tender system. MercadoLibre (NASDAQ:MELI), an Argentinian e-commerce giant, is contributing to this trend by introducing its own cryptocurrency, akin to PayPal’s (NASDAQ:PYPL) strategy, to offer shareholders indirect crypto exposure. In addition to its proprietary Mercado coin, MercadoLibre is capitalizing on the broader blockchain movement by providing a digital wallet that enables crypto trading across multiple assets, including Bitcoin.
MercadoLibre’s value extends beyond its indirect crypto exposure to diversify shareholder interests, as it remains a significant force in Latin America’s wider eCommerce sector. The company has reported consistent revenue and net income growth over the last five quarters, with sales nearing $15 billion by the end of 2023. Moreover, MercadoLibre’s management excels at managing debt, a notable achievement among tech and rapidly expanding eCommerce companies. This financial prudence is crucial for navigating the economic instability in Latin American markets, safeguarding the company and its investors.
Broadcom (AVGO)
Among its multiple revenue streams, Broadcom (NASDAQ:AVGO) assists business owners with incorporating blockchain technology into their daily operations. The tech stock distinguishes itself by focusing on blockchain integration’s essential infrastructure and security aspects, providing the backbone to adopt, integrate, and manage the tech across various applications. Broadcom is diversifying its revenue streams by moving towards blockchain services and addressing previous concerns about revenue concentration, especially following its VMware merger.
Previously, Apple (NASDAQ:AAPL) contributed to more than 20% of Broadcom’s revenue through its 5G and wireless component segments. However, with the synergies from VMware’s cloud computing and a focus on blockchain technology, Broadcom is lessening its dependence on revenue from a single source. Investors should note that integrating VMware will incur about $1 billion in transaction costs in the short term. Nevertheless, like adopting blockchain technology, this temporary volatility is a worthwhile investment for indirect crypto exposure.
SBI Holdings Inc (SBHGF)
SBI Holdings Inc (OTCMKTS:SBHGF), a vast Japanese conglomerate, operates across various sectors, including financial services, asset management, healthcare data, and biotechnology. However, the company’s indirect crypto exposure potential primarily stems from its “crypto-asset business.” This venture integrates a variety of crypto-related and blockchain initiatives to enhance the SBI Group’s financial ecosystem in preparation for an increasingly digital finance landscape.
The company has committed up to $100 million in investments to global crypto startups, offering essential funding to smaller firms challenged by the high interest rates that render debt financing exceedingly costly. Moreover, investors can take comfort in SBI’s diverse range of services, contributing to its steady profitability, a claim supported by its decently high dividend yield.
Shares dipped late last year amid accusations of stock manipulation that, thus far, haven’t been borne out by investigators. Shares are slowly returning to past highs, but it isn’t too late to get indirect crypto exposure from this unique stock.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
