Bitcoin (BTC-USD) has been in a consolidation zone after a big rally in the last 12 months. I expect some more consolidation between $60,000 and $70,000 before a fresh rally. It’s therefore a good time to look at some of the best crypto stocks to buy.
It’s worth noting that the fed is likely to cut interest rates multiple times in the next 12 to 18 months. Expansionary policies would imply easy money and that’s the first catalyst for Bitcoin trending higher. Of course, with limited supply, the blue-chip crypto will trend higher on wider adoption of digital assets.
Further, the current bull market for cryptocurrencies is far from being over. Peter Brandt is a well-known technical analyst and believes that Bitcoin’s ongoing bull market will peak at $200,000. This is likely to translate into multi-bagger returns for some of the best crypto stocks.
Let’s therefore discuss three crypto stocks to buy that can surge by 100% in the next 12 months.
Coinbase Global (COIN)
The trend in Coinbase (NASDAQ:COIN) stock for year-to-date is similar to that of Bitcoin. The crypto trading platform stock has remained sideways in the recent past as Bitcoin consolidates. I see this as a good accumulation opportunity and a forward price-to-earnings ratio (P/E) of 31x is attractive.
In the last bull market, the peak euphoria was associated with a surge in trading and speculative activity. That’s still to come and will benefit Coinbase, which is among the largest centralized exchanges in the world.
A key difference between the last bull market and now is the company’s geographical presence. Earlier, Coinbase was exclusively focused on the U.S. markets. However, with aggressive international expansion, the crypto exchange is present in 38 countries. Therefore, the revenue potential is significantly higher coupled with a bright free cash flow outlook.
I must add here that Coinbase Prime, the company’s institutional trading platform, hit all-time highs in trading volume and the number of active clients in Q1 2024. This is another segment that’s likely to drive growth as the bull market rages in the coming quarters.
Riot Platforms (RIOT)
Among Bitcoin mining stocks, Riot Platforms (NASDAQ:RIOT) seems massively undervalued. After a correction of 25% in the last 12 months, RIOT stock trades at a forward P/E ratio of 13.4x. Considering the growth outlook, the valuation gap is significant.
The first point to note is that Riot has strong fundamentals. The Bitcoin miner has a zero-debt balance sheet. Further, as of Q1 2024, the company reported a cash buffer (including Bitcoin holdings) of $1.3 billion. This positions Riot to pursue aggressive expansion.
A big expansion is already underway. Riot reported a hash rate capacity of 12.5EH/s as of Q1 2024. The company is targeting to increase capacity to 31.5EH/s by the end of the year. As a low-cost Bitcoin miner, this expansion is likely to translate into robust revenue and EBITDA upside.
Further, Riot has plans to increase capacity to 100EH/s by 2027. If the execution is good, RIOT stock will likely deliver multi-bagger returns from current levels. For now, I expect a sharp rally as new capacity boosts growth.
Block (SQ)
Among fintech stocks to buy, Block (NYSE:SQ) looks attractive. After a big correction, SQ stock has remained sideways in the last 12 months. I believe that a breakout on the upside is impending after this phase of consolidation. My view is underscored by the point that SQ stock trades at an attractive forward P/E ratio of 19x.
One reason for investors ignoring Block is the impression that the company is significantly focused on Bitcoin and crypto. In the recent shareholder letter, Block clarified that only “3% of company resources are dedicated to bitcoin-related projects.” As the adoption of Bitcoin increases and as blockchain technology is used across industries, it’s likely that Block will scale up investments towards crypto projects.
It’s also worth noting that Block has been investing 10% of the gross profit from Bitcoin products each month into buying the cryptocurrency. As the value of Bitcoin increases, Block will benefit in the form of higher financial flexibility.
The company’s Cash App has been a success with over 21 million active users buying, selling, or holding Bitcoin. As crypto is increasingly accepted as a payment method, the use of Cash App for Bitcoin transactions will increase and create value.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
