3 Crypto Stocks to Buy From Bitcoin's Long-Term Perspective

06/25/2024 21:36

Bitcoin has declined sharply over the past couple of months but it still has a lot of potential. Thus, stocks like NVIDIA Corporation (NVDA), Coinbase Global, Inc. (COIN) and Interactive Brokers Group, Inc. (IBKR) are likely to benefit once it rebounds.

Cryptocurrencies have been suffering lately, with Bitcoin (BTC) briefly falling below $60,000 on Jun 24. Although Bitcoin pared some of the losses and was trading just above $61,000, it has declined sharply from its all-time high of $73,750.07 attained on Mar 14.

The cryptocurrency is down 6% in the last seven days amid major selling pressure from continued ETF outflow owing to the upcoming Mt. Gox bankruptcy redemptions. However, several other factors have been weighing on Bitcoin, which had a solid 2023 and first quarter.

The Bitcoin rally gathered pace in January after the Securities and Exchange Commission approved 11 spot Bitcoin exchange-traded funds (ETFs) in a game-changing move with the aim of allowing both retail and institutional investors a regulated and accessible way to invest in the cryptocurrency.

The rally paused in April with the Bitcoin halving event, which occurs every four years and cuts the block reward by 50%, aiming to limit the total supply of Bitcoin to 21 million coins. This reduction in the rate of new Bitcoin supply typically increases demand for cryptocurrencies, often causing a price surge.

Now that the Bitcoin halving event has concluded, there is widespread speculation that the reduced supply will drive up prices due to scarcity in the near term.

Additionally, on Jun 12, Federal Reserve Chairman Jerome Powell, in his post-FOMC meeting statement, mentioned that the Fed expects only one rate cut this year. The recent decline in Bitcoin can also be attributed to Powell’s comments.

Needless to say, the drop in Bitcoin is temporary. The cryptocurrency has rallied 43.5% year to date after gaining 157% in 2023.

Moreover, a single rate cut of 25 basis points in 2024 would benefit the cryptocurrency market and the broader economy, particularly since many market participants had already anticipated no rate cut this year. Low interest rates are advantageous for growth assets like technology stocks, consumer discretionary stocks, and cryptocurrencies.

At this point, investors should take a long-term perspective.

Our Choices

We have narrowed our search to three crypto-oriented stocks that have strong potential for 2024. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corporation NVDA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, NVDA’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.

NVIDIA has an expected earnings growth rate of 106.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 12.1% over the last 60 days. NVDA presently sports a Zacks Rank #1.

Coinbase Global, Inc. COIN offers financial infrastructure and technology to support the global cryptocurrency economy. COIN provides a main financial account for consumers in the crypto space, a marketplace with liquidity for institutional crypto asset transactions, and technology and services for developers to build crypto-based applications and accept cryptocurrencies securely as payment.

Coinbase Global’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 219.1% over the last 60 days. Coinbase currently sports a Zacks Rank #1.

Interactive Brokers Group, Inc. IBKR is a global automated electronic broker. IBKR executes, processes and trades in cryptocurrencies. IBKR’s commodities futures trading desk also offers customers a chance to trade cryptocurrency futures.

Interactive Brokers Group has an expected earnings growth rate of 14.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.3% over the last 90 days. IBKR currently has a Zacks Rank #2.

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