Buy 5 Crypto-Centric Stocks Despite Bitcoin's Recent Meltdown

07/08/2024 21:30

We have narrowed our search to five Bitcoin-oriented stocks that have strong potential for 2024. These are: NVDA, COIN, SQ, HOOD, IBKR.

The cryptocurrency market suffered a bloody blow last week with more than $170 billion wiped out from the entire space. This was primarily due to an announcement by Mt. Gox, once the world’s largest crypto trading platform, that filed for bankruptcy in February 2014.

The bankrupt Japanese Bitcoin exchange recently announced that it has started repayments in Bitcoin and Bitcoin cash to some of the creditors through a number of designated crypto exchanges. The total size of repayment is approximately $9 billion. The trustee for the Mt. Gox bankruptcy estate, Nobuaki Kobayashi, also said that the remaining funds would be returned to creditors after meeting a series of conditions.

Consequently, on Jul 5, the price of Bitcoin (BTC) fell as low as $53,513.55, marking its first trading below the $55,000 level since Feb 27. On Mar 14, the world’s largest cryptocurrency recorded an all-time high of 73,750.07.

However, we believe that the recent meltdown of Bitcoin is a good buying opportunity. Market participants are hopeful of two interest rate cuts of 25 basis points each in 2024. A series of recently released soft economic data such as nonfarm payrolls and several other key labor market data, retail sales, personal spending, factory orders, manufacturing, and services PMIs, clearly indicates that the U.S. economy is cooling.

The CME FedWatch tool currently shows a 78% probability that the Fed will cut the Fed fund rate by 25 basis points in September. This probability was around 62% just a week ago. Moreover, the interest rate derivative tool also shows a 76.5% probability of two rate cuts by the end of 2024.

At this stage, investors should think from a long-term perspective. The Fed is undoubtedly approaching the end of the higher rate regime. A low interest rate is beneficial to high growth-oriented industries such as technology, consumer discretionary and cryptocurrency.

Therefore, investors should accumulate Bitcoin using a buy-on-the-dip strategy. Every dip in the Bitcoin price will be a good purchasing point to gain handsomely once the Fed’s tighter monetary control comes to an end.

Our Top Picks

We have narrowed our search to five Bitcoin-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.

The chart below shows the price performance of our five picks year to date.

Image Source: Zacks Investment Research

Coinbase Global Inc. COIN provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions, and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.

Zacks Rank #1 Coinbase Global has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the last 60 days.

NVIDIA Corp. NVDA is a semiconductor industry giant and one of the biggest success stories of 2023. As a leading designer of graphic processing units (GPUs), the NVDA stock usually soars on a booming crypto market. This is because GPUs are pivotal to data centers, artificial intelligence, and the creation of crypto assets.

Zacks Rank #1 NVIDIA’s expected earnings growth rate for the current year is more than 100% (ending January 2025). The Zacks Consensus Estimate for its current-year earnings has improved 1.1% over the last 30 days.

Block Inc. SQ is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of the Cash App can buy, sell, send and receive Bitcoin.
In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications that run on programmable blockchains. SQ is also one of the largest Bitcoin investors.

Zacks Rank #1 Block has an expected earnings growth rate of 72.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days.

Robinhood Markets Inc. HOOD operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.

Zacks Rank #2 Robinhood Markets has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the last 30 days.

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

Zacks Rank #2 Interactive Brokers Group has an expected earnings growth rate of 16.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last seven days.

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