The crypto market continues to evolve at breakneck speed, presenting both challenges and opportunities for investors. After several tumultuous years marked by wild price swings, regulatory crackdowns, and technological breakthroughs, cryptocurrency-related stocks have emerged as an alternative way to gain exposure to the digital asset ecosystem without directly holding crypto assets.
The landscape in 2024 looks markedly different from previous years. Bitcoin’s latest halving event occurred in April, institutional adoption has accelerated, and regulatory frameworks are finally taking shape across major markets. These developments have created a more mature market environment for companies operating in the crypto space.
“We’re witnessing a transition from pure speculation to genuine utility and integration with traditional finance,” notes Lisa Tan, crypto strategist at Berenberg Capital Markets. “The companies best positioned to capture value are those with diversified revenue streams and regulatory compliance at their core.”
Against this backdrop, seven crypto-related stocks stand out for their potential in the current market climate. These companies represent various facets of the crypto ecosystem, from mining to financial services and infrastructure.
Coinbase Global (COIN) continues to dominate as the leading U.S. cryptocurrency exchange. Despite facing regulatory headwinds, the company has diversified its revenue streams through international expansion, institutional services, and staking offerings. Its recent settlement with the SEC provided much-needed regulatory clarity, allowing the company to focus on growth initiatives.
According to its latest quarterly report, Coinbase has significantly reduced its reliance on transaction fees, which historically accounted for over 80% of revenue. This diversification strategy appears to be working, with subscription and services revenue growing by 41% year-over-year.
Marathon Digital Holdings (MARA) represents the mining segment of the crypto ecosystem. As one of North America’s largest Bitcoin mining operations, Marathon has strategically positioned itself to benefit from Bitcoin’s post-halving price movements. The company has expanded its mining capacity while reducing operational costs through investments in renewable energy.
“Mining companies that survived the last bear market have emerged stronger and more efficient,” explains Michael Novogratz, CEO of Galaxy Digital. “Those with low electricity costs and modern equipment are best positioned for the next bull cycle.”
Block Inc. (SQ), formerly Square, has maintained its commitment to Bitcoin integration across its product ecosystem. The company’s Cash App remains one of the simplest ways for retail users to buy Bitcoin, while its Bitcoin-focused TBD unit continues to develop decentralized finance solutions. CEO Jack Dorsey’s unwavering support for Bitcoin has positioned the company as a long-term player in the crypto space.
Microstrategy (MSTR) continues to execute on its Bitcoin treasury strategy, making it essentially a leveraged bet on Bitcoin’s price. The company now holds over 214,000 Bitcoin, acquired at an average price well below current market values. This makes MSTR stock an interesting proxy for Bitcoin exposure through traditional brokerage accounts.
“Microstrategy has essentially transformed itself into a Bitcoin holding company with a software business attached,” says Ryan Selkis, founder of Messari. “Their strategy has been vindicated thus far, but investors should understand they’re primarily buying Bitcoin exposure with additional business risk.”
Robinhood Markets (HOOD) has expanded its crypto offerings substantially, becoming an increasingly important player in the retail crypto trading space. The company’s commission-free model continues to attract younger investors, and its crypto wallet functionality has improved user retention. Recent quarters have shown crypto trading becoming a larger percentage of overall revenue.
PayPal Holdings (PYPL) has continued its cautious but steady integration of cryptocurrency services. The payment giant now offers crypto buying, selling, and checkout capabilities across multiple markets. While crypto represents a small portion of PayPal’s overall business, it provides significant optionality should mainstream crypto adoption accelerate.
Riot Platforms (RIOT) rounds out our list as another major North American Bitcoin mining operation. The company distinguishes itself through its vertically integrated approach, including power generation assets that help hedge against electricity price fluctuations. Riot’s diversification into data center hosting provides additional revenue stability beyond pure mining operations.
The Federal Reserve’s monetary policy shifts will likely impact these stocks significantly. Recent data from the CME FedWatch Tool indicates markets are pricing in multiple interest rate cuts for the remainder of 2024, potentially creating a more favorable environment for risk assets like cryptocurrency-related stocks.
It’s worth noting that these stocks generally exhibit high correlation with Bitcoin’s price movements. According to research from Bank of America Securities, the average 30-day correlation between these stocks and Bitcoin has hovered around 0.78 over the past year, indicating that broader crypto market sentiment remains a dominant factor in their performance.
Regulatory developments continue to shape the industry landscape. The SEC’s approval of spot Bitcoin ETFs earlier this year marked a significant milestone, while ongoing cases against various crypto companies highlight persistent regulatory uncertainties.
For investors considering exposure to this sector, diversification remains crucial. These stocks can experience extreme volatility, with daily price swings of 10% or more not uncommon. Position sizing and risk management should be paramount in any crypto-related investment strategy.
As we move through 2024, these seven stocks offer varied approaches to gaining exposure to the cryptocurrency ecosystem. Whether you’re bullish on mining operations, exchange platforms, or companies integrating crypto into traditional financial services, this watchlist provides a starting point for further research into this dynamic sector.
