When cryptocurrencies like Bitcoin or Ether tank, the thought of buying the dip and driving crypto to its next dizzying peak can be very tempting.
But prior to last week’s crash, in which Bitcoin’s price lost about $8,000 between September 7 and 10, the world’s most famous cryptocurrency has experienced multiple events where it lost at least 30% of its value in a matter of weeks.
That kind of volatility is not for everyone.
Fortunately, there are ways to capitalize on crypto’s current bounce without buying any real cryptocurrency: by investing in companies that have committed themselves to the crypto market.
Here are five crypto stocks that might be worth buying: only your change.
1. Tesla (TSLA)
While Tesla is known as the world’s leading electric vehicle manufacturer, its colossal Bitcoin investment, roughly 42,000 coins according to CEO Elon Musk’s Twitter account, means its own stock is somewhat at the mercy of the crypto market.
When Bitcoin took it on the chin last weekTesla shares have lost just over 2% of their value in 24 hours. When Bitcoin bottomed out from May to July 2021, Tesla shares followed suit.
But Tesla has also risen this year in line with Bitcoin’s gains. While Bitcoin rose 27.5% between August 3 and September 6, Tesla experienced its own gain of 5.7%.
2. Nvidia (NVDA)
You may be wondering how investing in a company like Nvidia, which many know for its advanced graphics processing units (GPUs), must-have products for serious video gamers, is also an investment in crypto.
It turns out that Nvidia’s GPUs are also in high demand among cryptocurrency miners. During its second-quarter earnings call, the company said it was unable to determine how much of its $3 billion in gaming revenues actually came from gamers rather than miners.
When Bitcoin fell to just under $30,000 in July, Nvidia’s share price also fell, losing more than 11% between July 12 and July 16.
But the company has deserved it.
Strong Q2 results, including a 68% year-over-year increase in Q2 revenue, certainly helped, as did growing data center demand for the company’s high-performance GPUs.
Nvidia has also rolled out products specifically for coin miners, meaning sales of its GPUs shouldn’t suffer the next time crypto hits an ongoing trough, as they did when Bitcoin suffered for much of 2018.
Shares in online payment precursor PayPal have taken a wild ride this year. They’ve crossed the $300 mark twice, in February and July, but they’ve also moved into the $240 area three times, most recently in May.
PayPal already had exposure to the crypto market and last October rolled out a product that allows US customers to buy, sell and hold cryptocurrencies. But it increased its bet on crypto when it launched a similar product for the UK in late August.
According to Paypal’s general manager for blockchain, crypto and digital currencies, Jose Fernandez da Ponte, the company’s deeper quest for crypto is an effort to make purchasing and managing cryptocurrencies easier for consumers.
If PayPal’s bet pays off, and the added convenience does indeed increase usage of its crypto platform, the costs should roll in.
4. Square (SQ)
Like Nvidia, financial services firm Square also had an impressive second quarter, grossing $1.14 billion — up 91% from the second quarter of 2020.
Unlike Nvidia, however, Square’s profits are more directly linked to the crypto market, both through the company’s ownership of real Bitcoin and its wildly popular Cash app, which allows customers to buy and sell crypto and send crypto transfers.
According to the company, Bitcoin accounted for more than half of its Q2 revenue of $4.68 billion. The bruising Bitcoin took this month won’t help Square’s third quarter results, but a rally could send its Bitcoin profits through the roof.
Square’s non-Bitcoin business is also in solid shape, growing 87% year over year in the second quarter.
5. CME Group (CME)
Unless you trade derivatives, such as stock options and commodity futures, you may not be familiar with CME Group.
CME is the world’s largest market for derivative contracts. The company introduced trading Bitcoin futures contracts in 2017 and expanded it to include Bitcoin futures options in 2020. In February, CME launched futures contracts for another notable cryptocurrency, Ether.
The success of CME’s crypto venture depends on the widespread adoption of cryptocurrencies by the wider economy. An increase in the practical use of Bitcoin or Ether should boost investor demand and intensify the crypto derivatives market.
So far, CME’s extensive crypto derivative game has not achieved much. The company’s shares have fallen more than 10% in the past six months.
Looking for something more stable?
Crypto is not for everyone.
If you’re a risk-averse investor looking for an easy-to-understand asset with demonstrable long-term profitability, you might want to consider putting some money into it more tangible — like farmland.
As global food demand increases and arable land shrinks, a play on farmland gives you access to two products whose value should only increase over time: agricultural real estate and the crops grown on it.
You don’t have to be a farmer, or have millions of dollars to buy your own farm, to get into the game. A modest minimum investment, combined with this online platform, can be your gateway to above-average long-term returns.
This article provides information only and should not be construed as advice. It comes without any kind of warranty.