4 Bitcoin Stocks to Strengthen Your Portfolio Before the Next Surge

The cryptocurrency market has faced a rough patch recently, with Bitcoin (BTC) prices falling sharply after peaking in March. On July 3, Bitcoin was priced at around $58,600, a significant drop from its all-time high of $73,750.07 on March 14.

In 2023, Bitcoin experienced a remarkable rally, increasing by 157%. The year started on a high note when the Securities and Exchange Commission (SEC) approved 11 spot Bitcoin exchange-traded funds (ETFs) in January. This decision made it easier for both regular and institutional investors to invest in Bitcoin in a regulated manner. This approval greatly boosted the market, resulting in about $14.41 billion flowing into these ETFs, according to a report by CCData.

However, the surge slowed down in April due to the Bitcoin halving event, which occurs every four years. This event halves the rewards for mining new Bitcoin, aiming to limit the total number of Bitcoins to 21 million. Although this typically increases demand and prices, the recent drop is expected to be temporary as the effects of the halving are still unfolding.

Federal Reserve Chairman Jerome Powell announced after the June FOMC meeting that there would be only one interest rate cut this year, instead of the three cuts projected in March. Even a single 0.25% rate cut was received positively, especially since many had expected no cuts in 2024. The latest FOMC forecast suggests a total 1% drop in interest rates by 2025, which could lower the Fed funds rate to 4.1% by the end of 2025. This outlook is seen as favorable for industries like manufacturing and the overall economy.

Markets are now anticipating a rate cut in September, which is likely to boost the cryptocurrency market. Lower interest rates benefit growth assets such as technology stocks, consumer discretionary stocks, and cryptocurrencies.

Our Top Picks

We've identified three crypto-focused stocks that we believe have strong potential for 2024. Each of these stocks has a high rating from Zacks, either #1 (Strong Buy) or #2 (Buy).

1. NVIDIA Corporation (NVDA)

NVIDIA is a global leader in visual computing technology and the creator of the GPU. The company's focus has expanded from PC graphics to AI-based solutions, supporting high-performance computing, gaming, and virtual reality. NVIDIA's expected earnings growth rate for this year is 106.2%, with the Zacks Consensus Estimate for earnings improving by 12.1% over the last 60 days. NVIDIA holds a Zacks Rank #1.

2. Robinhood Markets, Inc. (HOOD)

Robinhood operates a financial services platform in the US that lets users invest in stocks, ETFs, options, gold, and cryptocurrencies. Through its Robinhood Crypto platform, it trades Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies. Robinhood’s expected earnings growth rate for this year exceeds 100%, with the Zacks Consensus Estimate for earnings improving by 93.1% over the last 60 days. Robinhood holds a Zacks Rank #2.

3. Interactive Brokers Group, Inc. (IBKR)

Interactive Brokers is a global automated electronic broker that handles trades in cryptocurrencies. Its commodities futures trading desk offers customers the chance to trade cryptocurrency futures. Interactive Brokers has an expected earnings growth rate of 16.2% for this year, with the Zacks Consensus Estimate for earnings improving by 1.4% over the last 60 days. Interactive Brokers holds a Zacks Rank #2.

4. Coinbase Global, Inc. (COIN)

Coinbase provides financial infrastructure and technology to support the global cryptocurrency economy. It offers a primary financial account for crypto consumers, a marketplace with liquidity for institutional transactions, and technology and services for developers to build crypto-based applications and accept cryptocurrencies securely as payment. Coinbase’s expected earnings growth rate for this year exceeds 100%, with the Zacks Consensus Estimate for earnings improving by 2.6% over the last 60 days. Coinbase holds a Zacks Rank #1.

Why Investing in Bitcoin Stocks Makes Sense

Investing in Bitcoin-related stocks can be a smart move for several reasons. First, these stocks offer a way to gain exposure to the cryptocurrency market without directly buying Bitcoin, which can be volatile and difficult to manage. By investing in companies that are involved in the crypto space, you can benefit from the overall growth of the market while potentially reducing some of the risks.

Second, these stocks often belong to companies that have diverse business models. For instance, NVIDIA's involvement in AI and gaming, Robinhood's broader investment platform, Interactive Brokers' wide range of trading options, and Coinbase's financial infrastructure all mean that these companies have multiple revenue streams. This diversification can provide some stability even if the crypto market experiences downturns.

Lastly, the adoption of cryptocurrencies and blockchain technology is still in its early stages. As more industries and governments recognize and integrate these technologies, companies involved in the crypto space are likely to see significant growth. By investing now, you could be positioning yourself to benefit from these long-term trends.

Also Read: Bitcoin Drops Due to US Political Issues and Mt. Gox Sale Worries