One of the easiest investment plays of 2023 was to buy bitcoin (btc -3.97%) mining stocks. All they seemed to do was go up, with popular mining stocks like Digital marathon entries (MARA 2.60%), Riot platforms (RIOT 3.30%)and clean spark (CLSK 4.55%) all with an increase of more than 400% by the end of 2023.
But it could be a completely different story in 2024. Due to the upcoming bitcoin Cut in half, just a handful Bitcoin mining companies They are likely to be profitable for the year, and that could trigger a massive shakeup in the industry. So, with that in mind, here are two cryptocurrency stocks to buy.
Coinbase Global
First is Coinbase Global (CURRENCY 2.83%), which remains a favorite of cryptocurrency investors. Ark Invest's Cathie Wood was consistently bullish on Coinbase throughout 2023, and for good reason. Coinbase remains the world's second-largest cryptocurrency exchange, with an easy-to-understand business model for investors.
Coinbase also remains one of the best indirect ways to get exposure to Bitcoin. Among publicly traded companies, Coinbase is the sixth largest holder of Bitcoin in the world, with 9,181 bitcoins worth nearly $400 million on its balance sheet. Additionally, Bitcoin accounts for approximately one-third of all transactions on the Coinbase platform. Generally speaking, Bitcoin's bullish momentum also results in higher trading volume for other cryptocurrencies, so Coinbase could get a nice boost overall if investors return to the cryptocurrency market in 2024.
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The big question, of course, is what the new announcement will be. Bitcoin Exchange Traded Funds (ETFs) it means for the future of Coinbase. At the end of the year, Ark Invest was selling Coinbase shares and some interpreted this as a sign that it was time to exit Coinbase. After all, if people bought Bitcoin indirectly through ETFs instead of directly through a crypto exchange, that would likely mean a direct impact on Coinbase's bottom line.
But if we look closer at the structure of Bitcoin ETFs, Coinbase is designated as a custodian for 8 out of 11 of them. In other words, Coinbase will keep a large amount of Wall Street's Bitcoin in its digital vaults. At best, the new custody and service fees will help offset any losses in Bitcoin trading volume on its platform.
Microstrategy
The next is Microstrategy (MSTR -2.21%), which is still the best Bitcoin proxy stock. If you take a quick look at the amount of Bitcoin MicroStrategy has on its balance sheet, it's easy to see why. MicroStrategy now owns 189,150 Bitcoins worth almost $8 billion at current prices. For those of you keeping score at home, that's about 1% of the world's total Bitcoin supply.
As in the case of Coinbase, there is some debate about what the new Bitcoin ETFs will mean for MicroStrategy. Presumably, the company will lose some of its appeal as a Bitcoin proxy stock. In just the first 48 hours after the new Bitcoin ETFs went live, the shares lost 20% of their value.
However, some of that appears to be a market overreaction. Investment giant Vanguard Group, for example, has said it will not make new Bitcoin ETFs available to its client base. Instead, you will invest heavily in MicroStrategy as a more efficient way to gain exposure to Bitcoin. This may seem counterintuitive at first until you consider that MicroStrategy's vast Bitcoin holdings are worth more than the company itself.
What is the best way to get exposed to Bitcoin?
Now is the time to get your Bitcoin exposure right, especially now that the narrative around Bitcoin is changing. With this in mind, there are a variety of different ways to gain access to Bitcoin. You can buy Bitcoin mining stocks. You can buy Bitcoin proxy stocks like MicroStrategy. You can buy the new Bitcoin ETFs. Or you can buy Bitcoin directly through Coinbase.
Looking ahead, the next big catalyst to watch will be the Bitcoin halving, scheduled for April. Going forward, it could be a fantastic opportunity to find cryptocurrency stocks like Coinbase and MicroStrategy that are most likely to benefit from any long-term appreciation in the price of Bitcoin.
