“There are ways to get in touch with bitcoin without owning bitcoin,” said Daniel Polotsky, CEO and founder of CoinFlip, a bitcoin ATM machine that lets consumers buy cryptocurrencies with cash.
To be sure, crypto-linked stocks can be volatile despite the dramatic rise in demand for bitcoin over the past year.
Banks and other financial companies are benefiting from bitcoin boom
Bitcoin-related stocks are also unpredictable and can sometimes dive even on good news. That’s because their prices are tied so closely to bitcoin’s prices.
Silvergate, which reported earnings on Wednesday after the market closed, plunged nearly 15% on Thursday. That might be excessive considering the bank reported that its digital currency deposits more than doubled in the fourth quarter to $ 5 billion, up from $ 2.1 billion in the third quarter.
“2020 was a year of significant growth and expansion for our business … as investment in digital currencies increases among the institutional investor community,” Silvergate CEO Alan Lane said in a press release.
Lane points to the fact that high-profile money managers like Paul Tudor Jones, Stanley Druckenmiller and Anthony Scaramucci have all embraced bitcoin so recently.
“These are more mature companies that have real financial issues,” Venuto said.
Their stock prices have fluctuated wildly recently along with bitcoin. But Venuto dubbed the “spikes and axes” of the industry to miners – companies that should do well as long as bitcoin prices go higher.
His fund also owns larger blue-chip stocks that are benefiting from rising demand for bitcoin.
PayPal and Square could be big crypto winners
Palmer said in a report that PayPal’s cryptocurency business could add more than $ 1 billion to the company’s annual revenue by next year and that the payment platform is “about to play a leading role in promoting crypto acceptance” for investors and traders.
These stocks could be better bets for investors who are not comfortable mining cryptocurrency themselves, said Hong Fang, CEO of OKCoin, a cryptocurrency exchange.
“Look Square: Much of its growth comes from its bitcoin business,” he said. “Square is now a crypto stock, to be honest.”
That’s another reason some believe crypto-linked stocks could continue to benefit. More big money managers may join so-called mum and pop investors and grab shares in companies like Square, PayPal and the upcoming Coinbase IPO.
That makes the recent bitcoin spike different from the surge more than three years ago, said Alda Leu Dennis, general partner of Initialized Capital, a venture capital firm with a stake in Coinbase.
“The 2017 bitcoin run was driven more by retail investors,” he said. “Now bitcoin is becoming more widely adopted and more organizations are investing in it.”