In this article, we will discuss 10 crypto stocks for 2022. If you want to skip our detailed analysis of the crypto industry, you can go directly to 5 Crypto Stocks for 2022.
According to Deloitte, more operating organizations began allocating resources to digital assets and cryptocurrencies in 2020, reflecting a divergence from more traditional investing in this field. MicroStrategy Inc., for example, stated last December that it will spend more than $1 billion on Bitcoin in 2020, describing the plan as an investment that would “provide the opportunity for better returns and preserve the value of our capital over time compared to holding cash.” There are a variety of reasons for a company to add digital assets to its balance sheet, including seeking asymmetric risk returns, or as a defensive measure against changing fiat currencies, or as part of a business plan to embrace contemporary technology.
According to an estimate from 2020, over 2,300 US companies accept Bitcoin, excluding Bitcoin ATMs. Key findings of a report published by PWC revealed that crypto hedge funds’ total assets under management (AUM) nearly doubled in 2020, reaching $3.8 billion (up from $2 billion in 2019). Moreover, crypto hedge funds generated an average return of 128% in 2020, up from 30% in 2019.
Some of the leading companies taking an active interest in cryptocurrency include Meta Platforms, Inc. (NASDAQ:FB), Shopify Inc. (NYSE:SHOP), and PayPal Holdings, Inc. (NASDAQ:PYPL). While Meta Platforms, Inc. (NASDAQ:FB) is working on the development of a new cryptocurrency known as Diem, Shopify Inc. (NYSE:SHOP) and PayPal Holdings, Inc. (NASDAQ:PYPL) are working on adopting cryptocurrency as a payment method.
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Our Methodology
In this article, we have highlighted 10 stocks that can be bought due to their exposure to the crypto world. Either these companies are involved in the creation of a new cryptocurrency, holding a significant amount of cryptocurrencies, providing a digital wallet for cryptocurrencies, or operating an exchange to trade cryptocurrencies. Given the volatility in cryptocurrencies, most of these companies have a primary business driving their revenue and bottom line, but their exposure to the cryptocurrency space will act as a growth catalyst.
10 Crypto Stocks for 2022
10. MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Funds: 16
MicroStrategy Incorporated (NASDAQ:MSTR) is a provider of business intelligence, cloud-based services, and mobile software. The Virginia-based company revealed that it bought 1,432 Bitcoins between November 29 and December 8. Following this trade, the holding of the company has increased to 122,478 Bitcoins. MicroStrategy Incorporated (NASDAQ:MSTR) has paid $3.66 billion to buy these Bitcoins over a long period, resulting in an average price of $29,861 per Bitcoin. The current market value of these Bitcoin stands at more than $5.8 billion. This means that MicroStrategy Incorporated (NASDAQ:MSTR) has an unrealized gain of more than 58% on its investment in Bitcoin.
In a research note issued on October 29, Joseph Vafi at Canaccord increased the price target on MicroStrategy Incorporated (NASDAQ:MSTR) from $780 to $871 and reiterated a Buy rating on the stock. Joseph thinks that the sum-of-the-parts analysis has not caught up with the stock price. The analyst expects the company to develop further in 2022 on the back of its improving core BI software business. This will receive a boost through the introduction of new cloud offerings and the rising value of Bitcoin. The management of MicroStrategy Incorporated (NASDAQ:MSTR) also believes that it could leverage its programmers into executing blockchain analytics.
Alger shared its stance on MicroStrategy Incorporated (NASDAQ:MSTR) in its Q1 2021 investor letter. Here’s what the firm said:
“MicroStrategy Incorporated was among the top contributors to performance. MicroStrategy is a global leader in enterprise analytics software and services. MicroStrategy’s core software platform provides customers with visualization and reporting capabilities, mobility features and custom applications to help with complex business questions. Today, MicroStrategy has over 4,000 customers worldwide. In August 2020, MicroStrategy decided to make bitcoin its preferred reserve currency. To date, MicroStrategy has purchased over 90,000 bitcoins at an aggregate purchase price of $2.17 bi11 ion and an average price of over $23,985 per bitcoin. Going forward, MicroStrategy plans to use excess cash generated by its core business to purchase additional bitcoin.
Shares of MicroStrategy outperformed in the first quarter due to the appreciation of the company’s bitcoin asset, as the price of bitcoin relative to the U.S. dollar rose materially in the quarter. This bitcoin appreciation was driven by concerns about U.S. dollar inflation as well as other public companies deciding to acquire bitcoin to diversify reserve assets. MicroStrategy is establishing itself as a thought leader in the bitcoin space, and the company hosted an event at its February user conference to help other organizations understand the benefits of bitcoin as a reserve asset. MicroStrategy’s core software business is also benefitting from its status as a leader in the bitcoin space, with the increased public attention aiding MicroStrategy’s recruitment and marketing efforts as the software business continues to transition to a cloud-based subscription model.”
Apart from MicroStrategy Incorporated (NASDAQ:MSTR), companies like Meta Platforms, Inc. (NASDAQ:FB), Shopify Inc. (NYSE:SHOP), and PayPal Holdings, Inc. (NASDAQ:PYPL) have also expanded into the cryptocurrency market.
9. Robinhood Markets, Inc. (NASDAQ:HOOD)
Number of Hedge Funds: 20
Robinhood Markets, Inc. (NASDAQ:HOOD) is a renowned online brokerage application known for its low trade commissions. Robinhood is aiming to democratize personal finance by enabling commission-free trades. Robinhood Markets, Inc. (NASDAQ:HOOD) has no long-term debt on its books and has a short-term debt of $3.13 billion along with other current liabilities of $1.6 billion as opposed to $6.17 billion in cash and cash equivalents.
Users on the platform have the option to trade commodities, cryptocurrencies, stocks, and other financial instruments. Users have the option to trade Bitcoin, Ethereum, and Dogecoin without paying any commission on their trade. During Q3 2021, Robinhood Markets, Inc. (NASDAQ:HOOD) generated $51 million in sales through cryptocurrency trading. This was roughly 19% of the total quarterly revenue of $267 million.
To further streamline cryptocurrency trading on its platform, the California-based company announced the acquisition of Cove Markets on December 13. Cove Markets is a “cross-exchange trading platform” that provides convenience to its user in managing their cryptocurrency accounts. On the same day, ARK Investment announced that it had bought 261,000 shares of Robinhood Markets, Inc. (NASDAQ:HOOD). Following this trade, Cathie Wood’s hedge fund increased its holding in Robinhood Markets, Inc. (NASDAQ:HOOD) by 3.4 million shares since the start of November 2021. The hedge fund that is only focused on disruptive innovation is accumulating the stock following its earnings results.
8. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Funds: 50
Coinbase Global, Inc. (NASDAQ:COIN) is one of the leading cryptocurrency exchange platforms. Institutions are rapidly adopting currencies, and the platform will be a key beneficiary of this development.
Of the 867 hedge funds being tracked by Insider Monkey, 50 hedge funds held a stake worth $2.97 billion in Coinbase Global, Inc. (NASDAQ:COIN) at the end of Q3, up from 49 in the preceding quarter.
In a report released on November 10, Joseph Vafi at Canaccord increased the price target on Coinbase Global, Inc. (NASDAQ:COIN) from $325 to $342 and maintained a Buy rating on the stock. The analyst believes that with the passing of every quarter, Coinbase Global, Inc. (NASDAQ:COIN) is strengthening its leading position in the emerging blockchain and cryptocurrency universe. He was impressed by the number of users engaging themselves in activities on the exchange other than investing. Joseph summed up his analysis by saying that with the introduction of new products and services like NFT and direct deposit, user engagement and wallet size will increase further, which will be beneficial for Coinbase Global, Inc. (NASDAQ:COIN).
7. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Funds: 60
Tesla, Inc. (NASDAQ:TSLA) is primarily an electric car manufacturer, but the Austin, Texas-based entity has bought $1.5 billion worth of cryptocurrencies. The corporation owns around 42,000 Bitcoin with a current market value of over $2 billion. In 2021, Tesla, Inc.’s (NASDAQ:TSLA) CEO Elon Musk announced that his company would accept Bitcoin as a form of payment. However, he retracted his statement due to environmental issues related to the mining of Bitcoin.
On December 14, Elon Musk shared that Tesla, Inc. will be accepting Doge as payment for buying merchandise from the company’s e-commerce website on a test basis. Musk has also highlighted the possibility of accepting the meme cryptocurrency as a possible payment method for Tesla, Inc.’s (NASDAQ:TSLA) vehicles. Following this development, the value of Dogecoin rocketed by 20%. Dogecoin is a meme cryptocurrency that was created by Billy Markus and Jackson Palmer in 2013. In May 2021, the value of the cryptocurrency rocketed to an all-time high of 74 cents, as opposed to less than a cent at the start of the year. Presently, it is trading at 18.2 cents.
Tesla, Inc. (NASDAQ:TSLA) was mentioned in the Q3 investor letter of Worm Capital LLC. Here’s what the investment management firm said about the company:
“Our core portfolio as of this writing—TSLA, SPOT, SHOP, ABNB, and AMZN—are all premier examples of companies that use the concept of aggregation of marginal gains to continuously improve their value proposition for customers. After all, what is innovation if not just a continuous search for fractional advantages in business?
The way we see it, Tesla is perhaps the generational example of the marginal gain aggregation theory. It’s also been our largest position for several years now. There are many ways to characterize and value this business (see previous letters for longform write-ups), but perhaps the best way to think about the company is that it is a highly vertically-integrated software and hardware firm that’s devoted entirely to aggregating marginal gains across its organization. The goal? Lower costs, improve thruputs, and dramatically enhance the value proposition—at scale—for consumers…” (Click here to see the full text)
6. CME Group Inc. (NASDAQ:CME)
Number of Hedge Funds: 64
CME Group Inc. (NASDAQ:CME) is the biggest operator of financial derivatives exchange that allows investors and speculators to buy and sell futures and options. Futures provide a way of speculating the future price of an underlying asset. Meanwhile, options allow the holder to buy or sell an asset in the future at an already decided price. Exchanges operated by CME Group Inc. (NASDAQ:CME) allow the trading of a wide variety of assets ranging from commodities, currencies, and stocks. The trading of currency options and futures makes the Chicago, Illinois-based corporation a cryptocurrency play for 2022.
In 2017, for the trading of bitcoin futures, CME Group Inc. (NASDAQ:CME) created the first exchange. Three years later, the entity took this a step further by introducing a market for Bitcoin futures. In early 2021, CME Group Inc. (NASDAQ:CME) introduced Ether futures on the exchange. Ether is the underlying currency of the Ethereum blockchain network. Meanwhile, the holders of these cryptocurrencies have the option to hedge their portfolios from volatility in the prices of cryptocurrency. Andrei Kazantsev, global head of cryptocurrency at the Goldman Sachs Group, Inc. (NYSE:GS), thinks that the next progress in the world of cryptocurrencies will be the emergence of more liquid options markets as financial institutions increase their exposure in the rapidly growing asset class.
Cooper Investors discussed its stance on CME Group Inc. (NASDAQ:CME) in its Q1 2021 investor letter. Here’s what the firm said:
“CME has been owned by the portfolio for five years. CME’s strategic positioning as a monopolistic global financial exchange operator will continue to afford the business a highly attractive margin profile. CME is well managed however we can no longer identify clear value latency opportunities for the management team to execute against and so decided to exit our position.”
In addition to CME Group Inc. (NASDAQ:CME), Meta Platforms, Inc. (NASDAQ:FB), and Shopify Inc. (NYSE:SHOP), PayPal Holdings, Inc. (NASDAQ:PYPL) is also one of the leading crypto stocks for 2022.
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Disclose. None. 10 Crypto Stocks for 2022 is originally published on Insider Monkey.
