11 Most Undervalued Blockchain Stocks To Buy According To Hedge Funds

Published on February 14, 2023 at 3:49 pm by Fahad Saleem in Hedge Funds, News

In this article, we will take a look at the 11 most undervalued blockchain stocks to buy according to hedge funds. To see more such companies, go directly to 5 Most Undervalued Blockchain Stocks To Buy According To Hedge Funds.

Cryptocurrencies and crypto stocks started 2023 on a positive note. While many analysts argue that we are now seeing the end of the crypto winter, some say this is a bear market rally and the crypto bear market is far from over. Bear market or not, one thing everyone agrees with is that blockchain and decentralized finance will have a key role to play in financial transactions in the future. While many cryptocurrencies might be speculative in nature, blockchain is free from all such speculative impurities since it’s a technology that powers cryptocurrencies, networks and much more.

As a report by Seba Bank noted, the collapse of the crypto markets in 2022 was due to financial reasons, not technological.

“While 2022 is a crisis year for the cryptoverse, the root of the crisis is financial, not technological. This is a financial crisis because poorly designed cryptocurrencies collapsed and badly managed CeFi went under. This is not a technological crisis as blockchains continue to work smoothly. In the case of bitcoin, a block is added on average every 600 seconds, independently from price level and market stress. This crypto winter is the third since the invention of Bitcoin. The technology is battle tested and is solid. There is no reason to believe that this time is different and that bitcoin & co will not strengthen again.”

But decentralized finance space also got hit in 2022 as investors cut back on spending in the sector and funding dried. According to a research report published by The Block Research, total value locked in DeFi contracted in 2022 to $42.1 billion from $166 billion in 2021. This shows a decline of about 75%. The report said that decentralized exchanges and lending platforms were the hottest of the sub-segments in DeFi in 2022. The biggest decline in the industry was felt when Terra ecosystem collapsed.

As you will see in this article, major banks, including Bank of America and JPMorgan, are investing heavily into blockchain technologies to allow users to solve key problems in the financial space.

blockchain

SEC’s Crackdown Against Crypto?

Coming to the latest developments, cryptocurrencies are diving after regulators in the US seem to prepare for a crackdown against several digital coin companies. Earlier this month, crypto firm Paxos said it will stop issuing new Binance USD, or BUSD, stablecoins under the direction of New York state’s financial regulator.

The SEC also settled with crypto exchange Kraken over allegations of unregistered offering and sale.

Some analysts believe the latest crackdown effects can also spillover in the DeFi industry. According to a Bloomberg report, Binance-sponsored BNB Chain, which has the most BUSD usage in DeFi, can be affected amid the latest developments. The report cited Andrew Thurman, a researcher at Nansen, a blockchain analytics platform, who said the following:

“The whole ecosystem will presumably have to pivot to a different stablecoin as its primary source of liquidity.”

Nonetheless, there are several blockchain companies that have long-term growth potential and can rebound strongly once the market gets more clarity on crypto and related technologies.

Our Methodology

For this article we first scanned Insider Monkey’s database of 920 hedge funds’ holdings and picked at least 30 stocks that were either pure-play blockchain stocks or had direct or indirect investments in the blockchain or crypto space. After that we picked 11 of those stocks that had a PE ratio under 20 or Price/Book ratio less than 1, as of February 8.

Most Undervalued Blockchain Stocks To Buy According To Hedge Funds

11. HIVE Blockchain Technologies Ltd. (NASDAQ:HIVE)

Number of Hedge Fund Holders: 1

P/E Ratio (TTM): 4.42

Canada-based HIVE Blockchain Technologies Ltd. (NASDAQ:HIVE) claims to be the first publicly listed blockchain infrastructure company. HIVE Blockchain Technologies Ltd. (NASDAQ:HIVE) has a PE Ratio (TTM) of 4.42 as of February 8, according to Yahoo Finance. It ranks 11th in our list of the most undervalued blockchain stocks to buy now.

Earlier this month, HIVE Blockchain Technologies Ltd. (NASDAQ:HIVE) said it produced 260 Bitcoin in January, in addition to $180,000 of income from grid balancing, and a current BTC HODL balance of about 2,430 Bitcoin mined with green energy. HIVE Blockchain Technologies Ltd. (NASDAQ:HIVE) said that its YoY monthly production in January was almost the same when compared to the year-ago period.

In December 2022, HIVE Blockchain Technologies Ltd. (NASDAQ:HIVE) produced 213.8 Bitcoins from ASIC and GPU mining operations in December 2022, compared to 264 produced in November 2022.

10. Bitfarms Ltd. (NASDAQ:BITF)

Number of Hedge Fund Holders: 3

P/E Ratio (TTM): 8.21

Toronto-based Bitfarms Ltd. (NASDAQ:BITF) is another crypto stock that is gaining a lot of value in 2023 amid the broader upbeat mood in the crypto market. Bitfarms Ltd. (NASDAQ:BITF) has gained a whopping 148% this year through 2023. Earlier this month, Bitfarms Ltd. (NASDAQ:BITF) jumped after the company said it produced 486 BTC in January. The figure shows a 61% Y/Y growth. However, the production was down 2% when compared to December 2022. Bitfarms Ltd. (NASDAQ:BITF) said that on average, it mined 15.7 BTC per day, equivalent to $362,700 per day.

As of the end of the third quarter, 3 hedge funds had stakes in Bitfarms Ltd. (NASDAQ:BITF). At the end of September, Ken Griffin’s Citadel Investment Group reported owning a $529,000 stake in Bitfarms Ltd. (NASDAQ:BITF).

9. Bit Digital, Inc. (NASDAQ:BTBT)

Number of Hedge Fund Holders: 3

P/B Ratio (MRQ): 0.93

Bit Digital, Inc. (NASDAQ:BTBT) is a penny stock that is currently trading at $1.36, as of February 8. Bit Digital, Inc. (NASDAQ:BTBT) has gained about 109% year to date in 223. Bit Digital, Inc. (NASDAQ:BTBT) is a Bitcoin mining company. In December, Bit Digital, Inc. (NASDAQ:BTBT) posted third quarter results. In the September quarter revenue came in at $9.1 million, while gross profit totaled to $2.6 million. Earlier in February, Bit Digital, Inc. (NASDAQ:BTBT) revealed that it produced 134.3 BTC in January, which showed a 3% growth when compared to the previous month. The growth was driven by higher average active hash rate. However, some of the potential growth was offset by increased network difficulty.

As of the end of January, Bit Digital, Inc. (NASDAQ:BTBT)’s treasury holdings stand at 970.6 BTC and 10,200 Ether.

A total of 3 hedge funds tracked by Insider Monkey reported owning stakes in Bit Digital, Inc. (NASDAQ:BTBT) at the end of the third quarter of 2022.

8. Canaan Inc. (NASDAQ:CAN)

Number of Hedge Fund Holders: 9

P/E Ratio: 1.65

Canaan Inc. (NASDAQ:CAN) ranks 8th in our list of the most undervalued blockchain stocks to buy according to hedge funds. The Chinese company is known for its blockchain servers and ASIC microprocessors that are used in Bitcoin mining. Canaan Inc. (NASDAQ:CAN) makes high-performance hardware products that have immense applications in the crypto mining, blockchain and AI industries. Canaan Inc. (NASDAQ:CAN) could gain from the upcoming growth catalysts in these areas. Its PE ratio stands at 1.65, as of February 8. In 2023 so far, Canaan Inc. (NASDAQ:CAN) has gained about 68%.

As of the end of the third quarter of 2022, 9 hedge funds tracked by Insider Monkey reported owning stakes in Canaan Inc. (NASDAQ:CAN). The net worth of these shares was about $8.3 million. The biggest stakeholder of Canaan Inc. (NASDAQ:CAN) at the end of the September quarter was Douglas Harold Hart Polunin’s Polunin Capital which had a $4.6 million stake in the company.

7. Riot Platforms, Inc. (NASDAQ:RIOT)

Number of Hedge Fund Holders: 11

P/B Ratio (MRQ): 0.96

Formerly named Riot Blockchain, Riot Platforms, Inc. (NASDAQ:RIOT) is one of the most notable names in the Bitcoin mining and blockchain world. On a year-to-date basis Riot Platforms, Inc. (NASDAQ:RIOT) has gained a whopping 96%. Earlier this month, Riot Platforms, Inc. (NASDAQ:RIOT) announced that it produced 740 bitcoins (BTC-USD) in January, up about 12.3% from the previous month and 62% when compared to the year-ago period. In December, Riot Platforms, Inc. (NASDAQ:RIOT)’s production was 26% more than November’s

As of the end of the third quarter of 2022, 11 hedge funds reported owning stakes in Riot Platforms, Inc. (NASDAQ:RIOT). The net worth of these stakes was $29 million. The biggest stakeholder of Riot Platforms, Inc. (NASDAQ:RIOT) during this period was Dmitry Balyasny’s Balyasny Asset Management which owns an $8.8 million stake in the company.

6. Coinbase Global, Inc. (NASDAQ:COIN)

Number of Hedge Fund Holders: 28

P/E Ratio (TTM): 7.33

Crypto exchange platform Coinbase Global, Inc. (NASDAQ:COIN) remains one of the most notable names in the cryptocurrency and blockchain space. Coinbase Global, Inc. (NASDAQ:COIN) has gained a whopping 107% year to date. Last month, Coinbase Global, Inc. (NASDAQ:COIN) shares gained after Jefferies analyst Trevor Williams started covering the stock with a Hold rating. The analyst said that Coinbase Global, Inc. (NASDAQ:COIN) will be able to weather the industry-wide downturn following the FTX debacle. The analyst said that Coinbase Global, Inc. (NASDAQ:COIN) has a solid balance sheet with over $5 billion in cash. He noted Coinbase Global, Inc. (NASDAQ:COIN)’s proactive approach towards regulatory compliance and limited exposure to FTX as positives. The analyst said in his note that while Coinbase Global, Inc. (NASDAQ:COIN) has short-term headwinds, the company can re-establish its status as the “de-facto on-ramp into crypto” in case of another bull market in crypto.

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