Cryptocurrency stocks are soaring in 2021 as Bitcoin prices skyrocketed past $50,000.
Cryptocurrency is a new form of digital currency that many investors and fund managers have flocked towards as an alternative to saving US dollars.
Bitcoin is the main asset class for crypto stocks because many people believe Bitcoin is a form of digital gold.
Bitcoin is decentralized, scarce, and available to anybody who owns a crypto wallet or digital exchange account.
If you want to purchase Bitcoin safely and securely then I recommend Coinbase (the largest crypto exchange in America).
However, many investors may prefer owning stock in companies with large Bitcoin holdings.
These companies followed the lead of MicroStrategy CEO Michael Saylor who became the first executive to hold Bitcoin as a treasury reserve asset.
If you're looking for publicly traded Bitcoin mining companies then refer to my article on the best Bitcoin mining stocks.
Best Bitcoin Crypto Stocks
Here is a list of top cryptocurrency stocks to buy if you are looking to benefit from rising Bitcoin prices
- Grayscale Bitcoin Trust (OTCMKTS: GBTC)
- MicroStrategy (NASDAQ: MSTR)
- Square (NASDAQ: SQ)
- Marathon Patent Group (NASDAQ: MARA)
- Riot Blockchain (NASDAQ: RIOT)
Here's a table of Bitcoins held by each company:
| Company | Bitcoins Held |
|---|---|
| Grayscale Bitcoin Trust | 654,885 |
| Microstrategy | 91,579 |
| Square | 8,027 |
| Marathon Digital Holdings | 5,263 |
| Riot Blockchain | 1,175 |
1. Grayscale Bitcoin Trust (GBTC)
Grayscale is the world's largest cryptocurrency asset manager with over $27 billion in assets.
The popular Grayscale Bitcoin Trust allows investors to own Bitcoin without worrying about storing it through a trust that reports to the SEC.
Right now, Grayscale owns around 3% of all Bitcoins in total circulation but it comes with a catch: GBTC charges a 2% annual fee.
I understand the need for a product like GBTC to give institutional and whales a simple and easy way to invest in Bitcoin.
If you don't want to pay the annual fees then simply purchase Bitcoin through a trusted digital exchanged like Coinbase.
If you can stomach the fees then Grayscale Bitcoin Trust is a simple and easy way to get as much Bitcoin exposure as possible.
2. MicroStrategy (MSTR)
In 2020, MicroStrategy (MSTR) became the first publicly traded US company to add Bitcoin to its balance sheet.
Microstrategy CEO Michael Saylor is a bullish bitcoin adopter who believes that cash is a “melting ice cube” and bitcoin is a better long term store of value.
Watch this interview with Michael Saylor as he talks about bitcoin in-depth:
As of February 21st 2021, MicroStrategy owns over 90,000 bitcoins and many investors (myself included) have bought the stock to own a stake in those bitcoins.
With a market cap of under $8 billion, Microstrategy is an excellent way to gain exposure to bitcoin without purchasing crypto personally.
My strategy is to own all 3: physical gold, Microstrategy shares, and bitcoin.
MSTR stock will trade extremely close along BTC prices so it's hard to figure out a long term price target.
However, many long term bitcoin bulls think Bitcoin could reach $1,000,000 by the end of 2021.
That would give Microstrategy stock 20x upside if the prediction is true.
3. Square (SQ)
Square is a digital payment company that owns the popular Cashapp.
Square invested $50 million in bitcoin last year to acquire 4,709 BTC in total. As a digital payment company, I understand Square knows a lot about how payments will change in the future.
After reporting massive revenue growth due to the rising demand for Bitcoin, Square bought another $170 million in Bitcoin during February 2021.
Square's Cash App Bitcoin Revenue increased 785% YOY in 2020, forcing the company to take Bitcoin more seriously.
Selling Bitcoin alone represented 48% of revenue in 2020.
While more companies may add bitcoin to its balance sheet in the future, I think Square is a soft play on bitcoin whenever Bitcoin increases in price.
4. Marathon Digital Holdings (MARA)
Marathon is my favorite bitcoin mining stock in a fast growing industry that will explode in 2021.
Bitcoin isn't distributed like fiat currency but instead must be mined like physical gold.
Marathon plans to deploy over 100,000 Antiminer S-19 Pro Bitman miners to increase its Bitcoin mining output.
MARA stock has a market cap of less than $3 billion so I think the stock has a ton of upside this year.
I expect Bitcoin mining stocks to soar much higher as more investors realize the potential of Bitcoin as an alternative store of value to regular savings.
Marathon should become the largest Bitcoin mining company in America, giving them a ton of upside at the current price range.
If Bitcoin continues its rise then I don't see why Marathon can't trade at $50 or more in the future.
5. Riot Blockchain (RIOT)
Riot Blockchain is another Bitcoin miner that plans to profit from the rise in Bitcoin prices.
Riot will have over 9,000 S-19 Antiminer Pro deployed since they recently received a big order in early February.
While I don't like Riot Blockchain as much as Marathon Patent Group (Riot hasn't added Bitcoin to its balance sheet, I think Riot along with Marathon Patent Group maintain similar upside in the long run.
Bitcoin mining is a fast growing industry and you can't go wrong with a company worth just under $2 billion that will have thousands of Antiminer S-19s mining Bitcoins pretty soon.
Which Bitcoin Crypto Stock is Best?
I think all 3 have a ton of upside as long as Bitcoin continues trading higher.
For Retirement Accounts
Grayscale Bitcoin Trust is a good choice for long term accounts like IRAs or 401ks because you are betting on Bitcoin going up in the long run.
If you don't plan on retiring for another 5,10, or 20 years then holding GBTC will pay off as long as Bitcoin goes up in the future.
For Growth Investors
MicroStrategy and Square are great picks for growth investors because both companies generate earnings through its core business, which spits off free cash flow to buy more Bitcoin.
The only real risk is if Bitcoin plummets in price and these companies cannot raise enough cash to fund operations.
Bitcoin is scarce and someone will always value it so I don't think it's a serious problem.
For HyperGrowth Investors
Bitcoin mining is where you will most likely see the largest gains.
While Microstrategy and Square are larger companies, Mararthon & Riot both trade under $3 billion market cap.
Small cap stocks have a lot more growth ahead of them than larger companies.
If Bitcoin takes off in price then MARA & RIOT stock should soar.
Where to Buy Bitcoin Crypto Stocks
Grayscale Bitcoin Trust (GBTC) is an OTC traded stock that cannot be purchased on popular stock trading apps like Robinhood or Webull.
Open a Fidelity or TD Ameritrade account to buy and sell GBTC stock.
The rest of the Bitcoin crypto stocks trade on the major US stock exchanges so you can purchase them safely using a stock trading app like Webull.
Just remember that Crypto stocks trade extremely closely along side Bitcoin so expect volatility if Bitcoin soars or crashes in price.
