Bitcoin (BTC) is not an asset class for the weak-stomached. It has made some investors incredibly wealthy, but it has also crashed no less than fourteen times in its history. If you’re serious about investing in BTC and other cryptocurrencies, you must be prepared to HODL, or “hold on for dear life.”
With that disclaimer out of the way, 2020 is a great time to prepare for the next BTC bull market. After the COVID correction, BTC/USD bottomed out at around 7,500 USD. At present, that price is sitting just above 9,000 USD.
With unprecedented instability around the world, we believe BTC will increase in the short to medium-term. We also expect bitcoin adjacent equities to rise as well. In today’s report, we’ll examine four bitcoin stocks that have been getting a lot of attention lately.
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Bitcoin Services Inc. (OTCMKTS:BTSC)
According to its website, Bitcoin Services Inc. is a firm that engages in bitcoin mining, blockchain software development, and escrow services. And, when you look at their past performance, it appears they did well during the 2017 BTC super spike.
However, when you dig deeper, it’s hard to determine precisely what they do. BTSC’s website mostly contains information most bitcoin investors already know about. In other words, you won’t find a unique selling proposition that clues you into their competitive advantage.
When you search for news headlines that feature BTSC, the trail disappears around 2017. Despite radio silence since then, markets continue to trade BTSC stock. If you’re smart, you probably realize what’s going on – they are taking advantage of the mania around BTC.
In a previous life, BTSC was known as Tulip Biomed. In 2016, they changed their name to Bitcoin Services Inc. The following year, bitcoin caught fire, and their stock got swept up in the mania. At its peak, BTSC was worth $0.41.
Today, they are worth $0.02. Should you buy BTSC today? First, realize that, at best, BTSC only offers run-of-the-mill services that don’t stand out from the crowd. As such, you shouldn’t bet your life savings on this stock. However, if you feel like gambling, this stock will likely rise with the next BTC boom.
Grayscale Bitcoin Trust (OTCMKTS: GBTC)
Many investors are interested in purchasing BTC. However, this process can be intimidating to some. First, you have to sign up for a bitcoin wallet. Then, you have to buy your BTC on an exchange. Lastly, you have to remember your private key. If you forget it, you lose access to your BTC – forever.
Grayscale Bitcoin Trust (GBTC) has made this process less complicated and risky. Instead of going through the steps outlined above, you only need to buy their securities. Their entire business is buying BTC, and then selling securities based on its value of their holdings.
In other words, the value of GBTC shares tracks roughly with the worth of BTC. Times may be uncertain, but Grayscale continues to believe in this cryptocurrency strongly. According to the Asia Times, they were buying one-third of all newly-minted bitcoins as of May 2020.
Shortly after the apex of the 2017 super spike, GBTC’s shares soared to its all-time high of $18. A new wave of investors were interested in BTC, but not the complicated process of buying/storing it. While GBTC stock tanked with the price of BTC in 2018, it has since settled in the $9 to $15 range.
Should you buy GBTC? Given their profound belief in BTC, the company itself is almost certainly legitimate. Earlier this year, “The Halving” triggered a modest increase in prices. And, in the years ahead, BTC has growth potential that institutional/retail investors keep missing. For instance, in developing economies, users are adopting BTC to avoid high remittance fees and to hedge against inflation.
GBTC is the only significant trust that manages a fund exclusively consisting of BTC. Given the points mentioned above, we feel GBTC would make a great addition to your bitcoin portfolio.
Riot Blockchain (NASDAQ: RIOT)
Central banks don’t print BTC. Rather, teams of “bitcoin miners” produce this decentralized asset by solving complicated mathematical problems. However, crafting BTC is not easy/cheap, as the amount of computing power required is enormous.
In 2020, the cost of processors and the electricity needed to run them has squeezed out hobbyists. In this environment, only companies like Riot Blockchain have a shot at operating profitably. This Colorado-based firm runs a bitcoin mining facility in Oklahoma City. As of 2020, they’ve successfully produced 281 BTC.
Riot Blockchain also runs a fund that invests in cryptocurrency and blockchain-related businesses. On their site, they highlight three major investments – Coinsquare (Canadian crypto exchange), Tesspay (blockchain-based escrow service for telecom companies), and Verady (crypto accounting and auditing service).
Despite their varied business interests, the price of RIOT stock has languished since the 2018 crypto crash. However, after bottoming out below $1 during the COVID crash, RIOT is now trading around $2.29.
Should you invest? To be honest, it’s a toss-up. They do have a robust BTC mining facility, but their investing arm is their real wildcard. If one of their horses takes off, it could boost their profits significantly. On the other hand, a lack of results could keep RIOT anchored in penny stock territory.
Treat RIOT like a high-risk, medium/high-reward investment.
Nvidia (NASDAQ: NVDA)
Compared to the other companies on this list, Nvidia appears to be out of place. After all, the GPU, or Graphics Processing Unit, is their primary income generator. These specialized circuit boards power high-end gaming PCs and smartphones alike.
However, in recent years, crypto entrepreneurs have harnessed the GPU to mine bitcoin. Compared to CPUs (central processing units), GPUs use electricity far more efficiently. The more efficient a bitcoin miner is, the more BTC it produces, and the cheaper it is to run.
As the interest in bitcoin mining has risen, Nvidia has seen a boost in their stock. Before the 2017 BTC super spike, NVDA was worth less than $100 per share. Through 2017, Nvidia doubled in value. However, even as BTC tanked through 2018, NVDA held its value (through 1H 2018 at least). Today, even as BTC sits at half its all-time high, NVDA is trading around its all-time high.
BTC mining has contributed to NVDA’s success. However, NVDA interests are diversified across a range of technologies. As a result, we strongly recommend buying NVDA, as it will add a backbone to your BTC portfolio.
Are You Ready For The Next BTC Bull Run?
As the world embraces digital assets and seeks refuge from unstable currencies, interest in BTC will only increase. By adding solid BTC stocks to your portfolio, you’ll stand ready to capitalize when this cryptocurrency enters its next bull market.
About Carson Derrow
