The 5 Best Bitcoin Stocks And Crypto Plays To Buy And Watch

The price of Bitcoin has fallen this month. A number of Bitcoin stocks — or companies that have business tied to the cryptocurrency — have followed. Given the on-a-whim price swings in the crypto world, finding the best stocks out of that bunch can be difficult.

For now, based solely on IBD's chart analysis, the best crypto stocks and Bitcoin stocks to buy or watch include Coinbase (COIN), Silvergate Capital (SI), ProShares Bitcoin Strategy (BITO), a Bitcoin futures ETF, Bitfarms (BITF) and Signature Bank (SBNY)

The price of Bitcoin currently stands at around $40,000, a key support level. But it's down from around $57,000 at the start of December and a record $68,990.90 in early November. 

Bitcoin's gyrations have arrived as traders try to figure out where inflation and the economy are headed, as Russia's invasion of Ukraine tests the cryptocurrency's different investment narratives and the Federal Reserve raises its key interest rate to head off rising consumer prices.

Bitcoin has been seen by some as a hedge against inflation. But it doesn't always act that way. The price of Bitcoin fell at the end of last year as more traditional investors dumped what they considered a volatile "risk asset" in a time of rising prices and economic uncertainty.

BlackRock (BLK) CEO Larry Fink last month said the investment firm was "studying" digital currencies, stablecoins and the technology behind them to "understand how they can help us serve our clients."

President Biden has also announced an executive order geared toward "responsible development" of digital assets like cryptocurrencies. The order directed regulators to "develop policy recommendations to address the implications of" the digital-asset market. Bitcoin's price jumped on the news.

More exchange traded funds tied to Bitcoin futures and companies — the closest things to a direct Bitcoin ETF — have also debuted recently. Major corporations are taking interest.

ProShares Bitcoin Strategy ETF (BITO) began trading on the NYSE Arca in October. That launch helped drive Bitcoin to a record high. 

The Valkyrie Bitcoin Strategy ETF (BTF) made its trading debut shortly after. VanEck has launched its VanEck Bitcoin Strategy ETF on CBOE. Those funds offer exposure to Bitcoin futures. 

Among other Bitcoin-related ETFs, Invesco Alerian Galaxy Crypto Economy ETF (SATO), made up of shares of companies engaged in crypto-related activity, also debuted in October.

So did the Volt Crypto Industry Revolution and Tech ETF (BTCR), which also gives investors access to Bitcoin-exposed companies.

Grayscale has filed to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. But the SEC has concerns, and has pushed back its decision on the matter. The agency has until July 6 to make a decision. 

The way Bitcoin and cryptocurrencies are used now — largely for investing — is also a big departure from Bitcoin's original intent as a currency, free from central banks, that people could use to buy things.

Observers also still raise concerns about security, market manipulation, and whether cryptocurrencies, and by extension Bitcoin stocks, have a place in mainstream investing. 

More regulation could hasten adoption. But it could dampen some of the big gains that have made Bitcoin popular.

Some, such as Riot Blockchain (RIOT), are in the business of mining Bitcoin. Some, like MicroStrategy (MSTR), simply buy Bitcoin, giving investors a way to play the cryptocurrency on the major exchanges. The rise of Bitcoin ETFs may make such companies that buy Bitcoin less appealing. 

Other Bitcoin stocks serve as cryptocurrency's financial plumbing. Silvergate Capital (SI) is known as a "crypto bank" and runs a digital-currency exchange platform. 

Coinbase is a leading Bitcoin and cryptocurrency exchange, and makes money from fees on transactions. But the companies' stock prices are still affected by the day-to-day fluctuations of Bitcoin and other crypto prices.

Other companies, like the trading platform Robinhood (HOOD), can sometimes function as crypto stocks. Block (SQ), formerly known as Square, as well as PayPal (PYPL) also allow their users to buy Bitcoin.

Coinbase stock began trading on April 14. COIN stock fell almost immediately, tumbling from an opening day high of 429.74 to 208 on May 19. The stock rebounded through October, but later gave up those gains. 

Coinbase in February reported fourth-quarter results that soundly beat expectations. However, the company noted that for the first quarter, it had seen "a decline in crypto asset volatility and crypto asset prices compared to all-time high levels in Q4 2021."

"Recent market performance has been driven by macroeconomic factors such as tightening financial conditions (particularly after the U.S. Federal Reserve raised the possibility of quantitative tightening in 2022) 
and geopolitical instability in parts of the world," Coinbase said

The company has said it wants to become the "Amazon (AMZN)" of digital assets. But putting more of those assets on its platform could bring complications with compliance, and currencies that pose bigger risks to investors.

Silvergate Capital is the holding company for Silvergate Bank, which provides financial services for digital currencies that try to keep up with the 24/7 pace of cryptocurrency trading

SI stock broke out of a loose cup-with-handle base in late October as Bitcoin powered to record highs. But the stock sold off after consolidating. Silvergate has a 94 Composite Rating and a 97 EPS Rating.

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