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These 2 stocks offer safer ways to invest in cryptocurrencies
Cryptocurrency markets have been hot this year Bitcoin (CRYPTO: BTC) reaching new all-time highs in March. One way new investors have gained exposure to the cryptocurrency is through Exchange Traded Funds (ETFs), as regulators approved many Bitcoin spot ETFs earlier this year.
These ETFs track Bitcoin and give investors direct exposure to its price movements. This means that they won’t necessarily provide you with safer, less volatile options for investing in Bitcoin. You will still be vulnerable to wild swings in the cryptocurrency market.
You might instead consider investing in stocks that have strong underlying assets and exposure to Bitcoin. Two such examples are To block (NYSE: SQ) e PayPal (NASDAQ:PYPL). Here’s why these may be better options for you than spot Bitcoin ETFs.
1. Block
Block, the company formerly known as Square, helps merchants easily process payments using its app and point-of-sale devices. Bitcoin has also been a key part of his business.
It was the company’s main source of revenue last year; Bitcoin-related transactions brought in as much as $9.5 billion in sales, accounting for 43% of the company’s revenue ($21.9 billion). Block’s next largest source of revenue came from its subscriptions and services, which generated $5.9 billion in sales. Even though Block doesn’t generate high margins on Bitcoin transactions, the company still reported an overall profit last year with net income of $9.8 million.
The company’s Cash App makes it easy for people to buy and sell Bitcoin. And Block is going even deeper into the cryptocurrency industry as it plans to build its own Bitcoin mining system. It also recently finished developing its own Bitcoin mining chip.
For cryptocurrency investors, Block may be a safer long-term trade than investing in spot Bitcoin ETFs. With a diversified and profitable business, it is easy to track the company’s performance and growth; it is a less speculative investment than cryptocurrencies can be. While investors will still face risks with the stock, given the role Bitcoin plays in Block’s operations, it could represent a better overall investment option.
The stock currently trades at a rising P/E ratio (PEG) below 0.9, suggesting this could be a convenient option for growth investors to hold onto for the long term.
2. PayPal
PayPal also allows users to buy and sell cryptocurrencies, but its operations are smaller and it doesn’t have an entire segment dedicated to Bitcoin-related revenue like Block does. In this sense, PayPal could be an even safer option for investors. However, he is still clearly bullish on cryptocurrencies, as he has launched his own stablecoin, PayPal USD, which he says is designed for payments.
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Unlike Block, investors expect consistent profits from PayPal. The big problem for the company was simply its disappointing growth rate. But it is a fairly safe option for cryptocurrency enthusiasts.
The payment processing company released its earnings on Tuesday, and its revenue for the first three months of the year came in at $7.7 billion, up 9% year over year. Net income of $888 million also increased 12% compared to the same period last year.
PayPal is another stock with a decent valuation, as it trades at just 13 times expected future earnings (based on analyst expectations) and its PEG ratio is around 0.6. Whether you want relatively safe exposure to cryptocurrencies or simply want to own low-cost growth stocks, PayPal can be a great option to add to your portfolio today.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin, Block and PayPal. The Motley Fool recommends the following options: Short June 2024 $67.50 PayPal Calls. The Motley Fool has a disclosure policy.
Forget Spot Bitcoin ETFs – these 2 stocks offer safer ways to invest in cryptocurrencies was originally published by The Motley Fool