Crypto-linked stocks offer exposure to the highly volatile cryptocurrency sector without direct exposure to cryptocurrency assets. Investors can combine innovation with massive growth potential, and balance risks by owning crypto-related stocks, which also helps diversify portfolios.
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What are Crypto-Linked Stocks?
Crypto-linked stocks are publicly listed companies active in the cryptocurrency sector or with exposure to it through service offerings. They include crypto mining companies, financial firms that offer custodial services or bridge cryptocurrency with traditional finance, brokerages with a massive crypto trader base, cryptocurrency exchanges, semiconductor companies that provide the necessary hardware, and utilities that power them.
Why Should You Consider Investing in Crypto-Linked Stocks?
The cryptocurrency sector continues to mature, with its market capitalization exceeding $3 trillion. Most importantly, the blockchain technology underlying cryptocurrencies has numerous real-world applications and spans industries. Crypto-linked stocks offer investors another diversification tool with exposure to different trends. While cryptocurrency experiences extreme volatility, crypto-linked stocks are less volatile and more diversified, while providing excellent long-term potential.
Here are a few things to consider when evaluating crypto-linked stocks:
- Invest in a combination of crypto-linked stocks to ensure a well-diversified portfolio spanning the core cryptocurrency sector, ideally in a separate portfolio, given the higher volatility.
- Monitor regulatory changes, as they can have a material positive or negative impact on crypto-linked stocks.
- Stay informed on cryptocurrency trends, as they will impact the performance of crypto-linked stocks.
What are the Downsides of Crypto-Linked Stocks?
Volatility and risk factors are far greater for crypto-linked stocks than for other stocks. The dynamic regulatory environment can pose short-term challenges and can sometimes restrict growth. Unlike the early days of cryptocurrencies, where retail attitudes and trading behavior dominated, institutional investors have entered the sector. While the capital injection powered cryptocurrencies like Bitcoin and Ethereum higher, it has sparked different opinions and is changing the industry’s narrative and direction.
Here is a shortlist of currently attractive crypto-linked stocks:
- PayPal Holdings (PYPL)
- MARA Holdings (MARA)
- Strategy Inc (MSTR)
- Block (XYZ)
- Hut 8 (HUT)
- IREN (IREN)
- Riot Platforms (RIOT)
PayPal Fundamental Analysis
PayPal is a financial technology company focused on mobile and online payments. It added support for cryptocurrency purchases, operates in 202 markets, has 425M active accounts, and supports 25 fiat currencies. It is also a member of the NASDAQ 100, the S&P 100, and the S&P 500.
So, why am I bullish on PYPL following its recent breakout?
The introduction of PayPal Links, which will support cryptocurrency transactions, should boost its presence in the cryptocurrency market, revenues, and transaction volumes. I remain bullish about its recent partnership announcements with OpenAI, Alphabet, and Wix, while the first-ever dividend confirms management’s confidence in its future revenue potential. Its move into the Buy Now Pay Later (BNPL) space, where KKR acquired €65 billion of its European loans, remains an underappreciated bullish catalyst.
Metric | Value | Verdict |
P/E Ratio | 12.59 | Bullish |
P/B Ratio | 2.86 | Bearish |
PEG Ratio | 0.63 | Bullish |
Current Ratio | 1.34 | Bearish |
Return on Assets | 6.16% | Bullish |
Return on Equity | 24.34% | Bullish |
Profit Margin | 14.96% | Bullish |
ROIC-WACC Ratio | Positive | Bullish |
Dividend Yield | 0.96% | Bearish |
PayPal Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 12.59 makes PYPL an inexpensive stock. By comparison, the P/E ratio for the S&P 500 is 30.61.
The average analyst price target for PYPL is $82.82. This suggests excellent upside potential with decreasing downside risks.
PayPal Technical Analysis
PayPal Price Chart
- The PYPL D1 chart shows price action approaching its descending 38.2% Fibonacci Retracement Fan level.
- It also shows PayPal breaking out above its horizontal support zone.
- The Bull Bear Power Indicator turned bullish with an ascending trendline.
My Call on PayPal
I am taking a long position in PYPL between $61.29 and $63.17. I am buying into low valuations, its growing presence in AI and crypto commerce solutions.
- PYPL Entry Level: Between $61.29 and $63.17
- PYPL Take Profit: Between $79.22 and $82.82
- PYPL Stop Loss: Between $53.06 and $55.85
- Risk/Reward Ratio: 2.18
MARA Holdings Fundamental Analysis
MARA Holdings (MARA) is a digital asset technology and cryptocurrency mining company. It is the second largest corporate holder of Bitcoin.
So, why am I bullish on MARA despite its 50%+ correction?
I am bullish on MARA Holdings following the finalization of its joint venture with MPLX LP to develop integrated power generation facilities to provide long-term access to low-cost natural gas. It is essential for miners and AI data centers, and this deal further diversifies its revenue stream. MARA closely follows Bitcoin’s price, with over 53,000 BTC on its balance sheet, and any reversal in price action will boost this crypto-linked stock.
Metric | Value | Verdict |
P/E Ratio | 4.60 | Bullish |
P/B Ratio | 0.81 | Bullish |
PEG Ratio | Unavailable | Bearish |
Current Ratio | 2.09 | Bullish |
Return on Assets | 10.12% | Bullish |
Return on Equity | 17.96% | Bullish |
Profit Margin | 100.82% | Bullish |
ROIC-WACC Ratio | Negative | Bearish |
Dividend Yield | 0.00% | Bearish |
MARA Holdings Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 4.60 makes MARA an inexpensive stock. By comparison, the P/E ratio for the S&P 500 is 30.61.
The average analyst price target for MARA Holdings is $23.32. This suggests excellent upside potential with acceptable downside risks.
MARA Holdings Technical Analysis
MARA Holdings Price Chart
- The MARA D1 chart shows price action approaching its descending 38.2% Fibonacci Retracement Fan level.
- It also shows MARA Holdings breaking out above its horizontal support zone.
- The Bull Bear Power Indicator is bearish with an ascending trendline and is approaching a bullish crossover.
My Call on MARA Holdings
I am taking a long position in MARA Holdings between $11.10 and $12.69. I am bullish on its low valuations, cash flow generation, and efficient Bitcoin mining operations.
- MARA Entry Level: Between $11.10 and $12.69
- MARA Take Profit: Between $20.47 and $23.45
- MARA Stop Loss: Between $8.76 and $9.23
- Risk/Reward Ratio: 4.00
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