DeutschOn the surface, investors looking at the crypto market think that money can only be made in connection with the boom in digital currencies through direct purchases and derivatives such as contracts for difference. However, these are just two ways to convert developments in the market into returns. The stock market is also increasingly offering opportunities. Anyone who does not want to invest (only) directly in cryptos will find incentives in the following sections. Stocks with crypto exposure are interesting because they have recently developed less volatilely in phases of extreme price fluctuations than coins like Bitcoin and Ethereum. Crypto stocks are also advantageous because inexperienced investors are usually less apprehensive. There is a good reason why stocks are considered an understandable asset class. Anyone who deals with the matter in more detail can basically recognize a difference in crypto-related securities.
Namely, the one between companies that themselves help shape the development of the market in one form or another, and those companies that in turn act as investors in the market.
Tesla’s Billion-Dollar Bitcoin Purchase & Musk’s Influence on the Market
One of the best-known examples of a major investor in the crypto market is Tesla and SpaceX founder Elon Musk or his company Tesla. The electric car manufacturer secured Bitcoins worth 1.5 billion US dollars at the beginning of 2021, fueling the BTC price. Musk was later also responsible for a slump when he expressed environmental concerns about the leading crypto currency via Twitter and announced that Tesla would remove the Bitcoin payment option for car purchases that had been introduced shortly before. The US software giant MicroStrategy also has large amounts of Bitcoins, as does the US financial group Galaxy Digital. Billionaire Jack Dorsey also repeatedly influenced market movements with public statements. Dorsey’s company Square (also a financial services provider) has also repeatedly invested in digital currencies.
Crypto Investments via Fund Providers/Asset Managers
Anyone who shies away from direct purchases but wants to have cryptocurrencies indirectly in their portfolio can increasingly invest in the market via fund service providers. Institutional investors worldwide swear by shares such as those of the Grayscale Bitcoin Trust from Grayscale. Private investors can also participate in positive price trends of digital currencies at an increasing number of providers. Funds have long been focusing not only on Bitcoin. Many other coins and tokens will play a role in the future. Apropos funds: Many investors worldwide are waiting for exchange-traded funds (ETFs) – there have already been approvals in Canada, and a number of prospective providers in the USA are waiting for corresponding licenses from the SEC supervisory authority.
Crypto Exchanges and Trading Platforms
As a result of the boom in the crypto market, it was only a matter of time before the first major exchanges would dare to go public. The US exchange Coinbase is playing a pioneering role. The Coinbase share was listed on the US Nasdaq stock exchange as a direct placement on April 14, 2021. After the market launch, the company quickly reached a market capitalization of more than 100 billion USD. In the course of the temporary Bitcoin slump, the share also recorded a significant minus. Recently, there have been numerous reports about other exchanges that could soon follow Coinbase. The share of the renowned Bitcoin Group should be mentioned here as a European counterpart. The company not only concentrates on investments in cryptocurrencies; the provider also invests in companies that work on blockchain projects. Riot Blockchain from the USA is pursuing a comparable investment strategy and, for example, acquired mining service providers.
Chip Manufacturers and Technology Companies
Companies such as Nvidia, AMD, but also IT giants such as Microsoft and IBM recognized the crypto trend early on. Graphics chips, for example, are an essential instrument for mining cryptocurrencies such as Bitcoin. Without powerful chips, the development of applications such as smart contracts and DApps, as used in many networks based on the Ethereum blockchain, would be unthinkable. By buying shares in the companies mentioned, shareholders are also indirectly active in the crypto market. Microsoft, by the way, even offers the Azure cloud service itself. This system has already enabled the development of many exciting blockchain concepts.
Marathon Digital from the USA is just a mining service provider whose securities have already brought handsome profits to some investors. The share prices of such companies develop in close dependence on the prices of the currencies they mine. The same applies to the crypto exchanges mentioned above, whose share prices fluctuate more or less strongly when crypto prices rise or fall significantly.
Listed Companies that “Launch” Their Own Cryptocurrencies
The social media giant Facebook announced its own stablecoin some time ago. This led to some political resistance, as many states fear a destabilization of their fiat currencies. In the future, many experts expect many such reports and intentions. The US bank JP Morgan has already launched its JPM Coin in order to take advantage of the benefits of the blockchain. In this way, its own market is likely to develop in the banking sector in the coming years, which can and probably will attract many shareholders.
We see:
There are a number of options for trading stocks related to the crypto sector. It is also certain that there will be many more stock alternatives in the coming years. As with all securities, however, investors should be familiar not only with the opportunities, but also with the risks of stock trading in this context. With some of the stocks mentioned, the influence of crypto currencies is very clear. Other securities – such as those of Microsoft or other crypto and blockchain-interested companies such as Google – prove to be more stable in value in the event of setbacks in the crypto market. Here, as with stock trading in general: diversification is the be-all and end-all for shareholders. Also and especially with crypto stocks.
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