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These could be the best performing crypto stocks through 2030
Currently trading near an all-time high, Bitcoin (CRYPTO:BTC) continues to lead the cryptocurrency market higher. As a result, analysts and investors continue to raise their price estimates to a much higher level Bitcoin it could go. It comes from one of the most aggressive price predictions Cathie WoodArk Invest, which detailed a scenario where Bitcoin could surpass the $2 million mark by 2030.
If this turns out to be true, people will be kicking themselves for not investing in stocks whose success is heavily tied to the price of Bitcoin. The two I’m looking at right now are MicroStrategy (NASDAQ: MSTR) e Global Coinbase (NASDAQ: MONEY).
MicroStrategy
Over the past year, investors have viewed MicroStrategy as a proxy stock for investing in Bitcoin. This is because MicroStrategy currently has the largest holdings in Bitcoin of any publicly traded company in the world. The company currently has 193,000 Bitcoins on its balance sheet, worth an estimated $13 billion at today’s market prices. For comparison, MicroStrategy’s total stock market capitalization is $21 billion.
And, if anything, this extremely leveraged Bitcoin position will only grow over the next few years as the company just announced a massive new $700 million convertible note offering. The purpose of the new offer is incredibly simple: buy more Bitcoin. So get ready to hear more from MicroStrategy about its all-in Bitcoin strategy. Its aggressive Bitcoin strategy has already pushed the company’s stock price up to a 24-year high.
The only caveat here, of course, is that the company could reach a point where it simply has too much Bitcoin on its balance sheet. If the price of Bitcoin were to decline significantly for an extended period of time, MicroStrategy’s valuation could plummet.
For this reason, I would like to see MicroStrategy continue to develop its core software business in the coming years. The company has hinted that new AI-related software offerings may be on the way. This would help provide at least some diversification and alleviate the risk that the company’s Bitcoin holdings are worth more than half the value of the company itself.
Global Coinbase
The Coinbase Global stock price is also affected by the price of Bitcoin, but not nearly to the same extent as MicroStrategy. From my perspective, Coinbase is much more of a bet on the future direction of the cryptocurrency market, and not just the future trajectory of Bitcoin.
That said, the core element of Coinbase’s business model – investors placing trades on its cryptocurrency trading platform – has been boosted significantly by recent price action in Bitcoin. With Bitcoin hitting all-time highs, retail investors have been lured back into the cryptocurrency market. Bitcoin accounts for more than a quarter of all trading volume on the Coinbase platform, so this is a positive development. Presumably, an expanding bull market rally would push trading in other cryptocurrencies as well.
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At the same time, Coinbase is an indirect beneficiary of the new Bitcoin spot ETFs. This is because Coinbase is the custodian of many of the new ETFs, including the highly successful ones launched by Black rock and Arca Investire. This new custodian fee income will increase Coinbase’s subscription and service revenue. Over time, this will help smooth out the company’s revenue during tough market times.
This non-trading revenue is actually a rapidly growing category for Coinbase and also includes stablecoin revenue and blockchain rewards revenue. This is why I think Coinbase is really a play on the growth of the entire crypto and blockchain space, and not just Bitcoin.
What will happen in 2030?
Keep in mind that it is impossible to predict exactly what will happen in the cryptocurrency market over the next nearly seven years. There is too much uncertainty regarding the regulatory environment and the crypto asset class has historically been extremely volatile.
But it is possible to piece together key trends and milestones that could push crypto stocks higher. If both retail and institutional investors continue to allocate a larger share of their portfolios to Bitcoin, this is good news for crypto stocks. And if the Securities and Exchange Commission continues to approve new cryptocurrency investment products, that would also be a positive development.
As long as Bitcoin remains one of the best-performing assets, it is very likely that crypto stocks like MicroStrategy and Coinbase Global will follow suit.
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Domenico Basulto has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
Prediction: These could be the best performing crypto stocks through 2030 was originally published by The Motley Fool