Author: John Nelson
Are you thinking of buying crypto stocks, but are discouraged by the current situations in the cryptocurrency market? We completely understand.
So here are three crypto stocks we think you should buy ahead of a crypto rebound. Let’s dive in.
3 Crypto Stocks before the Crypto Rebound
Many cryptocurrencies are currently encountering poor performances, but the same goes for companies whose business models are crypto-centered.
Performance in the crypto market seems to fluctuate daily, but some stocks like Coinbase (COIN 0.69%), Marathon (MARA 0.50%), and Block (SQ 5.70%) look like they are in the best position to capitalize on a potential cryptocurrency rebound.
As of July 12, 2022, Coinbase shares were down by a whopping 78%, and things weren’t looking brighter with the broader problems plaguing the crypto market.
However, Coinbase has shown that it can excel when the conditions are right, which makes it a good stock to hold in a turnaround scenario.
Coinbase generates most of its money from transaction fees, which made up 87% of the company’s total revenue in Q1 2022.
So as trading volume for cryptocurrency reduced on Coinbase, the company’s net revenue followed with a 27% decrease from last year.
However, if the crypto market experiences a rebound, it’s clear how Coinbase would benefit from the increase in activity on its network.
In 2021, when the cryptocurrency market was hot, Coinbase generated $3.6 billion in profit (an increase of 1,025%) compared to the previous year.
Besides brokerage services, Coinbase Ventures (the company’s investment arm) has hundreds of investments in crypto businesses worldwide which will help to increase their valuation when things turn around.
As for the market cap, Marathon Digital Holdings is the largest among other cryptocurrency mining companies. Marathon prioritizes innovation in its business model, which has helped the company to survive multiple crypto winters.
At the moment, Marathon is planning to increase its mining power by 50% by adding 19,000 miners. But that’s not all.
The company also plans to increase its hashrate from 3.9 EH/s to 23.3 EH/s (almost 800% increase), and it is said to be accomplished by adding an extra 49,000 miners by the end of September. In addition, Marathon has pledged to be carbon neutral by 2023.
These bad times for cryptocurrency have taken a toll on mining companies, but investors should keep a close eye on the companies that continue to innovate in this field.
Block isn’t as involved in cryptocurrency as Coinbase and Marathon, but the company has a strong interest in Bitcoin.
Block’s CEO (Jack Dorsey) is a major proponent of Bitcoin that supposedly stepped down as Twitter’s CEO to focus more on Bitcoin.
In 2022, Block introduced the Bitcoin Lightning Network (a Bitcoin scaling solution) to Cash App, which has over 40 million users.
Now Cash App users directly purchase Bitcoin with leftovers from credit or debit card purchases. Also, Cash App users can automatically convert a portion of their paycheck to Bitcoin.
In addition, Block is partnering with Tesla to mine Bitcoin in Texas using Megapacks and solar panels.
The company also has an innovative yet ambitious idea of developing a decentralized Bitcoin exchange called Web5 (a Bitcoin-centered form of Web3).
Generally, Bitcoin benefits from Block’s effort to bring millions of users to the Bitcoin network. Meanwhile, Block benefits from the rising interest and adoption of Bitcoin as their platform is among the easiest ways for new users to get into bitcoin.
Investors should note that Bitcoin makes only a small portion of Blocks business compared to Coinbase or Marathon, which are more cryptocurrency-centered.