10 Crypto Stocks for 2022

Published on January 7, 2022 at 9:01 am by Aima Zaheer in Hedge Funds, News

In this article, we will discuss 10 crypto stocks for 2022.

According to Deloitte, more operating organizations began allocating resources to digital assets and cryptocurrencies in 2020, reflecting a divergence from more traditional investing in this field. MicroStrategy Inc., for example, stated last December that it will spend more than $1 billion on Bitcoin in 2020, describing the plan as an investment that would “provide the opportunity for better returns and preserve the value of our capital over time compared to holding cash.” There are a variety of reasons for a company to add digital assets to its balance sheet, including seeking asymmetric risk returns, or as a defensive measure against changing fiat currencies, or as part of a business plan to embrace contemporary technology.

According to an estimate from 2020, over 2,300 US companies accept Bitcoin, excluding Bitcoin ATMs. Key findings of a report published by PWC revealed that crypto hedge funds’ total assets under management (AUM) nearly doubled in 2020, reaching $3.8 billion (up from $2 billion in 2019). Moreover, crypto hedge funds generated an average return of 128% in 2020, up from 30% in 2019.

Some of the leading companies taking an active interest in cryptocurrency include Meta Platforms, Inc. (NASDAQ:FB), Shopify Inc. (NYSE:SHOP), and PayPal Holdings, Inc. (NASDAQ:PYPL). While Meta Platforms, Inc. (NASDAQ:FB) is working on the development of a new cryptocurrency known as Diem, Shopify Inc. (NYSE:SHOP) and PayPal Holdings, Inc. (NASDAQ:PYPL) are working on adopting cryptocurrency as a payment method.

Photo by Austin Distel on Unsplash

Our Methodology

In this article, we have highlighted 10 stocks that can be bought due to their exposure to the crypto world. Either these companies are involved in the creation of a new cryptocurrency, holding a significant amount of cryptocurrencies, providing a digital wallet for cryptocurrencies, or operating an exchange to trade cryptocurrencies. Given the volatility in cryptocurrencies, most of these companies have a primary business driving their revenue and bottom line, but their exposure to the cryptocurrency space will act as a growth catalyst.

10 Crypto Stocks for 2022

10. MicroStrategy Incorporated (NASDAQ:MSTR)

Number of Hedge Funds: 16

MicroStrategy Incorporated (NASDAQ:MSTR) is a provider of business intelligence, cloud-based services, and mobile software. The Virginia-based company revealed that it bought 1,432 Bitcoins between November 29 and December 8. Following this trade, the holding of the company has increased to 122,478 Bitcoins. MicroStrategy Incorporated (NASDAQ:MSTR) has paid $3.66 billion to buy these Bitcoins over a long period, resulting in an average price of $29,861 per Bitcoin. The current market value of these Bitcoin stands at more than $5.8 billion. This means that MicroStrategy Incorporated (NASDAQ:MSTR) has an unrealized gain of more than 58% on its investment in Bitcoin.

In a research note issued on October 29, Joseph Vafi at Canaccord increased the price target on MicroStrategy Incorporated (NASDAQ:MSTR) from $780 to $871 and reiterated a Buy rating on the stock. Joseph thinks that the sum-of-the-parts analysis has not caught up with the stock price. The analyst expects the company to develop further in 2022 on the back of its improving core BI software business. This will receive a boost through the introduction of new cloud offerings and the rising value of Bitcoin. The management of MicroStrategy Incorporated (NASDAQ:MSTR) also believes that it could leverage its programmers into executing blockchain analytics.

Alger shared its stance on MicroStrategy Incorporated (NASDAQ:MSTR) in its Q1 2021 investor letter. Here’s what the firm said:

“MicroStrategy Incorporated was among the top contributors to performance. MicroStrategy is a global leader in enterprise analytics software and services. MicroStrategy’s core software platform provides customers with visualization and reporting capabilities, mobility features and custom applications to help with complex business questions. Today, MicroStrategy has over 4,000 customers worldwide. In August 2020, MicroStrategy decided to make bitcoin its preferred reserve currency. To date, MicroStrategy has purchased over 90,000 bitcoins at an aggregate purchase price of $2.17 bi11 ion and an average price of over $23,985 per bitcoin. Going forward, MicroStrategy plans to use excess cash generated by its core business to purchase additional bitcoin.

Shares of MicroStrategy outperformed in the first quarter due to the appreciation of the company’s bitcoin asset, as the price of bitcoin relative to the U.S. dollar rose materially in the quarter. This bitcoin appreciation was driven by concerns about U.S. dollar inflation as well as other public companies deciding to acquire bitcoin to diversify reserve assets. MicroStrategy is establishing itself as a thought leader in the bitcoin space, and the company hosted an event at its February user conference to help other organizations understand the benefits of bitcoin as a reserve asset. MicroStrategy’s core software business is also benefitting from its status as a leader in the bitcoin space, with the increased public attention aiding MicroStrategy’s recruitment and marketing efforts as the software business continues to transition to a cloud-based subscription model.”

Apart from MicroStrategy Incorporated (NASDAQ:MSTR), companies like Meta Platforms, Inc. (NASDAQ:FB), Shopify Inc. (NYSE:SHOP), and PayPal Holdings, Inc. (NASDAQ:PYPL) have also expanded into the cryptocurrency market.

9. Robinhood Markets, Inc. (NASDAQ:HOOD)

Number of Hedge Funds: 20

Robinhood Markets, Inc. (NASDAQ:HOOD) is a renowned online brokerage application known for its low trade commissions. Robinhood is aiming to democratize personal finance by enabling commission-free trades. Robinhood Markets, Inc. (NASDAQ:HOOD) has no long-term debt on its books and has a short-term debt of $3.13 billion along with other current liabilities of $1.6 billion as opposed to $6.17 billion in cash and cash equivalents.

Users on the platform have the option to trade commodities, cryptocurrencies, stocks, and other financial instruments. Users have the option to trade Bitcoin, Ethereum, and Dogecoin without paying any commission on their trade. During Q3 2021, Robinhood Markets, Inc. (NASDAQ:HOOD) generated $51 million in sales through cryptocurrency trading. This was roughly 19% of the total quarterly revenue of $267 million.

To further streamline cryptocurrency trading on its platform, the California-based company announced the acquisition of Cove Markets on December 13. Cove Markets is a “cross-exchange trading platform” that provides convenience to its user in managing their cryptocurrency accounts. On the same day, ARK Investment announced that it had bought 261,000 shares of Robinhood Markets, Inc. (NASDAQ:HOOD). Following this trade, Cathie Wood’s hedge fund increased its holding in Robinhood Markets, Inc. (NASDAQ:HOOD) by 3.4 million shares since the start of November 2021. The hedge fund that is only focused on disruptive innovation is accumulating the stock following its earnings results.

8. Coinbase Global, Inc. (NASDAQ:COIN)

Number of Hedge Funds: 50

Coinbase Global, Inc. (NASDAQ:COIN) is one of the leading cryptocurrency exchange platforms. Institutions are rapidly adopting currencies, and the platform will be a key beneficiary of this development.

Of the 867 hedge funds being tracked by Insider Monkey, 50 hedge funds held a stake worth $2.97 billion in Coinbase Global, Inc. (NASDAQ:COIN) at the end of Q3, up from 49 in the preceding quarter.

In a report released on November 10, Joseph Vafi at Canaccord increased the price target on Coinbase Global, Inc. (NASDAQ:COIN) from $325 to $342 and maintained a Buy rating on the stock. The analyst believes that with the passing of every quarter, Coinbase Global, Inc. (NASDAQ:COIN) is strengthening its leading position in the emerging blockchain and cryptocurrency universe. He was impressed by the number of users engaging themselves in activities on the exchange other than investing. Joseph summed up his analysis by saying that with the introduction of new products and services like NFT and direct deposit, user engagement and wallet size will increase further, which will be beneficial for Coinbase Global, Inc. (NASDAQ:COIN).

7. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Funds: 60

Tesla, Inc. (NASDAQ:TSLA) is primarily an electric car manufacturer, but the Austin, Texas-based entity has bought $1.5 billion worth of cryptocurrencies. The corporation owns around 42,000 Bitcoin with a current market value of over $2 billion. In 2021, Tesla, Inc.’s (NASDAQ:TSLA) CEO Elon Musk announced that his company would accept Bitcoin as a form of payment. However, he retracted his statement due to environmental issues related to the mining of Bitcoin.

On December 14, Elon Musk shared that Tesla, Inc. will be accepting Doge as payment for buying merchandise from the company’s e-commerce website on a test basis. Musk has also highlighted the possibility of accepting the meme cryptocurrency as a possible payment method for Tesla, Inc.’s (NASDAQ:TSLA) vehicles. Following this development, the value of Dogecoin rocketed by 20%. Dogecoin is a meme cryptocurrency that was created by Billy Markus and Jackson Palmer in 2013. In May 2021, the value of the cryptocurrency rocketed to an all-time high of 74 cents, as opposed to less than a cent at the start of the year. Presently, it is trading at 18.2 cents.

Tesla, Inc. (NASDAQ:TSLA) was mentioned in the Q3 investor letter of Worm Capital LLC. Here’s what the investment management firm said about the company:

“Our core portfolio as of this writing—TSLA, SPOT, SHOP, ABNB, and AMZN—are all premier examples of companies that use the concept of aggregation of marginal gains to continuously improve their value proposition for customers. After all, what is innovation if not just a continuous search for fractional advantages in business?

The way we see it, Tesla is perhaps the generational example of the marginal gain aggregation theory. It’s also been our largest position for several years now. There are many ways to characterize and value this business (see previous letters for longform write-ups), but perhaps the best way to think about the company is that it is a highly vertically-integrated software and hardware firm that’s devoted entirely to aggregating marginal gains across its organization. The goal? Lower costs, improve thruputs, and dramatically enhance the value proposition—at scale—for consumers…” (Click here to see the full text)

6. CME Group Inc. (NASDAQ:CME)

Number of Hedge Funds: 64

CME Group Inc. (NASDAQ:CME) is the biggest operator of financial derivatives exchange that allows investors and speculators to buy and sell futures and options. Futures provide a way of speculating the future price of an underlying asset. Meanwhile, options allow the holder to buy or sell an asset in the future at an already decided price. Exchanges operated by CME Group Inc. (NASDAQ:CME) allow the trading of a wide variety of assets ranging from commodities, currencies, and stocks. The trading of currency options and futures makes the Chicago, Illinois-based corporation a cryptocurrency play for 2022.

In 2017, for the trading of bitcoin futures, CME Group Inc. (NASDAQ:CME) created the first exchange. Three years later, the entity took this a step further by introducing a market for Bitcoin futures. In early 2021, CME Group Inc. (NASDAQ:CME) introduced Ether futures on the exchange. Ether is the underlying currency of the Ethereum blockchain network. Meanwhile, the holders of these cryptocurrencies have the option to hedge their portfolios from volatility in the prices of cryptocurrency. Andrei Kazantsev, global head of cryptocurrency at the Goldman Sachs Group, Inc. (NYSE:GS), thinks that the next progress in the world of cryptocurrencies will be the emergence of more liquid options markets as financial institutions increase their exposure in the rapidly growing asset class.

Cooper Investors discussed its stance on CME Group Inc. (NASDAQ:CME) in its Q1 2021 investor letter. Here’s what the firm said:

“CME has been owned by the portfolio for five years. CME’s strategic positioning as a monopolistic global financial exchange operator will continue to afford the business a highly attractive margin profile. CME is well managed however we can no longer identify clear value latency opportunities for the management team to execute against and so decided to exit our position.”

In addition to CME Group Inc. (NASDAQ:CME), Meta Platforms, Inc. (NASDAQ:FB), and Shopify Inc. (NYSE:SHOP), PayPal Holdings, Inc. (NASDAQ:PYPL) is also one of the leading crypto stocks for 2022.

5. Shopify Inc. (NYSE:SHOP)

Number of Hedge Funds: 73

Shopify Inc. (NYSE:SHOP) has allowed merchants on its platform to accept payments in cryptocurrencies for their goods and services. The Ottawa, Canada-based entity provides online merchant services to 1.75 million retailers globally. Shopify Inc.’s (NYSE:SHOP) focus on cryptocurrency payment processing has increased following the integration of CoinPayments earlier in 2021 to boost the e-commerce experience of customers globally. Cryptocurrency acts as a secure payment method due to the strong controls and stability embedded in blockchain technology. Furthermore, the transaction fee is only 0.5%.

Shopify Inc. (NYSE:SHOP) expects the adoption of cryptocurrency to increase conversions and bring a greater customer in-flow in the form of cryptocurrency users. In August 2021, Binance, the biggest cryptocurrency exchange in the world, allowed its users to make payments through cryptocurrency on Shopify Inc. (NYSE:SHOP) due to a partnership with crypto-fiat gateway Alchemy Pay. This partnership enables users to make payments in more than 40 cryptocurrencies.

In its Q2 2021 investor letter, Worm Capital LLC discussed its stance on Shopify Inc. (NYSE:SHOP). Here’s what the firm had to say about the company:

“In particular, the very nature of travel is changing: Longer stays, more flexible remote work policies, and so on. As its marketplace matures, we see significant similarities to our position in Shopify: An international focus led by managers who understand that, in land-grab environment, focusing on its unique value proposition for its sellers—i.e. keep costs low, improve the platform with additional features, etc.—takes precedent over short-term earnings. In other words, we like businesses that play the long game. Unlike Airbnb, Shopify drove positive attribution this past quarter. Still, we think this opportunity is still vastly undervalued over the long-term.

Last year, in the Q2 2020 Investor Letter, we wrote a bit about the similarities and differences between AMZN and SHOP, but concluded they “both display winner-take-most dynamics in their respective domains.” We still believe that thesis is true: E-commerce is still, relatively speaking, in its early days. Despite the pandemic push, e-commerce retail still represents less than 15% of overall retail sales, per latest Fed data.

What that means, in practice, is that the opportunity for low-end disruption (i.e. create a scalable backbone for sellers to launch e-commerce business cheaply) is an enormous, underappreciated opportunity to create new economic value. Shopify is growing its GMV at high velocity (114% YoY in its most recent quarter to over $37 billion) but it’s a tricky business to value—which is good. We like tricky valuations. Our research process looks out several years into the future, which is really the only way to value a business properly—especially in a disruptive environment. (Trying to look at potential short-term earnings or even a simple price-to-sales multiple is not a good way to model out valuations on Shopify.) When thinking about a position like Shopify, we view them as generational company—much like AMZN—that is building the global infrastructure to enable small and medium-sized business to transact online, and, most importantly, keep their unique identity and branding.

Where AMZN optimizes for efficiency, SHOP optimizes for experience. The scale of this opportunity is vast, and Shopify’s reach is wide. The focus—much like ABNB—is keeping costs low for sellers, attract new vendors, improving the ecosystem for merchants. “The rebels are winning,” Shopify president Harley Finkelstein said recently (in a quote we liked so much we made it the title of this letter). “We are betting on a different vision of the future of commerce. We are making it possible for every business to present their brand in their own unique way. A stark contrast to selling on a centralized marketplace.”

4. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Funds: 83

NVIDIA Corporation (NASDAQ:NVDA) is not directly involved in the cryptocurrency value chain. However, the company is involved in the manufacturing of Graphics Processing Units (GPUs), an integral element in the mining of cryptocurrencies. This makes the company a great play in the cryptocurrency universe.

Blockchain technology and the science of cryptography need a massive amount of computational power, and GPUs are used to provide the required power. GPUs have been known for accommodating the graphics of premium video games; however, they are now employed at data centers and crypto mining locations. There have been instances when the stock price of the Santa Clara, California-based company has experienced a sudden surge following an increase in the demand for GPUs for cryptocurrency mining.

In March 2021, to capitalize on the boom of cryptocurrency mining, NVIDIA Corporation (NASDAQ:NVDA) launched the CMP series, a line of GPUs dedicated to cryptocurrency mining with a hash rate ranging from 26 MH/s to 86 MH/s. This move was made to ensure that there is not a shortage of gaming GPUs as professional miners bought these GPUs to fulfill their need for mining cryptocurrency. Since its launch, the CMP chip has generated total revenue of $526 million for NVIDIA Corporation (NASDAQ:NVDA). This is equivalent to 3% of the $19.27 billion in total revenue generated by NVIDIA Corporation (NASDAQ:NVDA) during the same period.

NVIDIA Corporation (NASDAQ:NVDA) was mentioned in the Q3 2021 investor letter of Harding Loevner. Here’s what the investment management firm said:

“The proliferation of devices using chips, whether EVs, “things” in lol, or embedded systems more generally, results in the generation of oceans of data potentially needing to be stored, processed, and analyzed. NVIDIA, the leading chip designer wellknown for its graphic processing units and its complementary CUDA software ecosystem, is at the forefront of the effort to provide the analytical platform needed to unlock the full potential of such specialist processors.”

3. Block, Inc. (NYSE:SQ)

Number of Hedge Funds: 98

Block, Inc. (NYSE:SQ), formerly known as Square, Inc., has been at the forefront of the cryptocurrency revolution. Back in 2017, Cash App allowed users to buy, sell or hold Bitcoins. According to the Q3 2021 results published on November 4, Block, Inc. (NYSE: SQ) revealed that it generated $1.82 billion in revenue through Bitcoin via its Cash App. Meanwhile, the total revenue for the three months was $3.84 billion.

The company is also buying Bitcoin as its CEO Jack Dorsey is bullish on cryptocurrency. Block, Inc. (NYSE:SQ) has bought $50 million and $170 million worth of Bitcoin in October 2020 and February 2021, respectively.

In July 2021, Block, Inc. (NYSE:SQ) announced that it is launching a business unit focused on DeFi (Decentralized Finance). The former CEO of Twitter, Inc. (NYSE:TWTR) revealed that the San Francisco, California-based digital payment processing company is working on coming up with an open developer platform with the single intention of creating a “non-custodial, permission-less, and decentralized financial services.” The new business unit will comprise the Seller, Cash App, and recently bought assets of the Tidal business. According to DeFi Pulse, $55.21 billion is locked into DeFi-based contracts around the world.

2. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Funds: 123

PayPal Holdings, Inc. (NASDAQ:PYPL) has allowed its users to trade cryptocurrencies like Bitcoin, Ethereum, Litecoin, etc., with an initial investment of only $1, directly through the PayPal digital wallet and Venmo. Furthermore, the San Jose, California-based financial technology corporation is working on making cryptocurrency an acceptable payment method across its extensive merchant network of 26 million globally. Currently, cryptocurrencies can be used for the payment of selected purchases.

The induction of cryptocurrencies in digital payment platforms like PayPal Holdings, Inc. (NASDAQ:PYPL) is attracting millions of users towards them. Like most of the stock, currency, commodity, and even cryptocurrency exchanges, there is a fee for trading cryptocurrency on the PayPal Holdings, Inc. (NASDAQ:PYPL) network.

The payment processing corporation also received a conditional Bitlicense from the New York Department of Financial Services (NYDFS) back in October 2020. This was the first-of-its-kind license issued by the state of New York that was aimed towards raising awareness about cryptocurrencies, such as the opportunities and risks of investing in cryptocurrencies and the know-how of the blockchain network.

Investment management firm Alger shared its stance on PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q3 2021 investor letter. Here’s what the firm said:

“PayPal Holdings, Inc. was among top detractors from performance. PayPal is a pure play on e-commerce and electronic payments which is driving the company’s high unit volume growth. As a digital payments company, it is helping to facilitate the shift to a cashless society. The coronavirus pandemic has significantly accelerated the adoption of e-commerce and the utilization of digital payments platforms. In our view, PayPal is currently positioned to benefit the strength in e-commerce trends, including increasing net new active users and increased engagement per user. PayPal also has launched a service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account. PayPal’s vision is to become a Super App that integrates payments, commerce and financial services, as well as crypto capabilities. After outperforming earlier in the year, the performance of PayPal shares weakened in the third quarter with the company facing potentially higher transaction expenses and credit losses. The higher transaction expenses are driven by a shift by consumers to the higher cost travel and entertainment categories which skew toward less profitable credit transactions.”

1. Meta Platforms, Inc. (NASDAQ:FB)

Number of Hedge Funds: 248

Meta Platforms, Inc. (NASDAQ:FB), formerly known as Facebook Inc., was a pioneer in Web 2.0 as it allowed users to create and share information online. However, since 2014, the world is now pivoting itself to Web 3.0, a term coined by Ethereum co-founder Gavin Wood. Web 3.0 is based on the premise that there should not be any centralized monitoring. Instead, users should have the ability to communicate and join forces without the presence of a single authority. This thought has given way to blockchain technology and DeFi.

Meta Platforms, Inc. (NASDAQ:FB) is gearing itself up for Web 3.0 by working on its new cryptocurrency known as Diem, previously known as Libra. The California-based tech giant is building a global financial payment system backed by the needed infrastructure that is decentralized and can be accessed from anyone or anywhere in the world. Along with this, Meta Platforms, Inc. (NASDAQ:FB) is also working on Move smart contract programming language.

Canterbury Tollgate mentioned Meta Platforms, Inc. (NASDAQ:FB) in its Q3 2021 investor letter. Here’s what the investment management firm said:

“To say traditional media is anti-Facebook would not be an overstatement. An already intense and multi-year critique of (or attack on) Facebook has ratcheted up in recent weeks. Facebook’s research efforts have been reported on, if often derided, for nearly a decade. Going back to 2014, Slate.com called their research practices “unethical” when FB tried to study the impact social posts had on users. Now those efforts have been turned against them for the kill shot.

My job is to observe, assess, and allocate. Not to commentate on all the whims and wishes of media narrative. However, in the case of Facebook I cannot avoid going into some detail re: the onslaught against them, which I find to be most unwarranted and insincere.

Last month the Wall Street Journal ran a five-piece series titled “The Facebook Files” which allegedly shows how toxic Instagram is for teens. The foundation of their argument was a single slide from an internal presentation claiming, based on FB’s own research, that of teens who had a negative self-image, one-third said Instagram “made them feel worse.”iii Somehow the implication here is that this is not an inescapable aspect of either the human psyche and/or society-atlarge, but that it is of Facebook’s doing…” (Click here to see the full text)

You can also take a peek at the Billionaire Israel Englander is Buying These 10 Stocks and 10 Canadian Dividend Stocks to Buy.

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10 Crypto Stocks for 2022

Published on January 7, 2022 at 9:01 am by Aima Zaheer in Hedge Funds, News

10 Crypto Stocks for 2022