In this article, we will take a look at the 11 crypto stocks with biggest upside.
Cryptocurrencies soared last month after a three-judge appeals panel in Washington vacated a decision by the U.S. Securities and Exchange Commission that blocked Grayscale’s attempt to convert Grayscale Bitcoin Trust into an Bitcoin (BTC-USD) exchange-traded fund. Several cryptocurrencies rallied strongly after this decision, including Bitcoin, Ethereum, Dogecoin and Binance Coin. Analysts see this decision as a critical milestone for the industry. Another win for the crypto industry came last month when a US judge ruled that Ripple Labs Inc did not violate federal securities law by selling its XRP token on public exchanges.
However, many analysts believe the crypto industry is facing the same concentration of value problem that is seen in the stock markets: just a few cryptocurrencies account for most of the gains in the industry and the industry is littered with meme coins and coins that have no solid underlying projects. As a result analysts and experts keep cautioning investors, which creates skepticism and volatility in the industry.
But what are the reasons behind the skepticism? Did the industry lose hope on the future of money and how digital currencies promise to change it with decentralization? Has the fundamental thesis that once made cryptocurrencies the darlings of the global markets shifted? Many mainstream analysts now believe cryptocurrencies have now gone in the background when compared to other truly disruptive technologies like AI and Cloud computing. For example, a Refinitiv report said that of the many technologies that changed our lives over the past few years, AI is the most disruptive. Other disruptive technologies include high-speed internet, Cloud computing and blockchain. But surprisingly, according to the report, analysts are not excited about crypto.
“This stands in stark contrast to cryptocurrencies, where institutional traders of all ages remain largely unexcited despite the efforts of many to make these markets more accessible.”
So that means the whole crypto chapter was a façade and cryptocurrencies do not promise any good for the world? A report by Oliver Wyman Forum on the crypto outlook for 2023 and beyond answers this question in detail. It says:
“The short answer is no – and that’s a good thing. Many parts of the sector show real promise for useful innovations to provide more efficient and effective financial products and services for businesses and consumers. The calamities of the past year revealed major flaws in the business models and practices of many crypto ventures, notably in the exchange and lending spaces, but they did not reflect fundamental weaknesses in the industry’s underlying technology or its ability to transform many areas of financial services. The challenge ahead – for digital asset businesses, investors, developers, policymakers, and consumers – is to focus on that promise, identify and rectify the flaws, and develop rules of the road (both formal and informal) that offer protections for investors and users while fostering truly valuable innovation.”
Just because the governments around the world initiated a crackdown against crypto and the industry is littered with scams and meme coins does not make the fundamental thesis behind crypto invalid. There are investors and major companies still betting on the future of digital money and they believe sooner or later the world will move to digital currencies, DeFi and related technologies.
Last month, JPMorgan said in a report that it sees “limited downside” to the crypto markets in the near term. The bank said in a report that the reversal of crypto rally seen after the Ripple Vs SEC court decision could be because of a “broader correction in risk assets such as equities and in particular tech, which in turn appears to have been induced by frothy positioning in tech, higher U.S. real yields and growth concerns about China.”
The Oliver Wyman report said that despite the problems, innovation continues to take place in the crypto industry. The report cited data according to which last year, during the peak of the crypto winter, the industry saw a rise in crypto developers. It also quoted data from Celent which says that 91% of institutional investors are “interested” in investing in tokenized assets.
The report however warned that the speculative element in the industry will remain strong. It however advised investors to focus on crypto projects with solid underlying assets and technologies. The report said that the industry has taken the form of an ecosystem, strongly interconnected, causing regulators and outsiders to see it as a whole. The report said this is not the right approach:
“Second, and more important, the world’s tendency to lump everything in digital assets together as crypto creates substantial indirect impacts. Policymakers are likely to accelerate the movement to bring digital assets clearly within the regulatory perimeter, and to do so by applying tougher regulatory standards than they would have prior to the recent debacles. Some of this policy action will fail to adequately distinguish between different parts of the digital assets ecosystem. Similarly, funding for digital assets projects of all kinds is likely to be tougher to find going forward than it was when crypto was spinning gold for investors.”
source: pixabay
Our Methodology
For this article, we conducted a survey of mainstream financial media and consulted at least 12 finance websites to see which cryptocurrency-related stocks have the biggest upside according to these websites. We picked 11 stocks that appeared most frequently on these websites. Some notable stocks include Paypal Holdings Inc. (NASDAQ:PYPL), NVIDIA Corporation (NASDAQ:NVDA) and Block, Inc. (NYSE:SQ).
Crypto Stocks with Biggest Upside According to Mainstream Financial Media
11. Aerohive Networks Inc. (NYSE:HIVE)
Number of Hedge Fund Holders: 4
Canadian-based crypto mining firm Aerohive Networks Inc. (NYSE:HIVE) ranks 11th in our list of the best crypto stocks with upside potential according to financial media. Aerohive Networks Inc. (NYSE:HIVE) produced 274 bitcoins in August.
10. Canaan Inc. (NASDAQ:CAN)
Number of Hedge Fund Holders: 4
Chinese firm Canaan Inc. (NASDAQ:CAN) is known for its Blockchain servers and ASIC microprocessors for use in bitcoin mining.
As of the end of the second quarter of 2023, 4 hedge funds reported owning stakes in Canaan Inc. (NASDAQ:CAN).
Canaan Inc. (NASDAQ:CAN)’s management talked about the challenges the company is facing and the expected obstacles in a latest earnings call and said:
“We believe that the broader market lacks sufficient upward momentum. In addition, large scale miners financing capabilities remain constrained. The recent hash rate growth curve also indicates a notable decline in the overall industry’s incremental hash rate investment and deployment during the first three quarters of this year. This trend aligns with our market assessment. Furthermore, policy changes concerning crypto-currencies and mining in various countries introduced further uncertainty to both the industry and our operations. In some cases, these changes could present unforeseen challenged to our actual operations. Given all the factors I have just outlined, we have a highly cautious outlook for the third quarter of 2023. We expect that revenues from the — for the quarter will be approximately $30 million.
This forecast reflects our current views on the market and operational conditions and actually results may be subject to change. Overall, as you might already be aware, we have navigated several Bitcoin cycles since our inception in 2013. Our task is to confront and resolve the challenges we encounter. Much like Bitcoin itself, where every day we create new history with each new day, we become more experienced and stronger than the day before. We remain fully committed to performing ahead of the market curve. Next month, on September 12, we plan to celebrate the company’s 10th anniversary in Singapore. Canaan stands out industry [voting] (ph) and proudly holds the distinction of being the first NASDAQ listed company in our industry. Over the past decade, our evolution from a project group into a multinational company with leading chief design capabilities has been remarkable.”
9. Hut 8 Mining Corp. (NASDAQ:HUT)
Number of Hedge Fund Holders: 6
Earlier this year crypto mining company Hut 8 Mining Corp. (NASDAQ:HUT) announced that it will combine with U.S. Data Mining Group, Inc. in an all-stock merger of equals.
As of the end of the second quarter of 2023, 31 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in Hut 8 Mining Corp. (NASDAQ:HUT). The biggest hedge fund stakeholder of Hut 8 Mining Corp. (NASDAQ:HUT) was Steven Tananbaum’s GoldenTree Asset Management which owns a $2.2 million stake in the company.
Like HUT, hedge funds also like Paypal Holdings Inc. (NASDAQ:PYPL), NVIDIA Corporation (NASDAQ:NVDA) and Block, Inc. (NYSE:SQ).
8. Marathon Digital (NASDAQ:MARA)
Number of Hedge Fund Holders: 10
Digital asset tech company Marathon Digital is engaged in crypto mining services.
7. Riot Platforms, Inc. (NASDAQ:RIOT)
Number of Hedge Fund Holders: 18
Riot Platforms, Inc. (NASDAQ:RIOT) shares have been on an absolute tear this year as the stock has almost doubled year to date through September 11.
As of the end of the second quarter of 2023, 18 hedge funds tracked by Insider Monkey had stakes in Riot Platforms, Inc. (NASDAQ:RIOT). The biggest stakeholder of Riot Platforms, Inc. (NASDAQ:RIOT) was Paul Marshall and Ian Wace’s Marshall Wace LLP which had an $18 million stake in the company.
6. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 27
Coinbase Global, Inc. (NASDAQ:COIN) ranks 6th in our list of the crypto stocks with high upside potential according to mainstream financial media. Last month, Coinbase announced it would buy an equity stake in Circle, the issuer of dollar-pegged USD Coin (USDC-USD).
Insider Monkey’s database of 910 hedge funds shows that 27 hedge funds out of the 910 hedge funds reported owning stakes in Coinbase Global, Inc. (NASDAQ:COIN). The most significant stakeholder of Coinbase Global, Inc. (NASDAQ:COIN) was Catherine D. Wood’s ARK Investment Management which owns an $867 million stake in the company.
Like Coinbase Global, Inc. (NASDAQ:COIN), Paypal Holdings Inc. (NASDAQ:PYPL), NVIDIA Corporation (NASDAQ:NVDA) and Block, Inc. (NYSE:SQ) are some crypto stocks analysts believe will rise in the future.
5. CME Group Inc. (NASDAQ:CME)
Number of Hedge Fund Holders: 55
Financial derivatives exchange company CME Group Inc. (NASDAQ:CME) is one of the crypto stocks with upside potential according to financial media.
Insider Monkey’s database of 910 hedge funds shows that 55 hedge funds had stakes in CME Group Inc. (NASDAQ:CME). The most significant stakeholder of the firm was Guardian Capital’s GuardCap Asset Management which owns a $785 million stake.
Ariel Global Fund made the following comment about CME Group Inc. (NASDAQ:CME) in its Q2 2023 investor letter:
“We purchased shares of leading derivatives exchange, CME Group Inc. (NASDAQ:CME). The company has various competitive advantages, including its breadth of products across all asset classes, extensive client networks, and centralized clearing services. In our view, CME Group is well-positioned to benefit from favorable macroeconomics tailwinds including tapering, rate hikes, and inflation, which we believe will fuel volume expansion and generate value for shareholders.”
4. Interactive Brokers Group, Inc. (NASDAQ:IBKR)
Number of Hedge Fund Holders: 58
Baron Focused Growth Fund made the following comment about Interactive Brokers Group, Inc. (NASDAQ:IBKR) in its Q2 2023 investor letter:
“We also added to our investment in Interactive Brokers Group, Inc. (NASDAQ:IBKR), a leading securities brokerage company that provides securities brokerage to both retail and professional investors. Interactive Brokers differentiates itself through its low prices, the vast array of markets it serves, and its strong growth from countries where low-cost brokerage is not well penetrated. 80% of Interactive Brokers customers are from outside the U.S., while 80% of their assets are invested in the U.S. The company offers its clients low-cost trading due to its high level of automation. This while providing competitive margin loans and securities lending rates and offering attractive yields on uninvested cash balances. The company continues to hire software and computer engineers with a focus on automating many of the processes that competitors rely on employees to perform.
With its low-priced offering and leading range of capabilities, we believe that Interactive Brokers is well positioned to not just continue its rapid pace of account growth from just over 2 million clients today but to accelerate growth. The company’s focus on automation should enable it to continue being the low-cost provider, while earning best-in-class margins, which we believe should lead to double-digit revenue and earnings growth over the long run.”
3. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 66
Block, Inc. (NYSE:SQ) ranks 3rd in our list of the crypto stocks with upside potential. Block, Inc. (NYSE:SQ) is down about 16% year to date through September 11. During the second quarter, Block, Inc. (NYSE:SQ)’s adjusted EPS came in at $0.39, beating estimates by $0.02. Revenue in the period jumped 25.4% year over year to $5.53 billion, beating estimates by $430 million.
As of the end of the second quarter of 2023, 66 hedge funds in Insider Monkey’s database had stakes in Block, Inc. (NYSE:SQ). The biggest hedge fund stakeholder of Block, Inc. (NYSE:SQ) is Catherine D. Wood’s ARK Investment Management which owns a $714 million stake in the company.
2. Paypal Holdings Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 86
Paypal Holdings Inc. (NASDAQ:PYPL) recently surprised everyone by announcing a stablecoin called PayPal USD (PY-USD). Bank of America said in a report that Paypal Holdings Inc. (NASDAQ:PYPL)’s step might become a “payments catalyst” over time but the adoption of the cryptocurrency asset “is unlikely to be significant in the near term.” However Paypal Holdings Inc. (NASDAQ:PYPL) has several other growth catalysts as the company’s primary business remains poised to grow in the long term.
BMO’s analyst Brian Belski recently said in a note that he expects the S&P 500 to end the year on a higher note since many of their bull case assumptions “have become more credible lately.”
The analyst recommends some growth stocks that he believes have low market valuation (NTM P/E and PEG) and above market earnings growth expectations. Paypal Holdings Inc. (NASDAQ:PYPL) was one of the Belski’s top picks.
RiverPark Large Growth Fund made the following comment about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2023 investor letter:
“PayPal Holdings, Inc. (NASDAQ:PYPL): PayPal shares were a top detractor in the quarter despite reporting better than anticipated 1Q earnings and raising guidance for the remainder of 2023. Revenue of $7 billion grew 9% year over year, an acceleration from the prior year and quarter. EPS of 1.17 grew 33% year over year on better cost discipline leading to better operating margins. The disappointment was centered around weaker gross margins, as unbranded checkout, which has lower gross margins, accelerated faster than branded checkout. Management anticipates this trend to continue and therefore guided to lower gross margins for the remainder of the year. Despite the gross margin headwind, operating margins continue to expand due to expense discipline.
PayPal is the most accepted digital wallet – with almost triple the acceptance of Apple Pay, the number two digital wallet – providing the purest exposure to the secular growth in ecommerce-driven digital payments. PayPal is also a key beneficiary of consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. With a 1Q non-GAAP operating margin of 23%, PYPL also has significant margin expansion potential given that competitors Adyen, Visa and Mastercard have 50%-65% operating margins. We believe the combination of the secular growth of eCommerce and P2P payments, along with expanding operating leverage and the strategic use of the company’s significant and growing cash balance should fuel at least a high teens earnings growth rate over the next five years. This, to us, presents an excellent risk/reward given that PYPL trades at a below market multiple.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 175
Even though NVIDIA Corporation (NASDAQ:NVDA)’s biggest growth catalyst now is generative AI applications as the company has an upper hand when it comes to making chips to power AI software, crypto mining remains an important catalyst for the stock. Whenever there’s a boom in crypto mining, NVIDIA Corporation (NASDAQ:NVDA) will see a jump in chips sales as the company’s systems are widely used for crypto mining all over the world.
As of the end of the second quarter of 2023, 175 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported having stakes in NVIDIA Corporation (NASDAQ:NVDA). The biggest stakeholder of NVIDIA Corporation (NASDAQ:NVDA) was Rajiv Jain’s GQG Partners which owns a $5.9 billion stake in the company.
RiverPark Large Growth Fund made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2023 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA): NVDA shares were our next top contributor in reaction to blowout 1Q results and 2Q guidance. The company reported revenue of $7.2 billion and EPS of $1.09, 10% and 18% ahead of expectations. Revenue guidance for 2Q of $11 billion was 53% above expectations. The artificial intelligence arms race kicked-off by generative AI applications ChatGPT and Alphabet’s Bard has generated tremendous demand for Nvidia’s next generation graphic processors.
NVDA is the leading designer of graphics processing units (GPU’s) required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming-focused chip vendor to one of the largest semiconductor/software vendors in the world. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. Following 1Q’s strong results, Jensen Huang, founder and CEO of NVIDIA stated in the company’s press release, “[a] trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”
You can also take a peek at Wall Street Analysts See Upside Potential for 10 Stocks with Rising Price Targets and 16 Most Profitable Dividend Stocks.
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Disclosure: None. 11 Crypto Stocks with Biggest Upside is originally published on Insider Monkey.
