In this article, we will discuss the 10 best Bitcoin stocks to invest in according to hedge funds.
Bitcoin was launched in 2009 and since then it has had the most volatile movements among all asset classes. If we look at Bitcoin’s price history, its shows some interesting trends. In 2010, Bitcoin was worth $0.9 and reached $26.9 in 2011. Over the years, it showed high volatility. In May 2017, Bitcoin was worth $2000 and reached over $19,000 in December of the same year.
During these ups and downs, the brightest year for Bitcoin was noted in 2021 as we reported previously that the cryptocurrency had reached its peak at $69,000. Later in 2022, cryptocurrency experienced one of its biggest disasters known as the “crypto winter” mainly due to the cryptocurrency exchange, FTX’s scandal, combined with Federal Reserve’s interest rate hikes due to rising inflation. It was estimated that Bitcoin would close out in 2022 at $16,800. The cryptocurrency traded at even less than the estimated amount at around $16,530 on December 31, 2022.
The FTX scandal was revealed when the digital currency news website, CoinDesk published an article stating that the FTX’s sister firm Alameda Research’s balance sheet was full of FTT tokens. It was later found that the capital provided by FTX to Alameda Research were customer deposits. This led Binance to sell all of its FTT tokens leading to a crash in its price which would later lead to a plethora of withdrawals from the exchange, creating a severe shortage of liquidity in the firm, thus leading to its bankruptcy.
FTX’s CEO Sam Bankman-Fried was later arrested and his bail bond was set at $250 million which is the largest one in history. The FTX collapse spread shockwaves among the industry and shepherded two major banks toward their collapse and a third one barely getting by and is currently being investigated by the US Department of Justice for accounts connected to Bankman-Fried’s businesses.
Cryptocurrency Outlook
Despite facing a rough year in 2022, Bitcoin made a major comeback as it is up by 86.86% at the time of writing from its November lows and trading at $29,444, marking its highest price since June 2022. Cathie Wood’s ARK Invest predicted that the cryptocurrency’s price may reach $1 million in 2023. The director of institutional sales at Paradigm believes that this is just the beginning of the rally for Bitcoin. He wrote:
“Now we’ve seen rates start to fall sharply, with the market pricing in rate cuts in the second half of the year. The Fed and ECB balance sheets are also back in expansion mode. This is the bullish thesis but on steroids.” In addition, Matthew Sigel, head of digital asset research at VanEck, said about cryptocurrencies:
“2023 will be a transition year from the vicious, frigid crypto winter of 2022 into something hopefully a lot hotter in 2024.”
Moreover, cryptocurrency stocks have also rallied significantly as cryptocurrency exchange platform, Coinbase Global, Inc. (NASDAQ:COIN) has been up by around 60% year to date as of April 30, and cryptocurrency mining company Riot Platforms, Inc. (NASDAQ:RIOT) is up over 250% year to date. During this crypto rally, we have curated this list of best Bitcoin stocks to invest in according to hedge funds that include Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Paypal Holdings, Inc. (NASDAQ:PYPL).
Methodology
For this article, we chose the companies based on their hedge fund sentiment. The companies on the list are directly or indirectly involved in Bitcoin mining, Bitcoin trading, and broader crypto trading.
The hedge fund sentiment around each stock has been taken from Insider Monkey’s database of 943 elite hedge funds.
Best Bitcoin Stocks to Invest in According to Hedge Funds
10. Interactive Brokers Group, Inc. (NASDAQ:IBKR)
Number of Hedge Fund Holders: 42
Interactive Brokers Group, Inc. (NASDAQ:IBKR) is a brokerage company dealing in cryptocurrencies, stocks, ETFs, bonds, futures, and more. The firm started cryptocurrency trading in September 2021, including Bitcoin, Ethereum, litecoin, and Bitcoin cash.
On February 15, Interactive Brokers Group, Inc. (NASDAQ:IBKR) announced, in partnership with OSL Digital Securities, the launch of cryptocurrency trading in Hong Kong for clients who have investable assets worth $1 million and institutions who have $5 million and more.
The hedge sentiment was positive toward Interactive Brokers Group, Inc. (NASDAQ:IBKR) in Q4 with 42 hedge funds holding a stake, compared to 35 funds in Q3. After increasing its investment in the company by 18%, Bermuda-based Orbis Investment Management is the biggest shareholder with 4.2 million shares.
Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Paypal Holdings, Inc. (NASDAQ:PYPL) are some of the prominent Bitcoin stocks on our list in addition to Interactive Brokers Group, Inc. (NASDAQ:IBKR).
LVS Advisory mentioned Interactive Brokers Group, Inc. (NASDAQ:IBKR) in its Q3 2022 investor letter. Here is what is said:
“The most notable new position this year has been our investment in Interactive Brokers Group, Inc. (NASDAQ:IBKR). I published a detailed write-up (link here) and also appeared on the ‘Yet Another Value Podcast’ (link here) to discuss our IBKR thesis. To boil it down, IBKR benefits from higher interest rates, and the stock was available at an exceptionally cheap price. I believe IBKR represents a particularly good risk/reward bet and have made it our largest position.”
9. CME Group Inc. (NASDAQ:CME)
Number of Hedge Fund Holders: 58
CME Group Inc. (NASDAQ:CME) is the leader of the financial derivatives market globally as it owns and operates multiple exchanges. Involved in the trading of cryptocurrencies futures, stock indexes, interest rates, and more, the group is one of the best Bitcoin stocks to invest in according to hedge funds.
CME Group Inc. (NASDAQ:CME) is a dividend-paying stock that has increased its dividend for the last 13 years. At the time of writing, the company has a dividend yield of 2.37%. The company’s latest dividend increase was recorded in February when it increased the quarterly dividend to $1.10 from $1.00.
On April 17, CME Group Inc. (NASDAQ:CME) announced the addition of new options to the range of standard and micro-sized Bitcoin (BTC) and Ether (ETH) contracts with extended expiries.
VGI Partners Global Investments Limited talked about CME Group Inc. (NASDAQ:CME) in its 2022 annual investor letter. Here is what it said:
“CME Group Inc. (NASDAQ:CME) is a business likely familiar to you, being one we have owned in our global strategy since 2008 and which was our largest VG1 position at the end of 2022.
CME operates futures and derivatives exchanges, including the Chicago Mercantile Exchange, the New York Mercantile Exchange, the Chicago Board of Trade, and the Dow Jones Index Services. On top of this, CME also owns other key assets related to foreign exchange trading & infrastructure and a strategic shareholding in Standard & Poor’s (S&P) Index business.
The key driver of trading activity for CME is in its interest rate derivatives products, where it has an effective monopoly in the exchange trading of interest rate derivatives in the United States, with benchmark products across the entirety of the interest rate curve. Demand for interest rate derivatives is driven by volatility in interest rate markets, whose effect is compounded by the number of bonds held by those looking to manage interest rate risk and, by extension, market liquidity. The below chart of average daily volumes of interest rate derivatives and US Federal debt held by the public illustrates the extremely strong relationship the size of the US Treasury market and volumes growth, although there are deviations around this primarily around Fed intervention (for example, at the start of the pandemic, volumes were suppressed by an enormous amount of Quantitative Easing (QE) and effectively zero interest rates which reduced the demand for hedging products). We expect the growth in the size of the US Treasury market, particularly in relation to privately held US treasuries as the Fed undergoes a balance sheet unwind, to remain a powerful underpinning of CME’s interest rate derivatives business…” (Click here to read the full text)
8. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 70
Providing its services in multiple countries, Block, Inc. (NYSE:SQ) is a tech conglomerate with multiple products and services under its belt, including financial services and digital payment platforms. The latest step to penetrate the international crypto market taken by the company was in the form of partnering with Yellow Card. Through the partnership, Block’s TBD will be used to send cross-border payments to any of the 16 African countries where Yellow Card operates.
On April 25, Credit Suisse lowered the price target of Block, Inc. (NYSE:SQ)’s shares from $105 to $100 while maintaining an Outperform rating. According to the firm, the company’s gross profit estimates will be a little lower but the business model is set to experience any “disclosure and more conservative GPV growth in the second half of 2023”.
According to Insider Monkey’s database, 70 hedge funds held a stake in Block, Inc. (NYSE:SQ) worth $4.255 billion in the fourth quarter of 2022. ARK Investment Management was the biggest shareholder with a little over 9 million shares in Q4 2022.
Baron Funds mentioned Block, Inc. (NYSE:SQ) in its second-quarter 2022 investor letter. Here is what it said:
“Block, Inc. provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares fell due to mixed quarterly results with more modest growth in the Seller business offsetting strength in Cash App. While integration of recently acquired Afterpay is progressing well and credit metrics remain healthy, the buy-now-pay-later business slowed due to greater competitive intensity. We continue to own the stock due to Block’s long runway for growth, sustainable competitive advantages, and unique corporate culture.”
7. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 71
American Express Company (NYSE:AXP) is headquartered in New York and is one of the most prominent financial services companies. Along with offering card products, it is the biggest issuer of travelers’ cheques globally. The company got involved in Bitcoin when it announced to launch a crypto card in collaboration with Abra, a fintech company.
On April 20, American Express Company (NYSE:AXP) reported an EPS of $2.40 and revenue of $14.28 billion in Q1 2023, beating expectations by $260 million. The 21.7% YoY growth was a result of card members spending more during the quarter and increased interest income with elevated average loan volumes.
On March 8, American Express Company (NYSE:AXP) announced a 15% increase in its quarterly dividend to $0.60 per share. The other announcement was the commencement of a share repurchase program of nearly 120 million common shares.
6. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 91
Tesla, Inc. (NASDAQ:TSLA) is a leader in the automotive and clean energy industry. The company earned $64 million on Bitcoin in 2022 because of its trading activities and currently owns $184 million worth of Bitcoin.
As per Insider Monkey’s database, the company has seen positive sentiment in Q4 2022 compared to the previous quarter as the number of hedge funds holding a stake in Tesla, Inc. (NASDAQ:TSLA) increased to 91 in Q4 from 88 in Q3. Ken Griffin’s Citadel Investment Group was the most significant stakeholder as it increased its holding in the company by 179% to 7.5 million worth $926.2 million.
Tesla, Inc. (NASDAQ:TSLA) was mentioned in the first-quarter 2023 investor letter of Aristotle Atlantic Partners. Here is what it said:
“Tesla, Inc. (NASDAQ:TSLA) was a negative contributor to performance due to our underweight position relative to Russell 1000 Growth Index, as the company had strong performance in Q1. The strength occurred after the company partially reversed a previously announced price cut for its electric vehicles following a period of strong demand. Tesla also reported better-than-expected results for Q4 2022 during the first quarter.
Tesla Motors designs, develops, manufactures, and markets high-performance, technologically advanced electric cars and solar energy generation and energy storage products. Tesla sells more than five fully electric cars, among others, the Model X and Y SUVs, as well as the Model S sedan and Model 3 sedan. The company has a growing global network of Tesla Superchargers, which are industrial grade, high-speed vehicle chargers, typically placed along well-traveled routes and in and around dense city centers to allow Tesla owners quick and reliable charging. Tesla offers certain advanced driver assist systems under its Autopilot and Full Self-Driving options. US customers generate nearly half of Tesla’s sales.
We see Tesla as the leading manufacturer of battery powered electric vehicles (EVs). The company has achieved scaled production of EVs before the other large automobile manufacturers. The company’s technology in battery production and self-driving technology is more mature than competitors’ offerings. EVs are one of the fastest growing categories within automobile manufacturing. The profit margin in the automotive segment is significantly above automotive competitors which provides the company flexibility to price its vehicles more strategically as the competition eventually scales up their EV production. The direct-to-consumer sales model gives the company more control over its relationship with its customers as well as a source of higher profit margin since there is no dealership share of the profits.”
5. Advanced Micro Devices, Inc (NASDAQ:AMD)
Number of Hedge Fund Holders: 97
Advanced Micro Devices, Inc (NASDAQ:AMD) is a California-based semiconductor manufacturer. The company is on our list of the best Bitcoin stocks to invest in according to hedge funds because it creates GPUs and CPUs for the blockchain technology on which most cryptocurrencies, including Bitcoins, run and are used for crypto mining.
Other than the high-profile acquisitions of Pensando and Xilinx last year, Advanced Micro Devices, Inc (NASDAQ:AMD) is focused on diversifying its portfolio through partnerships. On April 6, an extension of the partnership between the company and Samsung Electronics (OTCPK:SSNLF) was announced to continue the integration of Radeon graphics technology into Samsung Exynos SoCs.
On April 25, Stifel analyst Ruben Roy increased the price target on Advanced Micro Devices, Inc (NASDAQ:AMD)’s stock to $98 from $91 and kept a Buy rating on the shares. The firm predicted lower estimates for Q2 in light of the possible decreased data center demand and the probable sluggish pace of bouncing back of the PC market.
White Falcon Capital Management mentioned Advanced Micro Devices, Inc (NASDAQ:AMD) in its first-quarter 2023 investor letter. Here is what is said:
“Last quarter we added Advanced Micro Devices, Inc. (NASDAQ:AMD) to the portfolio at 18x earnings and quickly made it into a top 5 position. At that time, Mr. Market was worried about earnings revisions for semiconductor stocks. In Q1 2023, it has been one of our best performing positions with the stock up 50%! In just three months, the market realized that Artificial Intelligence (AI) and related technologies require a lot of semiconductors. Mr. Market really is manic depressive but this volatility can give the enterprising investor just enough of a window to pick stocks with attractive risk rewards.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 106
NVIDIA Corporation (NASDAQ:NVDA) is a technology company and its product range includes GPUs, CPUs, SoCs, and more. The company is one of the best Bitcoin stocks to invest in according to hedge funds as its GPUs are extensively utilized to mine various types of cryptocurrencies.
On April 19, BofA increased the price target of NVIDIA Corporation (NASDAQ:NVDA)’s shares to $340 from $310 while keeping the Buy rating on the stock. According to the firm, the company’s earnings power estimate for the year 2027 will be elevated because of increased value being placed on GPUs, owing to the penetration of AI.
NVIDIA Corporation (NASDAQ:NVDA)’s GPUs are often targeted toward high-end buyers as many of them sell for around $40,000. However, on April 12, the company rolled out GeForce RTX 4070. The GPU will use AI and will be priced at around $599.
Aristotle Atlantic Partners, LLC highlighted NVIDIA Corporation (NASDAQ:NVDA) in its first-quarter 2023. Here is what it said:
“NVIDIA Corporation (NASDAQ:NVDA) contributed to outperformance, as the company announced better-than-expected fourth quarter earnings driven by a strong rebound in Gaming and an improving outlook for the Datacenter business due to the acceleration of Graphics Processing Unit (GPU) driven Artifical Intelligence (AI) deployment. The company also hosted its Global Technology Conference (GTC) in March where it further highlighted its leading technology being used to develop AI Large Language Models (LLM). The company announced new partnerships with hyperscalers for its AI cloud-based service while also releasing new software and hardware offerings that will support GPU-driven AI growth. Nvidia continues to see a growing addressable market for its products and services as AI uses become more prevalent.”
3. Paypal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 115
Paypal Holdings, Inc. (NASDAQ:PYPL) offers payment solutions through its fintech platform to users in various countries. The financial payment system of the company allows users to buy cryptocurrencies, including Bitcoin, through a bank account, debit card (Paypal compatible), or Paypal balance.
On April 11, Paypal Holdings, Inc. (NASDAQ:PYPL) announced that it will be partnering with Visa Inc. (NYSE:V) to launch Visa+ with Venmo. Through the service, the company’s users will be able to conduct transactions between multiple digital payment apps without needing any Visa card.
In Q4 2022, 115 hedge funds had stakes in Paypal Holdings, Inc. (NASDAQ:PYPL) worth $5.1 billion, and Citadel Investment Group was the biggest stakeholder in the company after increasing its stake by 412%.
Paypal Holdings, Inc. (NASDAQ:PYPL) was mentioned in the fourth-quarter 2022 investor letter of Renaissance Investment Management. Here is what it is:
“Another underperformer in the quarter was PayPal Holdings, Inc. (NASDAQ:PYPL). Despite reporting solid third quarter operating results and announcing new payment agreements with both Apple and Amazon.com, the company guided for a slowdown in e-commerce activity, partly reflecting weakened consumers who are dealing with heightened inflation. However, we still expect growth in PayPal’s core payments platforms to improve in upcoming quarters, driven by easier year-over-year comparisons.”
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 139
Mastercard Incorporated (NYSE:MA) is a New York-based payment processing leader with products like different types of cards, and fraud management and security solutions. While the company got into the crypto world in 2021, it launched crypto trading for financial institutions last year through Crypto Source which is made secure with Mastercard Crypto Secure.
On April 28, BMO Capital increased the price target on Mastercard Incorporated (NYSE:MA)’s shares to $442 from $414 and maintained Outperform rating. The firm made a note of the company’s quality services and incoming cross-border revenue.
On April 27, Mastercard Incorporated (NYSE:MA) announced a non-GAAP EPS of $2.80, surpassing the estimates by $0.09 in Q1. The 9.6% YoY growth in revenue that brought it to $5.7 billion was because of increased cross-border travel, growth of 35%, and rising customer spending.
Polen Capital mentioned Mastercard Incorporated (NYSE:MA) in its first-quarter 2023 investor letter. Here is what it said:
“We trimmed Mastercard Incorporated (NYSE:MA) and Visa to equal weights of the Portfolio. Mastercard and Visa operate as a duopoly in a large and growing market. Over the last 50 years, global personal consumer expenditures (PCE) has grown 7-9% annualized. We expect 4-5% long-term PCE growth going forward. Additionally, the shift from cash to credit continues unabated, with a total credit penetration of only approximately 50% globally.3 This shift provides Visa and Mastercard with another ~4-6% of growth. When combined with PCE, this gives both companies high-single-digit to low-double-digit revenue growth opportunities. This growth estimate is before accounting for growth amplifiers like the acceleration of e-commerce, the shift from offline to online, and additional services. Both companies enjoy extremely strong network effects that provide strong competitive advantages.
We have trimmed Visa and Mastercard because their combined weight grew to over 12% of the Global Growth Portfolio because of their recent performance and to fund our increase in Amazon’s position size. We added to both positions when their prices were depressed due to cross-border transactions deteriorating materially from the pandemic. Cross-border volumes came roaring back when travel corridors reopened, and although we are several quarters removed from the cross-border nadir, Visa still grew volumes >30% in 1Q23. Total cross-border volumes are now 132% of 2019 levels. At 4.5% each, both companies remain high conviction positions for Global Growth.”
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 177
Visa Inc. (NYSE:V) is the biggest financial technology services company in the world and offers its digital payment services in more than 200 countries. Many companies’ niche Bitcoin cards are rolled out in partnership with the company.
In Q4, a total of 177 hedge funds had stakes in Visa Inc. (NYSE:V), up from 165 funds in the prior quarter. The total worth of the stakes was $26.46 billion. In the same quarter, London-based TCI Fund Management was the most significant stakeholder with 19.9 million shares, making up 13.83% of the fund’s portfolio.
On March 30, Visa Inc. (NYSE:V) announced that it is extending its partnership with Fold, a Bitcoin rewards app to introduce Bitcoin rewards in new areas. The partnership originally started in 2020 and since then it has yielded $30 million in Bitcoin as rewards.
Polen Capital mentioned Visa Inc. (NYSE:V) in its first-quarter 2023 investor letter. Here is what it said:
“We trimmed Mastercard and Visa Inc. (NYSE:V) to equal weights of the Portfolio. Mastercard and Visa operate as a duopoly in a large and growing market. Over the last 50 years, global personal consumer expenditures (PCE) has grown 7-9% annualized. We expect 4-5% long-term PCE growth going forward. Additionally, the shift from cash to credit continues unabated, with a total credit penetration of only approximately 50% globally.3 This shift provides Visa and Mastercard with another ~4-6% of growth. When combined with PCE, this gives both companies high-single-digit to low-double[1]digit revenue growth opportunities. This growth estimate is before accounting for growth amplifiers like the acceleration of e[1]commerce, the shift from offline to online, and additional services. Both companies enjoy extremely strong network effects that provide strong competitive advantages.
We have trimmed Visa and Mastercard because their combined weight grew to over 12% of the Global Growth Portfolio because of their recent performance and to fund our increase in Amazon’s position size. We added to both positions when their prices were depressed due to cross-border transactions deteriorating materially from the pandemic. Cross-border volumes came roaring back when travel corridors reopened, and although we are several quarters removed from the cross-border nadir, Visa still grew volumes >30% in 1Q23. Total cross-border volumes are now 132% of 2019 levels. At 4.5% each, both companies remain high conviction positions for Global Growth.”
You can also look at the Analysts Are Increasing Price Targets of These 10 Stocks and 13 Best New Stocks To Invest In.
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Disclosure. None. 10 Best Bitcoin Stocks to Invest in According to Hedge Funds is originally published on Insider Monkey.
