As the largest cryptocurrency exchange in the U.S., Coinbase is in prime position to benefit from a rise in Ethereum trading, earning a transaction fee on every sale or purchase.
Many cryptocurrencies sold on the exchange are powered by the Ethereum blockchain, which means a bet on Coinbase is essentially a bet on Ethereum itself. Their futures are tightly linked.
One thing you want to see in any stock is a capacity for growth, and Coinbase has that in spades. In the second quarter of 2020, Coinbase had 1.5 million monthly users; a year later, that figure hit 8.8 million. Over that same span, net revenue grew from $178 million to $2.03 billion.
Coinbase’s stock, currently trading for around $314, is down about 4 per cent since the company went public in April. And you don't need to dish out full price per share either, some investing apps allow you to purchase fractional shares of Coinbase.
Looking at Robinhood’s stock performance since its IPO launched in July — it’s down more than 20 per cent — you may wonder if the meme stock juice that the company was running on is fizzling.
It’s a fair question, but Robinhood is not just a commission-free stock trading platform (Wealthsimple Trade is the Canadian equivalent). The discount broker has facilitated Bitcoin and Ethereum trading since way back in 2018, and it now allows users to buy and sell Litecoin and Bitcoin Cash.
Robinhood’s crypto offerings have been paying off for the company too. Crypto-generated revenue in Q2 2021 was $233 million, more than 40 times what it was a year before.
A cryptocurrency miner, HIVE Blockchain is one of the many companies that turn colossal amounts of computing power into crypto tokens. HIVE mines Bitcoin, Ethereum and Ethereum Classic.
The amount of energy required to mine cryptocurrency is creating environmental concerns among prominent investors, including Tesla CEO Elon Musk, and HIVE is focused on using green energy for its mining.
HIVE has plans to pivot and focus on other cryptocurrencies once Ethereum 2.0 is rolled out, but its business is still heavily reliant on Ethereum and should provide decent exposure to Bitcoin’s little brother in the near to mid-term.
HIVE investors have had a great 2021. The company’s stock has more than doubled in price since the beginning of the year.
Avoid crypto volatility altogether—and still come out ahead
Crypto investing isn’t for everybody. The wild price swings and the many, many questions about its future as a currency make it a risky play in the short and long term.
If the crypto market is a no-go for you, and you believe the stock market looks ready for a plunge, it might be time to get a piece of some real assets, like commodities.
Another option is contemporary art, which has solidly outperformed the S&P 500 almost every year since 1995.
Investing in modern masterpieces doesn’t require millions of dollars. With the help of a popular new app, you can buy shares in rapidly appreciating works by Claude Monet, Andy Warhol and even Banksy.
You won’t be able to gaze at them on your wall, but seeing them in your portfolio should be just as inspiring.