1. Tesla (TSLA)
While Tesla is known for its electric vehicles, its colossal Bitcoin investment, about 42,000 coins according to CEO Elon Musk’s Twitter account, means its own stock is somewhat at the mercy of the crypto market.
When Bitcoin took it on the chin earlier this month, Tesla shares lost just over 2% of their value in the span of 24 hours. When Bitcoin hit a trough from May to July of 2021, Tesla stock followed suit.
But Tesla has also risen in concert with Bitcoin’s gains this year; when it rose 27.5% between Aug. 3 and Sept. 6, Tesla experienced a 5.7% gain of its own.
2. Nvidia (NVDA)
You might be wondering how investing in Nvidia, known for graphics processing units (GPUs) that are must-haves for serious video gamers, is tied to crypto.
It turns out Nvidia’s GPUs are also in demand among cryptocurrency miners. During its second quarter earnings call, the company said it wasn’t able to determine how much of its US$3 billion in gaming revenue actually came from gamers rather than miners.
As Bitcoin dipped to just under US$30,000 in July, Nvidia’s stock price softened as well, losing over 11% between July 12 and July 16. But the company's earned that back and then some.
Strong second quarter earnings, including a 68% year-over-year increase in Q2 revenue, definitely helped; as has growing demand from data centers for the company’s high-powered GPUs.
Nvidia has also rolled out products specifically for coin miners, which means sales of its GPUs shouldn’t suffer the next time crypto hits a sustained rough patch, like they did when Bitcoin suffered through much of 2018.
3. PayPal (PYPL)
Shares in online payment trailblazer PayPal have been on a wild ride. They’ve crossed the US$300 threshold twice, in Feb. and July, but they’ve also slipped into US$240 territory three times, most recently in May.
PayPal already had exposure to the crypto market, having rolled out a product allowing U.S. customers to buy, sell and hold cryptocurrencies last Oct. But it increased its bet on crypto when it launched a similar product for the U.K. in late Aug.
According to Paypal’s general manager for blockchain, crypto and digital currencies, Jose Fernandez da Ponte, the company’s deeper foray into crypto is an attempt to make the purchase and management of cryptocurrencies easier for consumers.
If the added convenience does increase the use of its crypto platform, the fees should come rolling in.
4. Square (SQ)
Like Nvidia, financial services company Square had an impressive Q2, with gross profits of US$1.14 billion — a 91% increase versus the second quarter of 2020.
But, unlike Nvidia, Square’s profits are more directly tied to the crypto market, both through the company’s holding of actual Bitcoin and its wildly popular Cash App, which allows customers to buy and sell crypto and send crypto remittances.
According to the company, Bitcoin made up more than half of its Q2 revenue of US$4.68 billion. The bruising Bitcoin's endured this month won’t do any favors for Square’s Q3 results, but a rally could send its Bitcoin profits through the roof.
Square’s non-Bitcoin business is also in solid shape, having grown 87% year over year in Q2.
5. CME Group (CME)
Unless you trade in derivatives, like stock options and commodities futures, you may not be familiar with CME Group.
CME is the world’s largest market for derivatives contracts. The company introduced trading of Bitcoin futures contracts in 2017 and expanded to include Bitcoin futures options in 2020. In Feb., CME launched futures contracts for another notable cryptocurrency, Ether.
The success of CME’s crypto venture hinges on widespread adoption of cryptocurrencies by the wider economy. An increase in the practical use of Bitcoin or Ether should boost demand among investors and intensify the crypto derivatives market.
So far, CME’s expanded crypto derivative play hasn’t accomplished much. The company’s stock is down more than 10% in the last six months.
Looking for something more stable?
Crypto isn’t for everybody. If that includes you, have a look at some other investing options.
Even if you only have a modest investing budget, you may want to use an investing app that allows you to buy “slices” of shares of big-name stocks — especially one that comes with no fees or commissions. You can even invest in your favourite automaker.
And, those looking to take control of their investments should certainly explore online trading platforms. The best sites offer resources and tools to help investors make informed decisions as they build and manage their investment portfolios.
Fine art as an investment
Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.
That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.
Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.