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El Salvador became the first nation in the world to make Bitcoin (CCC:BTC-USD) legal tender on Sept. 7. The country has also developed a $150 million fund to support the conversion of Bitcoin from U.S. Dollars. Accordingly, crypto stocks tied to Bitcoin have seen some impressive volatility in recent weeks.
To promote the use of Bitcoin in the country, the El Salvadorian government will provide its citizens with a wallet pre-loaded with $30 worth of Bitcoin. They will have to download the government’s digital wallet, Chivo, to receive it.
Additionally, the government installed more than 200 Bitcoin automated teller machines (ATMs) as the crypto’s introduction approached. These ATMs would enable citizens to easily convert digital currency to U.S. Dollars.
These moves were meant to simplify the process for El Salvador’s citizens and encourage the use of cryptocurrency in the country. However, recent issues with the rollout have created a rather bumpy start.
On Sep. 6, the price of Bitcoin went to $52,000, reaching its highest level since May 2021. This massive surge came ahead of Bitcoin’s induction as legal tender. However, since then, the price of Bitcoin has fallen dramatically as investors price in the botched Bitcoin rollout in El Salvador.
That said, a few other nations, including Ukraine and Panama, are reportedly considering adopting the crypto as legal tender. Needless to say, El Salvador’s decision has clearly boosted confidence and enthusiasm among cryptocurrency investors, buyers and traders.
With that in mind, these seven crypto stocks are worth considering as Bitcoin receives the honor of being a legal tender:
- PayPal Holdings (NASDAQ:PYPL)
- Riot Blockchain (NASDAQ:RIOT)
- JPMorgan Chase (NYSE:JPM)
- CME Group (NASDAQ:CME)
- Advanced Micro Devices (NASDAQ:AMD)
- Coinbase Global (NASDAQ:COIN)
- Silvergate Capital (NYSE:SI)
Crypto Stocks: PayPal Holdings (PYPL)
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PayPal announced in October 2020 that it would allow its users to buy, hold and sell cryptocurrencies directly with their service. A survey by Mizuho Securities showed that to date, nearly 17% of PayPal customers have used the platform to buy or sell cryptocurrencies. That’s an impressive uptake for a newly-launched service.
Indeed, PayPal is a massive player in the digital wallet space. The company has more than 392 million users worldwide. This existing adoption rate implies that nearly 67 million users hold some amount of cryptocurrency on the PayPal platform. For those bullish on PayPal’s ability to grow, this is a huge catalyst.
PayPal collects a nominal fee for each crypto transaction. Accordingly, this uptick in crypto volumes is expected to lead to growth in the company’s top and bottom lines. PayPal saw a 31% year-over-year (YOY) jump in revenue and a record spike in payment volume during the first quarter of 2021. Analysts believe the incorporation of cryptocurrencies was the major factor behind this rise.
As an indirect crypto play, Wall Street analysts believe PayPal could be due for an impressive run. Its earnings grew 24.1% over the past 12 months.
Riot Blockchain (RIOT)
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When it comes to crypto stocks, investors look to Riot Blockchain for growth. As a crypto miner, Riot’s business model is directly tied to the success of Bitcoin prices, among other cryptocurrencies as well.
Additionally, investors in RIOT stock gain access to a range of other crypto businesses with incredible upside potential. Riot is invested in Verady, which provides cryptocurrency services such as accounting and financial reporting.
Riot’s portfolio also includes Tesspay, which is focused on smart contract development, and Coinsquare, which provides a platform for crypto trading.
Currently, shares of RIOT stock trade at nearly 20 times consensus forward earnings and about 30 times current sales. RIOT stock has been a near-double-up for investors thus far this year.
Riot posted a stunning second-quarter financial report last month. Mining revenue shot up 1,540% YOY to $31.5 million. While the company’s net income came in at $19.3 million, total cash and Bitcoin reached $195.4 million.
Earnings per share (EPS) were 22 cents as opposed to a loss of 31 cents per share in Q2 of the previous year. The average Bitcoin price that was used for calculating Q2 2021 mining revenue was roughly $46,600.
Analysts feel long-term investors who can bear short-term price fluctuations might want to consider buying RIOT stock at these levels.
Crypto Stocks: JPMorgan Chase (JPM)
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One of the top banks and asset management firms in the world, JPMorgan Chase is an intriguing, indirect crypto play. This major bank is one with highly-diversified operations. Its core segments cover corporate and consumer banking as well as asset management.
However, JPMorgan is increasingly focused on becoming a leader in global fintech solutions. JPMorgan’s Blockchain Center of Excellence is developing in-house technology for crypto transactions. The bank has also built its own cryptocurrency: JPM Coin.
In many ways, JPMorgan is proving it’s a bank at the cutting edge of where the digital economy is heading. The company is trying to develop a blockchain-led system that reduces the time and number of parties required to verify global transactions.
JPMorgan hopes the growth provided by these crypto segments can help boost the company’s results moving forward. During the second quarter, JPMorgan reported net revenue was 7% lower on a YOY basis at $31.4 billion. That said, net income stood at $11.9 billion as opposed to $4.8 billion in the same quarter last year.
CME Group (CME)
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CME Group is a leading global derivatives marketplace. The company provides various futures exchanges, each offering global benchmarks for a huge variety of asset classes like fixed-income, equities and cryptos. The four major exchanges operated by CME include CBOT, CME, COMEX and NYMEX.
The company has launched micro-futures that are a fraction of the size of regular contacts. These are designed for smaller active traders.
It has also brought in micro Bitcoin futures, which are one-tenth of one Bitcoin as opposed to regular contracts, which are usually worth five BTC. Notably, CME saw 100,000 Bitcoin futures traded within six days of the launch.
CME delivered impressive second-quarter results as the company reduced expenses while increasing micro futures and hedging-related revenues. Q2 revenue and adjusted net income came in at $1.2 billion and $589 million, respectively. The adjusted EPS for Q2 was $1.64 compared to $1.63 in the previous year quarter.
CME stock has risen approximately 2% year-to-date (YTD) and trades around $186 per share.
Crypto Stocks: Advanced Micro Devices (AMD)
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Microprocessor manufacturer Advanced Micro Devices (AMD) has become a global behemoth in the chip sector. The company has aggressively gained market share in the past few years, much at the expense of incumbent Intel (NASDAQ:INTC).
AMD is a major producer of high-performance processors that can potentially benefit from gains in the cryptocurrency mining space.
Its shares have done quite well in 2021 after pulling off an impressive run last year. The stock jumped as high as $100 during mid-January, after which it dropped to trade around the mid-$80 range. However, since then, AMD stock has surged above $120 per share and still hovers around the $100 level.
Should crypto mining activity continue to pick up, AMD stands to reap the benefits. Of course, high-powered microprocessors are increasing in demand regardless of crypto adoption. But this stock could outperform in a hyper-bull market for cryptocurrencies.
Coinbase Global (COIN)
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Coinbase Global is a major cryptocurrency exchange and brokerage firm that connects crypto sellers and buyers. It makes money by charging a fee for each transaction made by crypto traders. Indeed, this is quite a simple, yet profitable strategy.
The crypto exchange has been going through a rough patch since it went public through a direct listing. However, Coinbase has been quite profitable since the day it started trading, and has been ahead of numerous other companies that went public.
Analysts from JPMorgan and Goldman Sachs are increasingly bullish on Coinbase shares. Growth and technology guru Cathie Wood has also remained bullish on COIN stock, with Coinbase being one of her core holdings.
Coinbase announced the launch of Coinbase Prime in May, which has been designed for institutional investors. This service will combine data analytics, trading and custody services.
Coinbase Global comes with a massive market value of $63 billion, making it one of the best crypto exchanges to invest in right now.
Crypto Stocks: Silvergate Capital (SI)
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Silvergate Capital is a California-based holding company for Silvergate Bank. It is a leading institution involved in the fintech and cryptocurrency space.
The company offers a diverse range of financial services. These include business lending, cash management solutions, mortgage lending, deposit services for commercial banks and more.
Silvergate partnered with Diem Association, which is backed by Facebook (NASDAQ:FB), in May to introduce a stablecoin. The company intends to integrate this stablecoin with Facebook’s digital wallet, Novi, which would then remain on Diem’s blockchain platform.
The company’s Q2 financial report published on July 20 shows Silvergate’s net income stood at $20.9 million. This is a stunning 280% YOY surge. Moreover, cash and cash equivalents reached $4.5 billion compared to $199.4 million in the same quarter last year.
According to CEO Alan Lane, the crypto exchange added a significant number of new customers during the second quarter of 2021, driving this growth. Network volume surged to $240 billion while transaction revenue went beyond $10 million for the first time.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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