3 Crypto Stocks to Buy When Bitcoin Rises Again
Bitcoin (BTC-USD) has always surprised investors. The cryptocurrency closed 2022 at around $16,500. During the first three months of this year, the price has risen by 64%. As the extended crypto winter ends, there are some attractive crypto stocks to buy that have multibagger return potential.
There are several reasons for the sharp rise in bitcoin. First, the cryptocurrency was significantly oversold. Second, relative weakness in the US dollar has been positive for bitcoin. It is also worth noting that another bitcoin halving is expected to happen in April 2024. In the past, halving events have been followed by a huge rally. Therefore, there are reasons to believe that bitcoin will continue to trend higher.
Crypto stocks took a beating in 2022. As sentiment in the sector turned positive in the new year, several crypto stocks have already surged over 100%. However, I expect multibagger returns for quality crypto stocks even from these levels, assuming bitcoin remains in an uptrend, which seems likely.
Below are three crypto stocks to buy at current levels.
| COIN | Coin base | $62.54 |
| RIOT | Riot Platforms | $8.04 |
| MARA | Digital Marathon | $7.11 |
Coinbase (COIN)
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Coin base (NASDAQ:COIN) the share has risen 76% so far this year. A week ago, however, the share was up well over 100%. Shares were beaten according to the Securities and Exchange Commission (SEC) sent Coinbase a warning that it had identified potential securities breaches.
But if the bullish momentum in bitcoin continues, so should the rise in COIN. ARK Invest’s Cathie Wood seems to think this will be the case. She bought millions of dollars worth of COIN shares on the dip.
Coinbase reported a sharp decline in revenue for 2022, along with an adjusted EBITDA loss of $371 million. Total trading volume fell 50% for the year, while transaction revenue fell 66%. The recovery is likely to be gradual as trading activity picks up. However, I like the fact that Coinbase ended 2022 with $5.5 billion in cash and equivalents. This gives the company good flexibility for product development and international expansion.
Another point worth noting is that Coinbase reported 53% growth in subscription and service revenue in 2022. As the assets held on the company’s platform increase in price, blockchain rewards and custodian fees are likely to increase. Finally, during the previous bitcoin rally, Coinbase witnessed strong growth in institutional investor activity. This may in turn prove to be a catalyst for revenue growth and margin improvement.
Riot Platforms (RIOT)
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With bitcoin trending higher, there is a strong case for a revival in the fortunes of bitcoin miners who Riot Platforms (NASDAQ:RIOT). The stock looks attractive at current levels around $8 per share despite a 147% rally so far this year. That’s because the rally is likely to continue if bitcoin remains in an uptrend.
A big reason to like Riot is the company’s fundamental strength. At the end of 2022, Riot reported $230 million in cash and equivalents. With no long-term debt and 7,058 bitcoin on the balance sheet, the financial flexibility is robust.
Another reason to be bullish on Riot is the fact that the company is a low-cost producer of bitcoin. In 2022, Riot reported a bitcoin mining gross margin of 60.3%. With the cryptocurrency trending higher, significant margin expansion is on the cards.
It is also worth noting that the company has increased its mining capacity on a sustained basis. As of March, the company reported a hash rate of 9.8 exahashes per second (EH/s). Furthermore, Riot expects to increase its mining capacity to 12.5 EH/si over the next few months.
Marathon Digital (MARA)
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Digital Marathon (NASDAQ:MARA) is another bitcoin miner that looks poised for multi-bag returns. So far this year, MARA shares are up 108%. It’s worth noting that when bitcoin hit all-time highs, MARA stock was trading around $80. The stock is currently trading below $8.
At the end of 2021, Marathon reported an installed hash rate of 3.6 EH/s. Last year, the company increased its mining capacity to 9.1 EH/s. Marathon continues to estimate that it will reach 23 EH/s by mid-year. Even if the expansion is completed towards the end of 2023, the company is positioned for robust growth.
On the flip side, Marathon reported significant operating losses in 2022. However, that is likely to reverse this year as bitcoin trends higher. Furthermore, with significant capacity increases, digital assets on the balance sheet will swell. This will give Marathon good financial flexibility.
At the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.
