Cryptocurrency Investing Opportunities Range from Bitcoin to Stocks

Paul Dykewicz

Cryptocurrency investing opportunities range from Bitcoin to the stocks of banks and other companies that are transacting business with digital money rather than the traditional kind issued by a sovereign nation. 

Cryptocurrency investing opportunities are plentiful, but some of the most common digital assets are Bitcoin, Ethereum, Litecoin, Binance Coin, Ripple and Tezos, which take a digital monetary form and are not managed or governed by any central authority or bank. Companies such as commercial banks that accept bitcoins offer another way for investors to gain exposure to the digital money without directly investing in the alternative assets themselves.

In addition, cryptocurrencies are based on blockchain technology in which the registration and distribution of the alternative money can be tracked through an independent record of digital transactions rather than an institution or central bank. As countries around the word rack up huge debt and the value of their currencies weakens, the appeal of cryptocurrency investing opportunities grows.

The speed of Bitcoin’s recent ascent has been stunning, with the cryptocurrency trading at a record high of $58,300 on Sunday, Feb. 21. Even though cryptocurrencies may seem exotic and a bit far afield for many investors to consider, blockchain.com wallets quietly have amassed more than 63 million users by year-end 2020, according to Statista.

Seasoned Money Manager Assesses Cryptocurrency Investing Opportunities

“Bitcoin is a financial conundrum in that, on the one hand, it does represent an alternative to traditional hedges against weakening fiat currencies,” said Bryan Perry, who writes a monthly newsletter called Cash Machine that features high-income investments. “Hence the popular term of ‘digital gold’ has been applied. Knowing that only 21 million Bitcoins can be mined with over 18.6 million already in circulation creates a natural supply/demand issue that has only been exacerbated by wealthy individuals, corporations and hedge funds buying into Bitcoin. In doing so, their participation lends more credence to the debate as to whether Bitcoin is a rational investment.

“Treasury Secretary Janet Yellen expressed some concern about the volatile nature of Bitcoin’s price action and the financial exposure to illegal activities transacted in bitcoins. Although some companies like PayPal and Square are accepting transactions in bitcoin, it doesn’t mean that it won’t run into regulatory hurdles at some point that have the potential of weighing on Bitcoin’s lofty valuation. At the same time, there is widespread interest in Bitcoin and other digital currencies that may continue to override any fears of government intervention as the adoption rate by businesses spreads — meaning the train has left the station with bitcoins now considered global legal tender.”

Paul Dykewicz interviews Bryan Perry at MoneyShow event in Orlando, Florida.

The “parabolic move” in bitcoin’s price does warrant a possible sell-off back to its recent breakout level of $40,000 where good technical support seems to reside, Perry said. Bitcoin’s volatile price settled at $49,770 late Tuesday, Feb. 23.

From a trading standpoint, one way to invest in the rise of Bitcoin is through Grayscale Bitcoin Trust (OTC:GBTC), which is highly correlated to the price movement of digital currency. Grayscale Bitcoin Trust recently rose 182% in just three months. But Perry said that if he is going to own a volatile asset that trades 24 hours a day, 7 days a week, the best way is to have 24-hour access to it.

Chart courtesy of www.stockcharts.com

“Therefore, I’m more inclined to own and trade Bitcoin on Coinbase or other dedicated platforms that exclusively serve Bitcoin investors and traders,” Perry said. “In my view, this is a no-brainer.”

Investment Radio Show Host Identifies Cryptocurrency Investing Opportunities

Investors also can find viable ways to profit from bitcoin and other cryptocurrencies indirectly.

“We have always been more interested in the blockchain technology that makes Bitcoin and other cryptocurrencies possible,” said Hilary Kramer, who hosts the nationally aired “Millionaire Maker” radio program and heads the GameChangers and Value Authority advisory services. “Tokens can rise and fall, emerge and disappear. The systems behind them are changing the world. If you want to hold any crypto token, I won’t try to stop you. Some people say this is a useful hedge against an inflating dollar. Others just like to speculate.

“If you’re looking for a way to get exposure to the place where crypto intersects with the conventional economy, we’ve had extraordinary success with Silvergate Capital Corp. (NYSE:SI), the so-called ‘crypto bank.’ It’s a bank that accepts deposits in digital currency and is now rolling out dollar lending using crypto assets as collateral. While we’re still in early innings, it felt great to get SI in front of my IPO Edge subscribers a little over a year ago at $12.50. You can see for yourself where it’s gone since.”

Paul Dykewicz conducts a pre-COVID-19 interview with Hilary Kramer, whose premium advisory services include IPO Edge2-Day TraderTurbo Trader and Inner Circle.

Cryptocurrency Investing Opportunities Will Be Highlighted in Free Online Presentation

Jim Woods, editor of Successful Investing, Intelligence Report and Bullseye Stock Trader, has a free, online presentation about how to profit from cryptocurrencies scheduled for Thursday, Feb. 25, at 2 p.m. EDT. He has recommended cryptocurrency investments profitably and plans to unveil his next favorite way to profit from the growing trend. To sign up, click here.

Aside from a pullback in cryptocurrencies during recent days, Bitcoin has been on a tear. The Fast Money Alert trading service co-led by Woods and economist Mark Skousen, PhD, watched their recommendation of China’s Canaan Inc. (NASDAQ:CAN) climb faster than just about any investment they had ever seen before.

They recommended that their subscribers sell the stock in two parts that produced a total return of 114.01%. The call options they recommended collected an average gain of 383.37%. Those gains took place in just a few weeks.

Canaan Inc. provides cryptocurrency “mining rigs” that crypto “miners” need to create a bitcoin. This is important because in order to create a bitcoin or other cryptocurrency, much computing power is required that is sufficient to solve complex mathematical puzzles that essentially create the blockchain, Woods said.

While buying Bitcoin and other cryptos directly is what many investors have done, the volatility in the coins themselves, as well as the logistical difficulties inherent in owning these currencies, makes them risky.

Columnist and author Paul Dykewicz meets with stock picker Jim Woods before COVID-19.

“Yet that doesn’t mean we can’t profit from the stocks that help support and/or are related to this space,” Woods said. For example, he has recommended payment processor Square, Inc. (NYSE:SQ) profitably.

BoA Identifies Banks that Offer Cryptocurrency Investing Opportunities

BoA Global Research published a recent research note that found investor interest in crypto for banks has increased as the price of Bitcoin has rallied, especially with Bank of New York Mellon Corp. (NYSE:BK) recently entering the space. BoA compiled responses from banks regarding their willingness to serve crypto-linked companies and blockchain users and discovered only a limited number currently are pursing that opportunity.

They are JPMorgan Chase & Co (NYSE:JPM), Citigroup Inc. (NYSE:C), Wells Fargo & Co. (NYSE:WFC), U.S. Bancorp (NYSE:USB), PNC Financial Services Group Inc. (NYSE:PNC), Fifth Third Bancorp (NASDAQ: FITB) and Signature Bank (NASDAQ:SBNY). When their stock prices are reviewed for the past year, Citigroup Inc., Wells Fargo & Co. and U.S Bancorp all have pulled back. The biggest winner among the banks turned out to be Silvergate Capital Corp. (NYSE:SI) up 685.7%, topping Tesla’s (NASDAQ:TSLA) 288.5% and GrayScale Bitcoin Trust’s 271.85 gains, respectively. Tesla recently announced a $1.5 billion investment in bitcoin.

Source: Stock Rover. Click here to sign up for a free, two-week trial for Stock Rover charts and analytics.

A look at the dividend-adjusted year-to-date performance shows that banks have been rebounding so far this year after a generally weak 2020. In fact, the two highest dividend-adjusted returns came from Silvergate Capital, soaring 74.7%, and Signature Bank, climbing 58.3%, while Tesla turned out to be the only stock to lose money among the other 10 equities presented. The third-place performer became Grayscale Bitcoin Trust (OTC:GBTC), jumping 43.3%.

Source: www.StockRover.com. Click here to subscribe to Stock Rover Research Reports.

Economist Elaborates on Prospects of Cryptocurrency Investing Opportunities

Bitcoin is the first and most dominant digital currency that serves as online payment for goods and services and as an investment asset, said Skousen, a presidential fellow at Chapman University in Orange, California. Since the price is so volatile and can explode upward from time to time, certain investors increasingly use it as an asset allocation in their portfolio, he added.

The use of blockchain technology as a decentralized, transparent data storage system is bound to expand in the future, said Skousen, who also leads the Forecasts & Strategies investment newsletter.

Once blockchain technology is fully developed, it could revolutionize data storage for the trading of stocks, bonds, commodities and real estate, Skousen said. Bitcoin is likely to keep rising in price for several reasons, amid its volatility, Skousen predicted.

First, institutional retail adoption is growing. Both Square Inc. (NYSE:SQ) and PayPal Holdings Inc. (NASDAQ:PYPL) now accept bitcoin as a legitimate payment system and other retailers likely will join them soon, he added.

The share prices of both stocks have soared since the market’s multi-week drop that spanned Feb. 20-April 7 last year. 

Chart courtesy of www.StockCharts.com

Chart courtesy of www.StockCharts.com

Second, institutional money and asset managers will add Bitcoin to their portfolios. Even if they allocate only 2% of their managed accounts to Bitcoin, it will mean a sharp increase in demand for Bitcoin and other cryptocurrencies, Skousen said.

More than a dozen well-known Wall Street firms, including Ark Invest, SkyBridge Capital, Rothschild Investment Group and Boston Private Wealth, have invested in Bitcoin recently, Skousen continued.

Third, influential investors and money managers, including commodity trader Paul Tudor Jones, Wall Street legend Bill Miller, entrepreneur Mark Cuban and hedge fund billionaire Stan Druckenmiller, are accepting Bitcoin as here to stay.

Bitcoin is emerging as an asset class that has appeal as a store of value to both millennials and others, has existed for 13 years and seems to gain more legitimacy as an alternative asset and a brand as time passes.

Bill Miller, founder of Baltimore-based Miller Value Partners, described digital currencies as the “single best-performing asset class” today.

Mark Skousen, PhD, a descendant of Benjamin Franklin, meets with columnist Paul Dykewicz.

Pension Fund Chairman Critiques Cryptocurrency Investing Opportunities

Bitcoin and other digital currencies have been rising in price lately primarily due to the easy-monetary policies of the Federal Reserve, said Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. With interest rates near zero and the Fed making clear its comfort with higher inflation, investors are looking for higher investment returns and a store of value, he added.

Bitcoin and other digital currencies are one asset class investors are moving money to, and a fair amount of the recent surge in Bitcoin is from money being shifted away from gold, said Carlson, who also heads the Retirement Watch investment newsletter. However, Bitcoin has some attractive features that include portability, accessibility and exchangeability. 

Plus, Bitcoin also has become widely recognized and accepted, Carlson said. The cryptocurrency also is limited in supply and its issuance rate halves every few years, he added.

Cryptocurrency Investing Opportunities Start with Rising Bitcoin

“Some Bitcoin analysts say the price surges for about 18 months after the issuance rate is cut in half, which they think means Bitcoin will rally through late 2021,” Carlson said. “But Bitcoin has a limited history. We can’t say it will be a good diversifier or store hold of wealth over an extended time. We do know Bitcoin and other digital currencies are very volatile in price. There isn’t a lot of volume in their markets. A small number of investors can influence the price.”

That reality has been manifested lately with a few billionaires and celebrities apparently triggering price surges, Carlson said.

Investors also need to keep in mind that Bitcoin does not have the infrastructure of more established investments, Carlson continued. Security is especially important. While Bitcoin itself is very hard for hackers to crack, the same hasn’t been true of the exchanges through which most investors have to trade Bitcoin, he added.

Cryptocurrency Investing Opportunities Are Largely Unregulated

Currently bitcoin is largely unregulated by governments, Carlson said. That is likely to change in the next few years as Bitcoin draws more attention and investors, he added.

“China essentially has prohibited Bitcoin and is trying to move consumers and investors to its digital national currency,” Carlson told me. “In the U.S., it’s more likely that Bitcoin will be regulated like other investments. While that probably is good for Bitcoin in the long term and will make it more acceptable, it could chase early Bitcoin devotees out of the market into something else.

“The best case for digital currencies is that many investors are seeing them as a substitute for gold as a store of wealth and inflation hedge. The market for these currencies is so small that even a small shift of money from gold to Bitcoin would dramatically increase the price.”

Pension fund and Retirement Watch leader Bob Carlson answers questions from Paul Dykewicz prior to COVID-19-related social distancing.

Cryptocurrency Investing Opportunities Are Watched by the IRS

The Internal Revenue Service (IRS) indicates that Bitcoin is taxed like other investments such as stocks. Gain or losses on the sale can be computed. If held for longer than one year, the gain or loss is long-term. If held for one year or less the gain or loss is short-term.

“That means someone who plans to trade short-term should hold it in an IRA, if they can find an IRA custodian who will hold Bitcoin,” Carlson said. “Longer-term investors can hold in a taxable account.”

Despite COVID-19, Cryptocurrency Investing Opportunities Expand

After the COVID-19 pandemic killed more than 100,000 people in America during January 2021 to account for the biggest death total of any month since the virus starting spreading in the United States near the start of 2020, the number of fatalities is starting to drop, according to Johns Hopkins University. Plus, approval by the Food and Drug Administration (FDA) of the first COVID-19 vaccines is boosting hope as the highest-priority people receive injections that may restore a semblance of normalcy later this year if the virus can be contained.

COVID-19 cases have soared to heart-wrenching totals with their number reaching 28,261,585 and causing 502,660 deaths in the United States, as a big chunk of 112,116,627 cases and 2,485,601 deaths worldwide, as of Feb. 24, Johns Hopkins University reported. America has the dubious distinction as the nation with the most cases and deaths.

Cryptocurrency investing opportunities are expanding as the price of Bitcoin rises. Investors may choose to buy the cryptocurrencies directly or gain exposure to them through banks, Tesla or other stocks that should benefit as the price of Bitcoin climbs.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.

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