The rise in popularity of cryptocurrencies has been a boon for crypto-powered stocks.
In recent months we’ve witnessed a surge in Bitcoin (BTC-USD) prices, climbing an impressive 91% from a year ago. However, this rally is hardly a singular event and reawakened animal spirits in nearly every corner of the market. The stock market is also witnessing unprecedented gains with the S&P 500 up by 17.4% in the first half of the year.
Now cryptocurrencies seem like an obvious investment choice in today’s bull market. However, not everyone has the risk appetite to stomach the bursts of volatility. Thankfully, risk-averse investors have a second option: investing in crypto-focused stocks.
Simply put, these are publicly listed companies heavily invested in cryptocurrencies, thus impacted by a surge in their prices. On the flip side, they are also a great way to get in on the crypto action while limiting exposure to price swings. That’s not to say that crypto stocks are free from volatility. But its diverse offerings certainly provide some insulation from extreme price fluctuations.
And based on current bullish market conditions, many looked well-positioned to provide explosive gains this summer.
Block (SQ)
One stock that’s trending high on investors’ radar is Block (NYSE:SQ). The company, formerly known as Square, has not shied away from its bullish sentiments towards crypto. First by changing its name to Block, reflecting its commitment to blockchain technology. Second with the launch of several crypto initiatives on its platform. More recently, Block reaffirmed its faith in BTC, announcing it will invest 10% of its gross profit from Bitcoin back into the asset.
But what makes Block one of the most highly favored crypto-powered stocks is its strong core business. In its recent earnings report, gross profit for the quarter was up 22% YoY, largely fueled by its Cash App. This business allows users to trade Bitcoin among other currencies and reported a 25% increase in profits YoY. Looking ahead Block believes banking and bitcoin will drive future growth and holds $573 million in BTC investments.
Block strong financials and focus on Bitcoin initiatives make it a compelling choice for investors seeking crypto-powered stocks this summer.
Robinhood (HOOD)
Shares of Robinhood (NASDAQ:HOOD) have been a tear- rising by 110% in the last 12 months. The company’s trading platform has become a go-to option for its east-to-use interface and commission-free trading. Investors can trade several assets on the platform, including over a dozen cryptocurrencies which account for a significant portion of its revenue.
Robinhood’s growth has been impressive, to say the least. In its first quarter, the company posted transaction-based revenue of $329 million, including $126 million in cryptocurrency revenue. According to analysts, this growth is the result of Robinhood’s investments in its growth initiatives to become an attractive option for investors.
The company is now taking these efforts a step further with the acquisition of Pluto, an AI-driven research platform. This partnership will provide Robinhood’s investors with custom trading strategies along with several AI insights. The acquisition aims to enhance the user experience while fueling Robinhood’s mission to “democratize finance for all.”
Looking ahead, Robinhood’s exposure to AI-driven crypto trading and expanding financial services will set the stage for explosive gains. As one of the leading crypto-powered stocks, HOOD is a winning stock that will keep on winning.
CME Group (CME)
CME Group (NASDAQ:CME) is one of the largest derivatives exchanges in the world. Investors on the platform can trade several commodities, including agriculture, energy, currencies and crypto futures. As a dominant player in futures trading and clearing services, CME is well-positioned to capitalize on crypto gains.
CME’s versatile trading platform caters to large institutional investors, meaning it had a lot to gain from the renewed interest in cryptocurrencies. To further capitalize on this demand, CME plans to launch a Bitcoin trading feature as reported by The Financial Times. While no official announcement has been made, the addition will tie in seamlessly with its broader crypto futures offering.
The financials certainly reflect CME’s robust growth potential. The company beat Wall Street’s estimates with revenue, increasing 3% year-over-year (YoY) to $1.5 billion. This was driven by higher transaction fee revenue, benefitting from an increase in average daily volume (ADV) and rate per contract. Looking ahead, CME plans to sustain this growth trajectory in Q2.
Following the strong earnings, several analysts expressed bullish sentiments towards CME, including Citi (NYSE:C) which maintained its buy rating. With its expanding crypto offerings and strong underlying business, CME is one of the top crypto-powered stocks on the market.
On the date of publication, Divya Premkumar 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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.