Cryptocurrency-related stocks represent shares in companies engaged in the crypto sector or exposed to digital assets like Bitcoin, Ethereum, and alternative cryptocurrencies. Investing in these stocks offers a means to participate in the expanding crypto market without the need to directly purchase and secure cryptocurrencies.

The year 2023 has proven to be a noteworthy period for the cryptocurrency industry, marked by a flurry of fresh developments, innovative advancements, and evolving regulations that have significantly shaped the landscape. Crypto stocks, comprising companies deeply connected to or benefiting from the industry, have also exhibited impressive gains and fluctuations.

Nevertheless, it’s crucial to note that these stocks remain susceptible to considerable volatility and regulatory uncertainty, given the dynamic nature of the cryptocurrency market, which continues to encounter numerous challenges.

In this article, we will explore some of the top-performing crypto stocks of 2023, evaluating their growth potential and competitive advantages. Furthermore, we will delve into the associated risks and opportunities that crypto investors should carefully consider.

Why Consider Crypto Stocks?

The initial concept behind blockchain technology, which serves as a digital ledger automatically recording transactions between parties and confirming ownership of cryptocurrency assets, was to establish a borderless, peer-to-peer electronic cash payment system known for its efficiency and security.

Thus, investors certainly have the option of directly acquiring cryptocurrencies, possibly by obtaining small amounts of various digital currencies. Nonetheless, a more prudent approach to gaining exposure to this burgeoning sector involves investing in well-established, larger companies that stand to benefit from the growing popularity of blockchain and cryptocurrency assets. The revenue generated by providers of crypto-related services through blockchain technology has experienced explosive growth in recent years.

Companies embracing blockchain technology, particularly in the realm of finance, stand to gain a significant advantage over traditional competitors when it comes to processing payments. The brokers offering digital assets may attract a larger customer base compared to exchanges that primarily deal in traditional assets like stocks and bonds.

Nevertheless, it’s crucial to acknowledge that this sector is susceptible to sharp fluctuations in the market. In June 2022, for instance, its peak valuation of $3 trillion plunged to under $1 trillion due to the impact of rising inflation, causing many investors to steer clear of high-risk investments. This decline was not the first significant downturn in the cryptocurrency market, and it is likely not the last. As with any investment, there are inherent risks, so it’s advisable to only allocate funds that you can afford to invest for the long term.

Top 6 Crypto Stocks To Buy In 2023

CME Group (NASDAQ: $CME)

CME Group operates the largest global financial derivatives exchange, enabling investors to engage in futures contracts, which speculate on the future price of an asset, as well as options contracts, granting investors the choice to purchase or sell an asset at a predetermined price in the future. CME Group’s exchange facilitates trading across a wide range of assets, including agricultural and mining products, energy commodities, stocks, and various currencies. Notably, it is the inclusion of cryptocurrencies that categorizes CME Group as a crypto-related stock.

In late 2017, CME Group pioneered the creation of the first-ever market for Bitcoin futures. At the outset of 2020, the company introduced an options market for Bitcoin futures. By March 2022, the exchange had expanded its offerings to include futures for Ether, the native token of the Ethereum cryptocurrency platform. Both Bitcoin and Ether futures were complemented by the addition of micro futures, which are based on smaller fractions of these underlying cryptocurrencies.

The establishment of a comprehensive derivatives exchange for the most prominent cryptocurrencies has provided Bitcoin and Ethereum with enhanced legitimacy. It has also offered a means for digital currency holders, including both individuals and an expanding array of businesses that accept cryptocurrencies as payment, to manage the risk associated with fluctuations in cryptocurrency prices. Although the cryptocurrency derivatives market remains relatively modest within CME Group’s operations, the potential for further expansion and the introduction of additional exchanges for cryptocurrency assets in the future are not only possible but even probable.

Coinbase Global (NASDAQ: $COIN)

Coinbase Global stands as the largest cryptocurrency exchange within the United States and ranks among the most widely used platforms for purchasing, selling, and safeguarding cryptocurrencies. It boasts access to a broad spectrum of over 250 altcoins, in addition to offering an array of crypto-related services and products such as staking, lending, debit cards, and institutional custody solutions. The exchange operates a professional trading platform known as Coinbase Pro and manages a venture capital division named Coinbase Ventures.

Coinbase took a historic step in April 2021 when it conducted a direct listing, making it the inaugural major cryptocurrency entity to undertake such a move. During this listing, the company’s stock made its debut at $381 per share, which translated to an approximate valuation of $100 billion. However, subsequent to this event, the stock’s value experienced a decline, settling at approximately $200 per share, in parallel with a notable correction in the broader cryptocurrency market that transpired in 2022.

Meta Platforms (NASDAQ: $META) & Shopify (NYSE: $SHOP)

Meta Platforms, the parent company of Facebook, embarked on the development of a cryptocurrency known as Diem, previously named Libra. Diem was conceived as a global financial payment and infrastructure platform designed to be inclusive, offering access to nearly one-third of the world’s population lacking traditional bank accounts.

However, this endeavor encountered various challenges, including the departure of prominent consortium members like Visa, Mastercard, and PayPal. Regulatory authorities voiced apprehension due to the relatively unregulated nature of cryptocurrencies. Meta relinquished its control of Diem in exchange for $200 million. Nevertheless, efforts on the project persist under new ownership, and Meta is reportedly exploring diverse avenues to establish a presence in the cryptocurrency sphere, aligning with its ambitious Metaverse vision and its desire to manage part of the underlying blockchain infrastructure.

On a separate front, Shopify, an e-commerce infrastructure and software provider, empowers merchants using its platform to accept cryptocurrencies as a means of payment. Recently, Shopify bolstered this capability by integrating with CoinPayments, a cryptocurrency payment processing service. In the spring of 2020, Meta introduced Facebook Shops as a new offering for small business e-commerce, with Shopify serving as a third-party software provider to power these fresh online stores. In tandem, Meta and Shopify are well-positioned to reap benefits should the adoption of digital assets continue to expand among small businesses and entrepreneurs.

Block Inc. (NYSE: $SQ)

Block Inc., previously recognized as Square Inc., stands as a fintech enterprise specializing in delivering payment solutions for both individuals and businesses. Block operates through two primary segments: the Cash App and Seller. Cash App serves as a mobile application that facilitates users in sending and receiving money, engaging in stock and cryptocurrency trading, and accessing banking services. Seller, on the other hand, is a platform designed to equip merchants with both hardware and software tools, enabling them to accept payments, manage inventory, and access financing options.

Block made a noteworthy mark as one of the early mainstream companies to embrace Bitcoin, commencing its Bitcoin trading services on Cash App in 2018. In the subsequent years, Block actively invested $220 million in Bitcoin for its own financial portfolio and established Square Crypto, a dedicated business unit aimed at supporting Bitcoin development and fostering innovation in the cryptocurrency space. Additionally, Block extended its reach by acquiring a majority stake in Tidal, a music streaming service with plans to incorporate blockchain technology and NFTs (non-fungible tokens) into its platform.

To signify its broader vision of constructing an inclusive network for economic empowerment, Block underwent a name change in December 2021, transitioning from Square. Alongside this transformation, the company disclosed its ambition to develop a decentralized exchange (DEX) for Bitcoin, aptly named TBDex. This DEX would offer users the capability to seamlessly exchange various digital assets without the need for intermediaries.

Nvidia (NASDAQ: $NVDA)

Nvidia holds a prominent position as a top manufacturer of graphics processing units (GPUs), which play a critical role in applications such as gaming, artificial intelligence, and cryptocurrency mining. Crypto miners highly covet Nvidia’s GPUs, utilizing them to tackle intricate mathematical problems and earn rewards in various cryptocurrencies. In Q3 of 2023, Nvidia’s revenue from crypto mining products surged to $266 million, marking a notable increase from the $175 million reported in Q2 2023. 

Additionally, in February 2021, Nvidia introduced a new series of GPUs tailored specifically for crypto mining, known as CMP (Crypto Mining Processor). The company’s stock price has experienced an impressive ascent of over 400% since the beginning of 2020, primarily attributable to robust demand for its products spanning multiple sectors.

These represent some of the standout crypto-related stocks in the landscape of 2023, yet the market offers numerous other options that warrant attention and potential investment. The crypto industry remains a dynamic and rapidly evolving arena, replete with both opportunities and challenges for investors. As always, it is advisable to conduct thorough research before making any investment decisions.

Pros And Cons Of Crypto Stocks

Pros 

1. High Returns: Cryptocurrencies have gained a reputation for yielding substantial profits when investors time their purchases wisely and sell during periods of high prices. For instance, Bitcoin, the most renowned cryptocurrency, has surged by over 300% in the past year alone.

2. Diversification: Cryptocurrencies present an avenue for diversifying your investment portfolio, thereby reducing exposure to conventional assets like stocks, bonds, and fiat currencies. Additionally, they often exhibit a low correlation with other asset classes, signifying their ability to move independently of broader market trends.

3. Innovation: Cryptocurrencies are built on blockchain technology, a groundbreaking system enabling secure, transparent, and efficient transactions without the need for intermediaries. This technology possesses the potential to disrupt various industries and foster fresh opportunities for growth and progress.

4. Accessibility: Cryptocurrencies are within reach for anyone with an internet connection and a digital wallet, eliminating the necessity for intermediaries such as banks or brokers when buying or selling them. Furthermore, they typically entail lower transaction fees and quicker processing times compared to traditional payment methods.

5. Sovereignty: Cryptocurrencies operate without central authority control, rendering them impervious to government interference or manipulation. They also afford users a substantial degree of privacy and anonymity, a vital aspect for those who prioritize financial freedom and security.

Cons

1. Volatility: Cryptocurrencies exhibit pronounced volatility and unpredictability, resulting in substantial price swings over brief time spans. These fluctuations stem from a multitude of factors, including supply and demand dynamics, market sentiment, regulatory developments, technical glitches, and cyberattacks. Consequently, investing in cryptocurrencies can be fraught with risk and complexity.

2. Complexity: Cryptocurrencies pose a formidable challenge to comprehension, particularly for newcomers to the field. Proficiency requires substantial research and education to grasp their underlying mechanisms, safe usage, and protection against scams and fraud. Furthermore, the technical aspects involving cryptography, blockchain technology, mining, and digital wallets can appear bewildering and daunting.

3. Regulation: Cryptocurrencies operate without central authority regulation, leaving them devoid of legal safeguards and official recognition in numerous countries. Additionally, some jurisdictions may impose legal restrictions or outright bans, deeming cryptocurrencies as illegal or detrimental. This state of affairs introduces uncertainty and instability for both investors and users.

4. Security: Cryptocurrencies are susceptible to cyberattacks and hacking, leading to potential loss or theft of assets. The security of digital wallets, where cryptocurrencies are stored, is pivotal but can be compromised or corrupted by malware or human error. Notably, there is typically no recourse or recovery mechanism for lost or stolen cryptocurrencies, raising the specter of complete investment loss in the event of mishaps.

5. Environmental Impact: Cryptocurrencies consume substantial energy and resources to power their networks and validate transactions, which can have adverse environmental consequences, contributing to global warming and climate change. For instance, Bitcoin’s annual energy consumption surpasses that of some entire countries.

Final Words

The best part about cryptocurrency stocks is that most of them are not pure plays on the industry, giving investors the reward of ample diversification. Cryptocurrencies are quite volatile and can cause wild swings in the revenue and earnings of companies with sector exposure.

At the same time, you need to keep an eye on the evolving regulatory framework while the crypto market adapts to the ever-changing global economy. The stocks mentioned above are smart investments in digital currencies, and most of them come with the benefit of also running significant business operations outside the crypto sector. 

As such, many investors find that they make more sense than buying the cryptocurrencies themselves, at least until regulators and governments around the world have nailed down their long-term approach to digital assets.

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