Bitcoin (BTC) has been on a steady upward trend, reaching an all-time-high. This has caused a surge in the entire crypto market, with analysts and investors increasing their price estimates for the future of Bitcoin. One bold forecast comes from Cathie Wood’s Ark Invest, which predicts that Bitcoin could reach a staggering $2 million by 2030.
Investors who missed out on the opportunity to invest in Bitcoin may regret it if this prediction comes true. Two stocks that are closely tied to the price of Bitcoin and worth keeping an eye on are MicroStrategy (MSTR) and Coinbase Global (COIN).
MicroStrategy has been viewed as a proxy stock for Bitcoin, as it currently holds the largest amount of Bitcoins amongst publicly traded companies. With 193,000 Bitcoins on its balance sheet, worth approximately $13 billion, its market capitalization is only $21 billion. The company recently announced a $700 million convertible note offering, with the intention of purchasing even more Bitcoin. This aggressive strategy has driven up the company’s stock price to a 24-year high. However, there is a risk that the company could have too much Bitcoin on its balance sheet, which could negatively impact its valuation if the price of Bitcoin were to decline significantly.
To mitigate this risk, it would be beneficial for MicroStrategy to continue building its core software business, with potential new AI-related offerings in the works. This would provide some diversification and reduce the reliance on Bitcoin for the company’s success.
On the other hand, Coinbase Global’s stock is not as heavily impacted by the price of Bitcoin, but it is still leveraged to some extent. The company’s main source of revenue comes from investors trading on its crypto platform, which has seen a boost due to the recent increase in Bitcoin’s price. With Bitcoin accounting for a quarter of the trading volume on Coinbase, the company is benefiting from the renewed interest in cryptocurrency. Additionally, as a custodian for several new spot Bitcoin ETFs, Coinbase is expected to see an increase in its subscription and services revenue, providing some stability during market downturns.
Coinbase’s revenue is not solely dependent on trading, as it also generates income from stablecoin and blockchain rewards. This makes it a more diverse play on the growth of the entire crypto and blockchain space, rather than just Bitcoin.
Of course, it is impossible to predict the exact future of the crypto market, especially with the uncertainty surrounding regulations. However, key trends and milestones can be identified, such as increased allocation from retail and institutional investors and the approval of new crypto investment products by the Securities and Exchange Commission. As long as Bitcoin remains a top-performing asset, it is likely that crypto stocks like MicroStrategy and Coinbase Global will continue to thrive.
