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Three US Stocks Outperforming BTC
Currently, the total value of assets managed globally based on Bitcoin investment products (such as futures and spot ETFs) has exceeded one million bitcoins (approximately $64 billion), highlighting the growing interest of traditional financial markets in crypto portfolios.
According to data from K33 Research, of the one million bitcoins, over 83% are held by US spot and futures ETFs, followed by investment products in Europe and Canada. As of the close of March 4th, they collectively held 1,008,436 bitcoins, accounting for 5.13% of the circulating supply.
Taking IBIT under BlackRock as an example, it broke through $10 billion in assets under management in just 7 weeks, while Fidelity's FBTC fund assets have also exceeded 115,000 bitcoins (worth $7.5 billion). Comparing with traditional ETFs, their expansion rate is remarkable: among the current 3,400 ETFs, only about 150 have assets under management exceeding $10 billion, with the majority having been launched for over 10 years.
These investment tools have greatly disrupted Bitcoin's original market structure. A few years ago, exchanges held 20% of the circulating supply of bitcoins; now, this number has dropped to 11%, with the scale of ETF/ETP and other derivative products based on Bitcoin rapidly expanding.
Unlike in the past where bitcoins held on exchanges served as leverage collateral, this time traditional asset management products entering the scene make it difficult to generate liquidity overflow. Bitcoins bought through these products are held by custodians and cannot be pledged or lent to market makers, significantly reducing the possibility of liquidity leakage.
If one believes that Bitcoin will enter a bull market in 2024, which stocks will benefit the most? How do they compare to Bitcoin in terms of performance, fundamentals, and investment logic? Next, the RockFlow research team will analyze the investment prospects of the leading companies in three directions: cryptocurrency trading, Bitcoin asset management, and Bitcoin mining—Coinbase, MSTR, and Mara.
It is also worth noting that holding crypto stocks instead of Bitcoin itself has another advantage—lower risk for investors. Directly holding Bitcoin carries risks such as hacking, fraud, issues with crypto wallets, and exchange failures. A typical example is the collapse of FTX at the end of 2022, leading to customers losing $8.9 billion in crypto assets.
1) Coinbase
Recently, on February 15th, Coinbase announced a Q4 2023 financial report far better than expected, leading to a nearly 30% surge in its stock price over the following weeks. This quarterly report convinced investors that Coinbase's fundamentals are improving due to the widespread recovery of the crypto market. Additionally, with the SEC approving Bitcoin spot ETFs, the rise in Bitcoin prices further solidifies investors' confidence in the crypto market. Coinbase has become the best bet for betting on the booming crypto economy.
In fact, the anticipation of a positive decision by the US SEC on Bitcoin ETFs has already led to a widespread increase in cryptocurrency prices in Q4 2023, reflected in Coinbase's trading revenue surge. Fueled by the attraction of rising cryptocurrency prices, both institutional and retail clients have joined the trend, resulting in a 64% year-on-year increase in Coinbase's trading revenue in Q4 2023. Institutional trading revenue grew by 160% quarter-on-quarter, while retail client trading revenue grew by 79%.
Furthermore, since 2022, Coinbase's revenue has become more diversified, with efforts to reduce reliance on unpredictable trading revenue. Subscription and service revenue for Coinbase increased significantly (up 78% year-on-year) to $1.4 billion in the 2023 fiscal year. These services include blockchain rewards, custody services, customer loan interest income, and fees from stablecoin issuers.
In the 2023 fiscal year, 48% of net revenue came from non-trading-related services, compared to only 25% in the 2022 fiscal year. This diversification helps reduce the volatility of Coinbase's future revenue and leads to more stable profitability.
On the other hand, Coinbase has significantly reduced operating expenses, which has begun to show results. During the last crypto bear market, Coinbase laid off a large number of employees and drastically cut costs. Today, Coinbase is a much leaner company, with operating expenses in fiscal year 2023 down 45% year-on-year.
Currently, Coinbase is a profitable and stable crypto trading platform. The SEC's approval of Bitcoin spot ETFs directly stimulates the demand for Bitcoin trading, significantly boosts investor sentiment, and further legitimizes the entire crypto economy.
However, it should be noted that Coinbase is not without its risks. Investors need to pay attention to regulatory trends, cyclical fluctuations in the crypto market, and the risk of bankruptcy of other trading platforms. The bankruptcy of FTX in 2022 had a very negative impact on investors, and similar events could severely damage the bullish sentiment in the crypto market again.
2) MicroStrategy
MicroStrategy (MSTR) was originally a business intelligence and analytics software service provider. Of course, they still do related businesses and have recently ventured into the AI field. But what is its real value? Holding nearly 200,000 bitcoins.
MSTR chooses to "dollar-cost average" Bitcoin and hold it for the long term, which is one of the best ways to build a portfolio of volatile assets like Bitcoin. And this approach is bringing in huge returns for it in the current crypto bull market.
MSTR's purchase of Bitcoin began in August 2020, about three months after the third Bitcoin halving. About a year after the first purchase, MSTR's Bitcoin holdings soared to 92,000. The company currently holds 193,000 bitcoins, valued at over $13 billion at current prices, with an unrealized profit of $6 billion.
Also, due to its continued issuance of debt to purchase Bitcoin, since 2020, MSTR's stock price has shown a strong correlation with the price of Bitcoin. Historical data also indicates that MSTR's stock price can effectively amplify fluctuations in the price of Bitcoin. On average, MSTR's volatility is 1.5 times that of the price of Bitcoin.
Therefore, if one is bullish on Bitcoin's future performance, considering MSTR for excess returns beyond Bitcoin's rise is worth considering.
However, it should be noted that, given the continued volatility in Bitcoin prices, MSTR's stock price will also bear greater fluctuations. Unexpected global events, including geopolitical tensions or macroeconomic shocks, could affect the crypto market and thus impact MSTR.
3) Marathon Digital
Due to the improvement in macroeconomic conditions and the continuous surge in Bitcoin prices, Bitcoin mining stocks have delivered significant returns over the past few months. The RockFlow research team believes that Marathon Digital (Mara) is the best among all Bitcoin mining stocks because its hash rate and Bitcoin reserves surpass those of its competitors. Mara provides investors with greater trading flexibility, and given the potential for Bitcoin to continue hitting new highs after its halving this year, Mara is also worth considering.
As a leading Bitcoin mining company, Mara's strategy is to mine and hold Bitcoin as a long-term investment after paying operating costs. Currently, Mara mines Bitcoin through joint ventures in the United States, as well as in Abu Dhabi and Paraguay. While some mining farms were previously entrusted to third-party custody, Mara is moving away from this model, which helps reduce its mining costs and improve operational efficiency.
As mentioned earlier, halving |
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Post time 16-3-2024 21:18:23
