Bitcoin Sensitive Stocks to Buy as Mania Returns: OSTK, SQ, NVDA & GBTC


June saw a lot of interest return to the cryptocurrency market. Bitcoin prices ended May around $8,550, and rose as high as $12,650 during the last week of June. The surge in price reminded a lot of investors of the 2017 run up, and built excitement that bitcoin could be ready for another huge move to the upside.

After the big run-up, bitcoin prices have pulled back, and bitcoin is currently trading back at $10,590. What this proves is that the cryptocurrency remains very volatile, and can make a huge run in either direction at any time with very little news driving the moves.

For some investors, the volatility is a big red flag that they wish to avoid at all cost. For investors with a higher risk appetite, bitcoin is the perfect investment. Bitcoin’s wild moves can lead to big short-term profits that are tough to find anywhere else. Of course, with the potential for big gains comes the equally possible chances of a big loss for investors that get in at the wrong time.

If you are interested in bitcoin, you can either purchase bitcoin directly through a variety of platforms like Coinbase, or you can purchase stocks that are closely aligned with the cryptocurrency market and trade in sympathy to bitcoin prices.

Here are a few bitcoin sensitive stocks to consider for investors will to bet on the future of bitcoin. (OSTK)

Overstock (OSTK) is an online marketplace that is closely aligned with bitcoin. Overstock became the first major e-commerce site to allow for transactions in bitcoins, so the stock has a lot of cryptocurrency sensitivity. OSTK skyrocketed in 2017 as bitcoin mania drove the cryptocurrency to $20,000, but the stock has seen weakness in the last 18 months as bitcoin prices have fallen. The stock rose sharply since the start of June when bitcoin traders started to push up the coin’s price, with shares rising from $9.55 at the end of May to its current price of $13.19 for a 38% gain in the short time period. The stock hit a ceiling as bitcoin prices retreated in the last few days, and you can expect the stock to trade in sympathy to bitcoin over the next week as bitcoin finds its next natural trading range. Analysts have a very bullish average price target of $61.50 on the stock.

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Square (SQ)

Over the last year payment processor Square (SQ) has been adding bitcoin buying to its users. After trading in a weak downward trend since February, SQ stock came back to life in June as bitcoin prices started to move higher. After closing out the month of May at $61.95, the stock has appreciated 18% to $73.05. SQ faces some hard resistance at the $77.50 level, and its ability to trade above that level will depend on whether or not bitcoin is able to regain its footing and resume its recent strong bullish run. Bitcoin is very volatile, and any move can be dramatic, and given Square’s close relationship with the cryptocurrency SQ shares are very unpredictable at this time. The stock has an $87.07 average price target.

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Semiconductor maker NVIDIA’s (NVDA) chips are used for more than just bitcoin mining, but the company’s powerful chips are a favorite among bitcoin miners, so the stock is very sensitive to bitcoin price movements. The reasoning is simple. As bitcoin prices rise, there is a lot more value in mining and investing in new mining machines. It is not cheap to mine bitcoins. Equipment costs a lot, and it requires a lot of electricity to run the machines and keep them from overheating. Seasoned and potential bitcoin miners have to run a cost/reward scenario of mining for coins, and it is much easier to justify upgrading or buying new mining equipment as prices rise. NVDA was headed for a 52-week low at the end of May, but shares rallied in June and should move higher if bitcoin traders start to push prices higher again. The stock trades at 23 times future earnings and analysts have an average price target of $191.16 on the stock. NVDA is currently trading at $162.92.

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Grayscale Bitcoin Trust (GBTC)

For investors that are truly bullish on bitcoin, Grayscale Bitcoin Trust (GBTC) is the best way to invest in a security that is directly tied to bitcoin’s future. The fund holds bitcoins, and allows investors a very liquid way to buy and sell bitcoin. The fund does have a high 2% annual management fee, but for investors that want to play bitcoin but do not want to have to deal with setting up a bitcoin wallet or establish an account at one of the many bitcoin trading platforms, GBTC is the perfect solution. You can buy and sell shares just like any other stock, and the price of each share will be reflective of bitcoin, rising and falling in sympathy to the popular cryptocurrency. GBTC rose sharply in June but has fallen in July as bitcoin has retreated. For a pure bitcoin play that offers immediate liquidity, GBTC is the way to go.

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Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

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