Currently trading near all-time highs, Bitcoin (BTC 5.38%) We continue to lead the cryptocurrency market. As a result, analysts and investors continue to ratchet up their price expectations on how high Bitcoin will rise. One of his most aggressive price predictions comes from Cathie Wood's Ark Investments, who proposed a scenario in which Bitcoin could skyrocket to more than $2 million by 2030. is described in detail.
If that's true, people will be blaming themselves for not dabbling in stocks whose success is heavily tied to Bitcoin's price.These are the two I'm looking at right now micro strategy (MSTR 4.11%) and coinbase global (coin -0.95%).
micro strategy
Over the past year, investors have looked to MicroStrategy as a proxy for Bitcoin investing. That's because MicroStrategy currently holds the largest amount of Bitcoin among publicly traded companies in the entire world. The company currently has 193,000 Bitcoins on its balance sheet, worth an estimated $13 billion at today's market value. For comparison, MicroStrategy's stock market capitalization is $21 billion.
And if anything, this highly leveraged Bitcoin position is likely to grow even further in the coming years, as the company just announced a massive new $700 million convertible bond issuance. The purpose of the new service is deceptively simple. It's about buying more Bitcoin. MicroStrategy's All In Get ready to hear more about his Bitcoin strategy. Already, the company's aggressive Bitcoin strategy has pushed its stock price to a 24-year high.
Of course, the only caveat here is that the company could reach a point where it has too many Bitcoins on its balance sheet. If the price of Bitcoin drops significantly over an extended period of time, MicroStrategy's valuation could plummet.
As such, I expect MicroStrategy to continue to strengthen its core software business over the next few years. The company hinted that new AI-related software may be on the way. This would provide at least some diversification and help reduce the risk of holding more than half of a company's value in Bitcoin.
coinbase global
Coinbase Global's stock price also has an impact on the price of Bitcoin, but not as much as MicroStrategy. From my perspective, Coinbase is a bet on not only the future trajectory of Bitcoin, but the future direction of the crypto market.
That said, investors trading on the crypto trading platform, which is a core element of Coinbase's business model, have been significantly strengthened by Bitcoin's recent price action. Retail investors are once again drawn to the cryptocurrency market as Bitcoin hits new all-time highs. This is a welcome development, as Bitcoin accounts for more than a quarter of all trading volume on his Coinbase platform. Perhaps an expanded bull market rally will also facilitate trading in other cryptocurrencies.
Image source: Getty Images.
At the same time, Coinbase is also an indirect beneficiary of the new Spot Bitcoin ETF. That's because Coinbase is the custodian of many new ETFs. black rock and Ark Investment. This new storage fee revenue will likely boost Coinbase's subscription and services revenue. Over time, this will help smooth out the company's earnings even during times of market volatility.
This non-transaction related revenue is actually a fast-growing category for Coinbase, and also includes stablecoin revenue and blockchain reward revenue. This is why I think Coinbase has really taken into account the growth of not just Bitcoin, but the crypto and blockchain space as a whole.
What will happen by 2030?
Keep in mind that it is impossible to predict exactly what will happen in the cryptocurrency market over the next seven years or so. There is too much uncertainty regarding the regulatory environment and the crypto asset class has historically been very volatile.
However, it is possible to piece together key trends and milestones that are likely to push crypto stocks higher. If both retail and institutional investors continue to allocate more of their portfolios to Bitcoin, that will be good news for crypto stocks. And if the Securities and Exchange Commission continues to approve new crypto investment products, that will also be a positive development.
As long as Bitcoin remains one of the best-performing assets, crypto stocks like MicroStrategy and Coinbase Global are likely to follow suit.
