Buying was one of the easiest investments in 2023 Bitcoin (BTC -1.80%) Mining stocks. It seems all they did was go up, with popular mining stocks like… Marathon Digital Holdings (Mara 0.37%), Riot pads (riot -0.39%)And Clean Spark (CLSK -0.14%) All of this will rise by more than 400% by the end of 2023.
But the story could be very different in 2024. Given the Bitcoin halving, only a few Bitcoin mining companies are likely to be profitable for the year, and that could lead to a massive shake-up in the industry. So, with that in mind, here are two cryptocurrency stocks you can buy instead.
Coinbase International
First up is Coinbase International (currency 0.33%), which remains a favorite among cryptocurrency investors. Cathie Wood of Ark Invest has been consistently bullish on Coinbase throughout 2023 — and for good reason. Coinbase remains the second largest cryptocurrency exchange in the world, with a business model that is easy for investors to understand.
Coinbase also remains one of the best indirect ways to learn about Bitcoin. Among publicly traded companies, Coinbase is the world's sixth-largest holder of bitcoin, with 9,181 bitcoins worth nearly $400 million on its balance sheet. Furthermore, Bitcoin accounts for nearly a third of all trading on Coinbase. Overall, Bitcoin's upward momentum also drives trading volume relative to other cryptocurrencies as well, so Coinbase could get a good overall boost if investors return to the cryptocurrency market in 2024.
Image source: Getty Images.
The big question, of course, is what new Bitcoin exchange-traded funds (ETFs) mean for Coinbase's future. At the end of the year, Ark Invest was selling Coinbase shares, and some took that as a sign that it was time to exit Coinbase. After all, if people were to buy Bitcoin indirectly via ETFs rather than directly via a cryptocurrency exchange, it would likely mean a direct hit to Coinbase's bottom line.
But if you take a closer look at the structure of Bitcoin ETFs, you will find that Coinbase is appointed as custodian for 8 out of 11 of them. In other words, Coinbase will be holding a lot of Wall Street's bitcoins in its digital vaults. In a best-case scenario, the new custodial and service fees will help correct any loss in Bitcoin trading volume on its platform.
Accurate strategy
Next is Accurate strategy (MSTR -1.15%), which is still the best Bitcoin proxy stock. If you take a quick look at how much Bitcoin MicroStrategy holds on its balance sheet, it's easy to see why. MicroStrategy now owns 189,150 bitcoins worth about $8 billion at today's prices. For those of you keeping score at home, this represents about 1% of the world's total Bitcoin supply.
As with Coinbase, there is some debate about what the new Bitcoin ETFs will mean for MicroStrategy. The company should lose some of its appeal as a proxy stock for Bitcoin. In just the first 48 hours after the launch of the new Bitcoin ETFs, the stock lost 20% of its value.
However, some of this appears to be an overreaction by the market. Investment giant Vanguard Group, for example, said it would not make new Bitcoin ETFs available to its client base. Instead, it will invest heavily in MicroStrategy as a more efficient way to gain exposure to Bitcoin. This may seem counter-intuitive at first until you realize that MicroStrategy's massive Bitcoin holdings are worth more than the company itself!
What is the best way to get exposure to Bitcoin?
Now is a good time to correct your Bitcoin exposure, especially as the narrative around Bitcoin shifts. With that in mind, there are a variety of different ways to access Bitcoin. You can buy Bitcoin mining stocks. You can buy shares of a Bitcoin proxy like MicroStrategy. You can buy new Bitcoin ETFs. Or you can buy Bitcoin directly through Coinbase.
Looking ahead, the next big catalyst to watch is the Bitcoin halving, scheduled for April. Between now and then, there could be a great opportunity to find cryptocurrency stocks like Coinbase and MicroStrategy that are likely to benefit from any long-term rise in the price of Bitcoin.
