6 Crypto Names to Watch as Correlation with Stocks Rises

How to benefit from the crypto market without trading crypto

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Cryptocurrency is a new asset class that is considered more volatile than traditional investments, such as stocks and bonds. For those who are more risk-averse, though, there are still alternative ways to gain exposure to cryptocurrencies without directly purchasing coins.

One of these alternatives is to invest in stocks that are involved in the crypto markets. This is a safer way to gain exposure to crypto because these corporations are able to make money from crypto transactions. More specifically, every time crypto is bought, sold, or sent, there is a transaction fee. This is called a gas fee, and the transaction's facilitator will generate profit from it.

1. Robinhood Markets

Robinhood Markets Inc (NASDAQ:HOOD) is a discount brokerage application that is changing the way people think about investing. The Robinhood app is visually appealing and can inspire anyone to start their investment journey with its videogame-like platform.

Prior to 2018, you could only buy stocks and trade options on Robinhood. However, investors can now also trade cryptocurrencies on the platform. This allows the company to diversify its revenue streams, shifting from stocks and options to other asset classes such as cryptocurrencies. They can even send and receive money using other crypto wallets. Plus, Robinhood keeps adding new coins that will bring them more revenue through crypto transactions.

2. Coinbase

Coinbase Global Inc (NASDAQ:COIN) is a centralized crypto exchange that is wildly popular. It allows users to trade more than 100 cryptocurrencies, and regularly adds new ones. Coinbase allows investors to stake Ethereum, which is not available on most other crypto exchanges. Plus, the company doesn't rely on cryptocurrency prices -- it simply charges for every transaction.

Governments and financial institutions use Coinbase blockchain analytics to match wallet addresses to specific people. This is very useful to stop hackers, and it allows companies to easily find your wallet address. Blockchain technology is a public ledger, meaning all transactions are public, so Coinbase can help the government analyze the blockchain and possibly help catch criminals.

3. CME Group

CME Group Inc (NASDAQ:CME) is known for operating futures exchanges that allow people to trade commodities, stocks, and agricultural futures contracts. In 2017, it also created the first Bitcoin futures market, making it a great way to safely profit from the crypto market.

As traders buy and sell crypto futures contracts, CME Group benefits regardless of the coin's price. It is also important to note that crypto futures are only a small part of its business. Even if cryptocurrencies fail, CME Group has other products that traders will continue to use. This provides a safety net in case the crypto market goes down.

4. Block (formerly Square)

Block Inc (NYSE:SQ) makes money from cryptocurrency transactions, but also on the cryptocurrency itself. It holds over 8,000 Bitcoins on its balance sheet, which could be an incredible investment going forward.

Block hopes to become a leading platform for cryptocurrency transactions for companies using its technology. This is favorable for international transactions, because traditional banks charge high conversion fees. What's more, Block owns the company Cash app, which also started offering Bitcoin trading in late 2017.

5. PayPal

PayPal Holdings Inc (NASDAQ:PYPL) is similar to Block in the sense that it allows commerce transactions, and has a peer-to-peer payment app called Venmo. Plus, both Venmo and PayPal allow cryptocurrency transactions, making PYPL a great choice for indirect crypto exposure.

It's also worth noting that Venmo is the largest peer-to-peer payment app, so in theory, it could also become the largest cryptocurrency payment platform. As companies continue to use cryptocurrencies to conduct business, companies like PayPal could continue to benefit from those transaction fees.

6. Nvidia

NVIDIA Corporation (NASDAQ:NVDA) is a chipmaker, so it doesn't deal directly with cryptocurrencies. However, the graphics processing units (GPUs) it produces are now capable of generating cryptocurrencies through mining. Cryptocurrency mining is how coins are generated on a proof-of-work system. Bitcoin mining, for instance, requires computers with a powerful GPU to solve the equations, which Nvidia supplies.

Keep in mind that the most popular coin to mine right now is Ethereum. The problem is that it will soon move from proof-of-work to proof-of-stake, meaning you will no longer be able to mine Ethereum with GPUs, once the transition is complete. There are still other coins to mine, but none as lucrative or liquid as Ethereum. As this transition occurs, GPU demand may drop.

 




 
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