5 Stocks To Watch As Bitcoin Prices Spike

With cryptocurrencies like Bitcoin, Ethereum, and, yes, Dogecoin making a splash in the stock market this month, you're likely asking yourself, "Should I buy cryptocurrency stocks right now?"

It's hard to ignore the rampant explosion in trading momentum and stock prices for some of these companies. On top of that, even some leading tech stocks can't help but benefit from even the most minor of exposures to the DeFi niche. If you're unfamiliar with what a lot of this means, that's ok because I'll discuss some of the definitions within this article. First, DeFi or Decentralized Finance has become a big buzzword over the last few years. Whether we're talking about Fintech (financial technology) start-ups working on virtual payment portals, or the newest company developing better blockchain technology, DeFi is at the heart of a novel tech movement.

The latest drop in markets and uptick in crypto has triggered the latest move in DeFi-related names. If you're interested in this part of the market, now's the time to start taking notes because this isn't just about the newest token and how to mine it. Non-fungible tokens, the Internet of Things, trading platforms, and the like are now playing a big role in this niche as it evolves and matures.

While some pundits like Jim Cramer may opt for more direct investment into the coins themselves, there are many other ways to play this trend if you don't want to open up yet another brokerage account just to figure out how to buy Bitcoin.

Cryptocurrency & Blockchain Stocks To Watch

Let's take a look at the full gamut of companies that could benefit from their exposure in this are of the market. First, large-cap or "blue-chip" DeFi stocks, in this case are companies like Advanced Micro Devices (AMD), Nvidia (NVDA), PayPal (PYPL), and Square (SQ). While cryptocurrency isn't the core focus of their business models, they've each gained exposure to this budding arena. AMD and Nvidia fall into the hardware niche developing the technology for things like cryptocurrency mining and hosting. PayPal and Square have only just recently come into the fold by offering customers the ability to buy and sell cryptocurrencies. We've also seen them purchase large blocks of cryptocurrencies as well. You've also got companies like Microsoft (MSFT) and IBM (IBM) developing decentralized networks for things like identity authentication and computer learning.

Does this mean that the only way to get exposure to this trend is indirectly buying into companies with "some" access to crypto and decentralized technology? No, and there are some others, which solely focus on crypto. For instance, Marathon Digital (MARA) and Riot Blockchain (RIOT) are two of the more popular cryptocurrency mining stocks to watch. In Marathon's case, the company recently published its unaudited bitcoin production and miner installation updates for last month. It produced 1,252.4 new-minted bitcoins during Q3 2021, which increased production by 91% quarter-over-quarter. What's more, 340.6 new-minted bitcoins were produced during September alone. Marathon also received roughly 26,960 ASIC miners from Bitmain year to date with an additional 8,459 ASIC miners currently in transit. Its current mining fleet consists of 25,272 active miners producing around 2.7 EH/s.

How does that compare to Riot? In its September production and operations update, Riot said it produced 406 BT, which was a 346% increase over last September's production of 91. Year to date through September 2021, Riot said it produced a total of 2,457 BTC, up 236% compared to its BTC production during the same 2020 period. At the end of September, Riot held around 3,534 BTC and has a deployed fleet of approximately 25,646 miners, with a hash rate capacity of 2.6 EH/s.

Then you've got brokerages that offer cryptocurrency trading like Coinbase (COIN) and Robinhood (HOOD). While they aren't "pure-play" crypto stocks, they are facilitating the ability for transacting the very basic of crypto transactions: trading currencies.

Are Cryptocurrency Penny Stocks Worth It?

There are plenty of other companies that are also gaining momentum thanks to simply announcing that they're going to start taking digital payments with BTC, ETH, and DOGE. AMC Entertainment (AMC) is the most recent to tap into the crypto hype and begin taking payments with other forms of digital currency. Does that make it a "Bitcoin stock"? In my opinion, it's still a movie theatre stock but CEO Adam Aron has done his best to appeal to "the Apes" as they've become known. From giving free popcorn to "hodlers" to now offering crypto payment options, he's played on recent market trends in near real-time.

But the interesting part of all of this is that some of the most popular or "leading" stocks like some mentioned above were actually trading as penny stocks not that long ago. This murky portion of the stock market is well-known for its risk and propensity for fraud. On the flip-side, it's also well-known for producing some of the biggest winners in the stock market, daily. When it comes to the crypto, blockchain, DeFi discussion, there are quite a number of companies trying to get involved. Canaan Inc. (CAN), for instance, is following in the footsteps of higher-priced cohorts like Marathon and Riot. The company specializes in ASIC chip design and development. Its latest initiative has it supplying thousands of Bitcoin mining machines. In fact, it closed on a partnership with Genesis Digital Assets this summer. The deal sees Genesis purchasing up to 200,000 mining machines with 20,000 upfront and an option for up to an additional 180,000.

Hut 8 (HUT) is another one of the former crypto penny stocks showing strength over the last few months. The company focuses on digital asset mining. At the end of September, Hut reported that 264 Bitcoin were mined during the month at an average production rate of 9.11 BTC per day. Furthermore, its total Bitcoin balance sat at 4,724. With rising cryptocurrency prices, miners are obviously a more clear depiction of how to directly capitalize on such a move. But again, there's far more than just miners.

Companies like Takung Art (TKAT), Oriental Culture Group (OCG), Dolphin Entertainment (DLPN), Hall of Fame Resort & Entertainment Co (HOFV), Vinco Ventures (BBIG) and others focus on the new trend in non-fungible tokens or "NFTs". These digital pieces of artwork are growing in popularity and companies aim to capitalize. It's also given rise to an entirely new sub-set of "crypto stocks" known as NFT stocks. Whether this subset is here to stay or is just a fad is yet to be seen. However, with some NFTs selling for millions of dollars in Ethereum, chances are that it won't just fall by the wayside.

Just The Beginning

This isn't meant to be an all-encompassing list of cryptocurrency penny stocks to watch. I discussed several different ways to gain exposure to this high-risk market segment and a few companies that may be worth a closer look. Whether or not you choose to buy or not is completely up to you. However, as they say, "The more you know," and today's focus was on how the latest trend in Bitcoin can impact more than just a single set of stocks. Drop a comment below and let me know if you're actively investing in stocks within this niche and why.