Cryptocurrency markets have been hot this year Bitcoin (Crypto: Bitcoin) Reaching all-time highs in March. One way new investors have gained exposure to cryptocurrency is through exchange-traded funds (ETFs), with regulators earlier in the year approving several Bitcoin exchange-traded funds.
These ETFs track Bitcoin and give investors direct exposure to its price movements. This means that they will not necessarily provide you with safer and less volatile options for investing in Bitcoin. You will still be vulnerable to extreme volatility in the cryptocurrency market.
Instead, you may want to consider investing in stocks that have a strong underlying business and exposure to Bitcoin. Two such examples are roadblock (NYSE: SCO) And PayPal (NASDAQ: PYPL). That's why these may be better options for you than Bitcoin ETFs.
1. Block
Block, formerly known as Square, helps merchants easily process payments using its apps and point-of-sale devices. Bitcoin has also been a major part of its business.
Last year, it was the company's largest source of revenue. Bitcoin-related transactions generated a whopping $9.5 billion in sales, representing 43% of the company's total profits ($21.9 billion). Block's next largest revenue source was from its subscriptions and services, which generated $5.9 billion in sales. Although Block doesn't make strong margins on Bitcoin transactions, the company still generated overall profits last year with net income of $9.8 million.
The company's Cash App makes it easier for people to buy and sell Bitcoin. Block is delving deeper into the cryptocurrency space as it plans to build its own Bitcoin mining system. It also recently finished developing its own Bitcoin mining chip.
to Crypto investorsBlock may be a safer way in the long term than investing in spot bitcoin ETFs. With a diversified and profitable business, it is easy to track a company's performance and growth; It is a less speculative investment than cryptocurrencies. While investors will still face risks with the stock, given how big of a factor Bitcoin plays in Block's operations, it could make for a better investment option overall.
The stock is currently trading at P/E growth (link) is less than 0.9, suggesting that this may be a cheap option for growth investors to hold on to over the long term.
2. PayPal
PayPal also allows users to buy and sell cryptocurrencies, but its operations are smaller, and it doesn't have an entire segment dedicated to bitcoin-related revenues like Block does. In this sense, PayPal may be a safer option for investors. However, the company remains clearly bullish on cryptocurrencies, having launched its own stablecoin, PayPal USD, which it says is designed for payments.
Unlike Block, investors have come to expect steady profits from PayPal. The big hit on the business was simply that its growth rate was disappointing. But it is a fairly safe option for cryptocurrency enthusiasts.
The payment processing company reported earnings on Tuesday, and its revenue for the first three months of the year totaled $7.7 billion, up 9% year over year. Net income of $888 million also increased by 12% compared to the same period last year.
PayPal is another good value stock, trading at just 13 times its expected future earnings (based on analyst forecasts) and a PEG ratio of around 0.6. Whether you want relatively safe exposure to cryptocurrencies or just want to own cheap growth stocks, PayPal can be an excellent option to add to your portfolio today.
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David Jagielski He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Block, and PayPal. The Motley Fool recommends the following options: Short $67.50 June 2024 calls on PayPal. The Motley Fool has Disclosure policy.
Forget spot bitcoin ETFs: These two stocks offer safer ways to invest in cryptocurrencies Originally published by The Motley Fool