Cryptocurrencies have resumed their northward journey this year after a highly disappointing 2022. Prices of cryptocurrencies are inversely related to market interest rate. The primary reason for last year’s disappointment was the Fed’s decision to pursue stringent monetary policies and rigorous hikes in the benchmark interest rate to combat 40-year high inflation.
The situation has reversed this year buoyed by a favorable macro-economic scenario. The Fed has reduced the magnitude of interest rate hikes following a steady decline in inflation. In spite of facing tighter monetary control in the past one and a half years, the fundamentals of the U.S. economy remain solid. This has eased fears of a near-term recession.
Finally, the largest thrust came in the form of investments from institutional investors in cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Dogecoin (DOGE) to name a few.
However, market participants are expecting the Fed to hike the benchmark interest rate again in the July FOMC meeting. Notably, the central bank paused its rate hike in the June FOMC meeting after 10 consecutive increases. A resilient labor market has changed the entire scenario.
At present, the CME FedWatch indicates almost 100% probability that the Fed will raise the benchmark lending rate by 25 basis points to a range of 5.25-5.5% in July. In fact, in his post-FOMC meeting statement in June, Fed Chairman Jerome Powell warned that more rate hikes are likely this year as inflation remains elevated, at least much higher than the central bank’s 2% target.
As a result, cryptocurrencies may face volatility in the near-term. However, investors should accumulate cryptocurrencies using a buy-on-the-dip strategy. Every dip in crypto prices will be a good purchasing point in order to gain handsomely once the Fed’s tighter monetary control comes to an end.
Our Stock Selection
We have narrowed our search to five stocks with solid crypto exposure and strong growth potential.
NVIDIA Corp. NVDA is a semiconductor industry giant and one of the biggest success stories of 2023. Being a leading designers of graphic processing units (GPUs), the NVDA stock usually soars on a booming crypto market. This is because GPUs are pivotal to data centers, artificial intelligence, and the creation of crypto assets.
NVIDIA’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for its current-year earnings has improved 1.4% over the last seven days. NVDA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Robinhood Markets Inc. HOOD operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.
Robinhood Markets has an expected earnings growth rate of 47.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.7% over the last seven days. HOOD currently carries a Zacks Rank #3 (Hold).
Shopify Inc. SHOP is an e-commerce company that allows merchants using its platform to accept cryptocurrencies as payment and has integrated with cryptocurrency payments processor CoinPayments.
Shopify’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for its current-year earnings has improved 3.2% over the last 30 days. SHOP currently has a Zacks Rank #2 (Buy).
Coinbase Global Inc. COIN provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.
Coinbase Global has an expected earnings growth rate of 78.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13.4% over the last seven days. COIN currently carries a Zacks Rank #3.
Marathon Digital Holdings Inc. MARA operates as a digital asset technology company that mines cryptocurrency. MARA is singularly focused on the blockchain ecosystem and the generation of digital assets in the United States.
Marathon Digital has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 90 days. MARA currently carries a Zacks Rank #3.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Shopify Inc. (SHOP): Free Stock Analysis Report
Marathon Digital Holdings, Inc. (MARA): Free Stock Analysis Report
Coinbase Global, Inc. (COIN): Free Stock Analysis Report
Robinhood Markets, Inc. (HOOD): Free Stock Analysis Report
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