Crypto in A Frenzy! Which Stocks Benefit, What Are the Top Picks?
Introduction
TradingKey - With the U.S. softening its stance on trade tariffs, particularly after signing trade agreements with the U.K. and China, Bitcoin (BTC) soared past the $100,000 mark. Other major cryptocurrencies such as Ethereum(ETH) and Solana (SOL) have also seen significant price increases. As investor optimism rises, crypto-related stocks have experienced strong gains, prompting many to wonder: Which stocks will benefit from this rally? Which are the top stocks to watch?
This article explores the key crypto-related stocks and highlights the best potential investment opportunities amid this market surge.
What Are Crypto-Related Stocks?
Crypto-related stocks are publicly traded companies with businesses tied to cryptocurrency, blockchain technology, and digital finance. These companies may directly or indirectly participate in crypto-related industries, including mining, trading, payments, or offering technical infrastructure, such as chip manufacturing, financial services, or security solutions.
Since these stocks are closely tied to cryptocurrency markets, they exhibit unique characteristics:
High correlation | Their stock prices often move in sync with major cryptocurrencies like Bitcoin and Ethereum. |
Tech-driven growth | They rely on cutting-edge blockchain innovations, attracting venture capital and tech enthusiasts. |
Business model dependence | Their revenue streams largely rely on cryptocurrency market conditions, such as mining output and trading fees. |
Non-traditional financial metrics | They use industry-specific metrics such as market cap per TH/s (mining) and custody asset size (exchanges). |
Regulatory sensitivity | Heavily impacted by regulatory changes, particularly from the SEC, with compliance costs often ranging between 5%–15% of revenue. |
Strong market potential | As cryptocurrencies gain broader adoption, crypto-related stocks stand to benefit, attracting institutional and retail investors alike. |
Types of Crypto-Related Stocks
Based on business models, crypto-related stocks can be categorized into six main types:
Category | Business Model | Representative Companies |
Holding Stocks | Companies that hold large crypto assets | |
ETFs & Funds | Crypto-themed investment funds | Grayscale GBTC, ProShares BITO |
Mining Stocks | Crypto mining & hash power leasing | Marathon Digital (MARA), Riot Platforms (RIOT) |
Exchange Stocks | Crypto asset trading & custody services | Coinbase(COIN), Robinhood(HOOD) |
Payment Stocks | Crypto payment integration | PayPal (PYPL), Block Inc. (SQ), Visa (V) |
Tech Stocks | Blockchain development, mining chips, GPU production |
Which Stocks Benefit the Most from a Crypto Rally?
Crypto price surges benefit different stock categories at varying speeds and intensities. Below is a detailed analysis:
Stocks | Reaction Speed | Correlation | Underlying Logic |
Exchange Stocks | ★★★★★ | High | Increased trading volume boosts transaction fees |
Holding Stocks | ★★★★☆ | High | Bitcoin holdings increase in value, benefiting financial reports |
ETFs & Funds | ★★★★☆ | Medium | Crypto asset price surges drive fund valuations higher |
Mining Stocks | ★★★☆☆ | Medium-High | Higher crypto prices improve mining profitability |
Payment Stocks | ★★☆☆☆ | Medium-Low | Increased transaction demand supports crypto payment adoption |
Tech Stocks | ★☆☆☆☆ | Low | Rising demand for blockchain solutions leads to gradual growth |
Among these categories, Coinbase (COIN), as the second-largest crypto exchange globally and strong ETF custody potential, stands out as the leading stock in the exchange sector.
Meanwhile, MicroStrategy (MSTR) holds the most Bitcoin among publicly traded companies, making it highly sensitive to Bitcoin price fluctuations—though its high debt levels introduce additional risk.
How to Allocate Crypto-Related Stocks?
A structured allocation strategy helps balance risk and return:
1. Allocate Based on Risk Level
- Aggressive Investors: 70% high-volatility stocks (COIN, MARA) + 30% Bitcoin ETFs (GBTC, IBIT).
- Balanced Investors: 50% mining stocks + 30% ETF holdings + 20% cash buffer.
- Conservative Investors: 20% Bitcoin ETFs + 80% traditional tech stocks (NVDA, IBM) for indirect crypto exposure.
2. Adjust Allocation Based on Market Cycles
- Bull Market: Increase exposure to exchanges and mining stocks to capitalize on trading and mining surges.
- Bear Market: Reduce holdings of high-risk stocks and shift toward more stable financial stocks like Visa (V).
Regardless of strategy, monitor regulatory policies (especially from the SEC) and adjust holdings accordingly. It’s also advisable to reevaluate portfolio allocations quarterly or semi-annually to optimize capital efficiency.
Key Considerations for Investing in Crypto Stocks
Crypto-related stocks offer significant opportunities but come with inherent risks. Investors should focus on the following factors to minimize risk and maximize returns:
1. Macroeconomic Conditions
- Interest rate hikes by the Federal Reserve (Fed) may reduce liquidity in financial markets, impacting crypto investments.
- Global economic instability may limit institutional capital inflow into cryptocurrency markets.
- Market downturns often push investors toward traditional safe-haven assets like gold, reducing crypto demand.
2. Regulatory Challenges
Governments may tighten crypto regulations, affecting stock valuations:
- SEC oversight may alter business models for exchanges and mining companies.
- China & Europe’s restrictions on crypto trading may impact global liquidity.
3. Market Volatility
Crypto stocks mirror cryptocurrency price swings, leading to sharp price changes:
- Bull markets drive fast gains, but bear markets can cause steep declines—dynamic portfolio adjustments are necessary.
- Setting stop-loss and profit-taking points helps mitigate losses during price corrections.
4. Company Financial Health
Evaluate company profitability and financial stability before investing:
- Is its revenue growth consistent?
- Is its debt manageable?
- Does the company have sufficient cash reserves?
5. Risk of Misleading Claims
Some companies falsely claim to be entering the blockchain industry without substantial operations.
- In 2021, Long Island Iced Tea rebranded as “Long Blockchain Corp.”, causing temporary hype without actual crypto business engagement.
Conclusion
Crypto-related stocks directly align with market trends, offering high volatility, tech-driven potential, and expansive investment opportunities. Given the diverse range of stocks available, investors should tailor their investments based on risk tolerance and financial goals while remaining vigilant against market risks and industry shifts.
