Nvidia, Square & CME Group: Stocks To Play The Cryptocurrency Surge

by Trefis Team
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Interest in Bitcoin has been rising with the cryptocurrency rallying by over 70% this year to levels of close to $12,000. Although the crypto space looks promising, not everyone would want to buy into cryptocurrencies themselves considering the volatility and risk of fraud/cybertheft that could come with cryptocurrencies and also due to potential portfolio mandates. However, we’ve picked a handful of stocks including computing companies such as AMD (NASDAQ:AMD) and Nvidia (NASDAQ: NVDA), exchanges such as CME Group (NASDAQ: CME), and payment companies such as Square (NYSE: SQ), and Paypal (NASDAQ: PYPL) that could stand to gain if bitcoin prices continue to rise, while at the same time offering downside protection in the form of other stable and growing businesses.

See our indicative theme on Cryptocurrency Stocks To Watch for more details of key companies with exposure to the Crypto space.

Nvidia is a leading player in graphic processor units (GPU) which are key to mining cryptocurrency. GPUs are better equipped to handle large mathematical computations compared to traditional processors made by the likes of Intel. As bitcoin prices and adoption increases, it could lead to higher demand for the company’s GPU chips. AMD, another player in the space, could also see demand grow as cryptocurrency gains more mainstream acceptance.

Square’s Cash mobile wallet app has emerged as a popular way for people to buy and sell Bitcoin. Over Q2 2020, Bitcoin revenue from the Cash App jumped 600% year-over-year to $875 million. Paypal a large online payments processor has also indicated that it would offer cryptocurrency purchases via its PayPal and Venmo apps. As these apps are more mainstream and widely trusted, people could prefer them over newer and more obscure bitcoin exchanges.

CME, the world’s largest financial derivatives exchange that specializes in a wide variety of asset classes ranging from agricultural products, currencies, and stock indexes, has also started offering bitcoin futures contracts. The exchange also started offering Bitcoin options earlier this year. CME could gain as cryptocurrencies increasingly appeal to institutional investors. Other financial intermediates such as the Interactive Brokers Group have also been embracing cryptocurrencies on their platforms.

What if instead, you are looking for a more balanced portfolio? Here’s a top-quality portfolio to outperform the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk. It has outperformed the broader market year after year, consistently.

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