Five ways to profit from the crypto crash without buying volatile coins

Five ways to profit from the crypto crash

Momentum Fotograh / Shutterstock Article content This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page. Article content Whenever cryptocurrencies like Bitcoin or Ether tank, the thought of buying the dip and riding crypto to its next peak can be seductive. But prior to Bitcoin’s recent crash, which saw it shed about US$8,000 between Sept. 7 and Sept. 10, it had experienced multiple events where it lost at least 30 per cent of its value in a matter of weeks. That kind of volatility isn’t for everybody. Luckily, there’s a way to capitalize on crypto’s current bounce without purchasing any actual cryptocurrency. You just invest in companies that have tied themselves to the crypto market. Here are five crypto-linked stocks that might be worth buying with just your “spare change.” 1. Tesla (TSLA) While Tesla is known for its electric vehicles, its colossal Bitcoin investment, about 42,000 coins according to CEO Elon Musk’s Twitter account, means its own stock is somewhat at the mercy of the crypto market. Article content When Bitcoin took it on the chin earlier this month , Tesla shares lost just over 2 per cent of their value in the span of 24 hours. When Bitcoin hit a trough from May to July of 2021, Tesla stock followed suit. But Tesla has also risen in concert with Bitcoin’s gains this year; when it rose 27.5 per cent between Aug. 3 and Sept. 6, Tesla experienced a 5.7 per cent gain of its own. 2. Nvidia (NVDA) You might be wondering how investing in Nvidia, known for graphics processing units (GPUs) that are must-haves for serious video gamers, is tied to crypto. It turns out Nvidia’s GPUs are also in demand among cryptocurrency miners. During its second-quarter earnings call, the company said it wasn’t able to determine how much of its US$3 billion in gaming revenue actually came from gamers rather than miners. Article content As Bitcoin dipped to just under US$30,000 in July, Nvidia’s stock price softened as well, losing over 11 per cent between July 12 and July 16. But the company’s earned that back and then some. Strong second-quarter earnings, including a 68 per cent year-over-year increase in Q2 revenue, definitely helped; as has growing demand from data centers for the company’s high-powered GPUs. Nvidia has also rolled out products specifically for coin miners, which means sales of its GPUs shouldn’t suffer the next time crypto hits a sustained rough patch like they did when Bitcoin suffered through much of 2018. 3. PayPal (PYPL) Shares in online payment trailblazer PayPal have been on a wild ride. They’ve crossed the US$300 threshold twice, in Feb. and July, but they’ve also slipped into US$240 territory three times, most recently in May. Article content PayPal already had exposure to the crypto market, having rolled out a product allowing U.S. customers to buy, sell and hold cryptocurrencies last Oct. But it increased its bet on crypto when it launched a similar product for the U.K. in late Aug. According to Paypal’s general manager for blockchain, crypto and digital currencies, Jose Fernandez da Ponte, the company’s deeper foray into crypto is an attempt to make the purchase and management of cryptocurrencies easier for consumers. If the added convenience does increase the use of its crypto platform, the fees should come rolling in. 4. Square (SQ) Like Nvidia, financial services company Square had an impressive Q2, with gross profits of US$1.14 billion — a 91 [per cent increase versus the second quarter of 2020. Article content But, unlike Nvidia, Square’s profits are more directly tied to the crypto market, both through the company’s holding of actual Bitcoin and its wildly popular Cash App, which allows customers to buy and sell crypto and send crypto remittances. According to the company, Bitcoin made up more than half of its Q2 revenue of US$4.68 billion. The bruising Bitcoin’s endured this month won’t do any favours for Square’s Q3 results, but a rally could send its Bitcoin profits through the roof. Square’s non-Bitcoin business is also in solid shape, having grown 87 per cent year-over-year in Q2. 5. CME Group (CME) Unless you trade in derivatives, like stock options and commodities futures, you may not be familiar with CME Group. Article content CME is the world’s largest market for derivatives contracts. The company introduced trading of Bitcoin futures contracts in 2017 and expanded to include Bitcoin futures options in 2020. In Feb., CME launched […]


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