Crypto + BTC: 3 Crypto Proxies

Understanding the Difference Between Bitcoin & Crypto

Bitcoin, the world’s first and most popular cryptocurrency, and the crypto industry as a whole are often conflated. If you’re interested in trading crypto or even just educating yourself about the space, understanding the difference between the two is critical.

Bitcoin is the most heavily traded crypto in the world and has had staggering performance since its inception roughly a decade ago – rising from $.09 to nearly $25,000 today. Like most cryptocurrencies, Bitcoin runs on blockchain technology – a sort of encrypted digital Excel spreadsheet (ledger) that stores data and “chains” it through multiple different areas of the internet. However, unlike most other cryptocurrencies and fiat, Bitcoin is:

·      Truly Decentralized: To this day, Bitcoin’s creator (or creators) is unknown. Instead, credit is given to a pseudonymous, made-up founder known as Satoshi Nakamoto.

·      Deflationary: Unlike global, government-backed fiat and many other crypto assets, Bitcoin has a limit to the number of coins that can ever be minted. Satoshi ensured that there can never be more than 21 million Bitcoins in existence.

·      Implements a Proof-of-Work Protocol: The Bitcoin blockchain validates transactions through thousands of miners. Miners solve complex mathematical equations and validate transactions. Because it takes a plethora of miners to validate transactions, the Bitcoin network has never been hacked. (Crypto exchanges have, however).

For the reasons mentioned above, and the recent demise of the FTX exchange (and its “air” coin FTT), many crypto enthusiasts are “Bitcoin Maximalists” that avoid “alt-coins” such as Ethereum. Regardless of where one stands in the argument, crypto has made an impressive comeback over the past few weeks – despite a volatile stock market and negative news. Below are 3 unique ways to play crypto and Bitcoin through public means (without investing in the coins themselves):   

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1.   “Selling the Shovels”

Investors looking to cash in on a crypto turnaround may want to look at secondary companies. In other words, companies that benefit indirectly from an increase in crypto trading and activity rather than the direction of crypto markets. Coinbase COIN, the largest US-based crypto exchange, stands to benefit if crypto trading begins to pick up again. Despite slowing earnings growth and the FTX debacle, COIN shares are showing a clear character change. Since bottoming in late February, shares have more than doubled and have cracked the 200-day moving average for the first time since going public back in April of 2021.

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Semiconductor providers such as Advanced Micro Devices AMD and Nvidia NVDA are a way to play an increase in crypto mining and the buying of crypto “rigs”.

2.   BITO ETF: The Proshares Bitcoin Strategy ETF BITO is the first to be approved in the United States. Like Coinbase, BITO is overtaking its 200-day moving average for the first time since inception. Investors can buy shares of the ETF or even play it via options to limit risk.

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3.   MicroStrategy MSTR: Microstrategy is a software company that has adopted the “Bitcoin standard”. In other words, any cash generated from its software operations is being put toward accumulating Bitcoin.

Bottom Line

Bitcoin, the crypto market, and public companies have several differences. Investors who do not want to invest directly in cryptocurrencies can invest in public “proxies” and still benefit from a crypto turnaround. Though the crypto space has been on a solid run recently, more investors may look to diversify into the space as confidence in banking stocks wanes. 

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Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report

Coinbase Global, Inc. (COIN) : Free Stock Analysis Report

ProShares Bitcoin Strategy ETF (BITO): ETF Research Reports

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