How Cautious Investors can Invest in Crypto

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Much more than a digital ledger, the blockchain of the 2020s has enabled a revolution in finance, encompassing everything from smart contracts to non-fungible tokens (NFTs) – and of course cryptocurrencies, some of which have created vast wealth for early stakeholders.

As the U.S. dollar and other fiat currencies come under negative inflationary pressure, today’s nimble investors are seeking both shelter and yield in crypto. Yet, cryptocurrency investing isn’t readily available to everyone in all situations.

For instance, some investors might not be able to buy crypto coins in their investment accounts. Others may have cryptocurrency investing available to them but would prefer to stick to an established broker that only allows stock trading.

Furthermore, investors can choose to diversify into both cryptocurrency tokens such as Bitcoin or Ethereum, along with allocations into stocks that are associated with crypto and/or the blockchain. For those who rely on data such as analyst ratings and price targets, earnings reports, insider transactions, and more, investing in companies that offer exposure to cryptocurrency prices.

Powerful exposure

It is entirely possible to get indirect but still powerful exposure to the blockchain and digital assets through stocks. Besides, there are distinct advantages, as there is typically much more, and much more reliable, data available regarding blockchain-focused businesses than there is for cryptocurrency tokens.

Think about it, even the most famous cryptocurrencies, such as Bitcoin and Ethereum, don’t have a CEO or a president to discuss the outlook for the future. Cryptocurrencies have no earnings reports and no SEC filings because they’re not companies.

All of this means that there are fewer data available to the public concerning cryptocurrencies. With a company, on the other hand, Wall Street analysts can carefully sift through SEC forms, earnings and revenue data, as well as the forward guidance provided by the CEO or president.

Also with companies, both analysts and retail investors can check for metrics like insider activity. When executives and other insiders are buying shares of their company’s stock, that’s often a positive sign. Of course, there are no “insiders” buying cryptocurrency since Bitcoin, Ethereum, and other cryptos aren’t companies – they’re decentralized, after all.

On top of all that, indirect exposure to the blockchain through stocks is advantageous because you typically get more diversification compared to directly owning a cryptocurrency. If a company is involved with Bitcoin or Ethereum, for example, but also has other business interests and revenue sources, then you as an investor won’t be as directly exposed to the ups and downs of crypto prices.

Using research to your advantage

Since there’s so much more data available with stocks than there is with most cryptocurrencies, it might seem intimidating if you don’t know where to start your due diligence process on blockchain-focused companies. How can informed investors separate the best from the rest?

It’s not as hard as you might think. One place to begin your journey into high-conviction crypto companies is with this list of best cryptocurrency stocks, which provides immediate access to key financial indicators along with analysts’ price targets and recommendations.

Here’s a quick tip, start with stocks that are heavily favored by analysts, and which have a consensus (i.e., average) rating of either Strong Buy or Moderate Buy (or something equivalent, such as Overweight).

Moreover, check for price targets: are the experts predicting significant upside for the crypto stock, or are they pessimistic about the stock’s future performance?

Two crypto stocks to consider

Without giving specific recommendations, let’s review two companies that are heavily correlated to cryptocurrencies.

The first is is Block (NYSE:SQ), formerly known as Square. In November Jack Dorsey resigned from Twitter to lead transitioning Square from a payment app to bitcoin mining company. The company changed its name to Block at the beginning of December, acknowledging the company’s new direction.

Investors looking for data can easily tap into the opinion of Wall Street analysts. According to TipRanks, a simplified research platform, Block stock has a Moderate Buy consensus rating from Wall Street analysts, based on 16 Buy and 6 Hold ratings in the past three months. No analysts have made a Sell rating in this time.

Crucially, as of January 19, analysts predict over 100% upside for Square stock over the next 12 months. Potentially, investors could double their money with this investment. This type of data can help investors build confidence in their decision-making.

Another cryptocurrency stock to consider is Coinbase (NASDAQ:COIN), the largest cryptocurrency exchange by trading volume in the U.S. The company held its IPO in early April 2021, and since its stock has dropped by over 30%. The company’s first two earnings reports beat analysts’ forecasts, although the third did not.

TipRanks shows that Coinbase has a Strong Buy analyst rating consensus, with an average price target of $411.43, representing over 80% upside over the next 12 months, as of January 19. In the most recent reported quarter, hedge fund managers including Cathie Woods and Ray Dalio added COIN to their portfolios.

Crypto and the cautious investor

For investors who are hesitant about cryptocurrencies, but don’t want to miss out on the future of money, there’s more than one way to get exposure to the blockchain revolution. Crypto stocks can provide diversification and access to more data.


All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Ariel Shapira is a father, entrepreneur, speaker, cyclist and serves as founder and CEO of Social-Wisdom, a consulting agency working with tech companies and helping them to establish connections with international markets.

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