The 5 Best Bitcoin Stocks And Crypto Plays To Buy And Watch

The price of Bitcoin has seesawed this week, meeting resistance at the $40,000 level. A number of Bitcoin stocks — or companies that have business tied to the cryptocurrency — have wobbled as well. Given the on-a-whim price swings in the crypto world, finding the best stocks out of that bunch can be difficult.

For now, based solely on IBD's chart analysis, the best crypto stocks and Bitcoin stocks to buy or watch include Coinbase (COIN), Silvergate Capital (SI), ProShares Bitcoin Strategy (BITO), a Bitcoin futures ETF, Bitfarms (BITF) and Signature Bank (SBNY).

However, none of those stocks are currently in bases. And with the market in correction, none are buys.

Fluctuations In Bitcoin, Bitcoin Stocks
The price of Bitcoin currently stands at around $39,000. But it's down from around $57,000 at the start of December and a record $68,990.90 in early November.

Bitcoin has taken multiple hits over that time, due most recently to Russia's invasion of Ukraine and worries about the Federal Reserve taking a more aggressive approach to fighting inflation. Prices for could squeeze higher if the conflict in Ukraine disrupts the flow of commodities.

Against that backdrop, investors have been trying to figure out how to handle volatile assets like cryptocurrencies.

"Bitcoin continues to act like the ultimate risky asset, tumbling hard after Russia launched an attack against Ukraine," Edward Moya, senior market analyst at OANDA, said in emailed commentary.

"With larger funds, corporations, and investors allocating to Bitcoin over the last year or two, correlations between the cryptocurrency and more traditional investments have surged," Matt Weller, global head of research at Forex.com, said in an email. He also noted a "strong correlation" between tech stocks and Bitcoin.

A crypto crackdown in China, Tesla (TSLA) backing away from using the currency and fears of tighter regulations in the U.S. have also weighed on Bitcoin. Russia's central bank has proposed a cryptocurrency ban.

Meanwhile, cheaper coins — including meme-based cryptocurrencies Dogecoin and Shiba Inu — have become more popular. But their moves higher or lower can happen at any time regardless of market news.

Mainstream Adoption
Still, the industry has made progress toward mainstream adoption. More exchange traded funds tied to Bitcoin futures and companies — the closest things to a direct Bitcoin ETF — have debuted recently. Major corporations are taking interest.

ProShares Bitcoin Strategy ETF (BITO) began trading on the NYSE Arca in October. That launch helped drive Bitcoin to a record high. The Valkyrie Bitcoin Strategy ETF (BTF) made its trading debut shortly after. VanEck has launched its VanEck Bitcoin Strategy ETF on CBOE. Those funds offer exposure to Bitcoin futures.

Among other Bitcoin-related ETFs, Invesco Alerian Galaxy Crypto Economy ETF (SATO), made up of shares of companies engaged in crypto-related activity, also debuted in October. So did the Volt Crypto Industry Revolution and Tech ETF (BTCR), which also gives investors access to Bitcoin-exposed companies.

Grayscale has filed to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. But the SEC has concerns, and has pushed back its decision on the matter.

The way Bitcoin and cryptocurrencies are used now — largely for investing — is also a big departure from Bitcoin's original intent as a currency, free from central banks, that people could use to buy things.

Observers also still raise concerns about security, market manipulation, and whether cryptocurrencies, and by extension Bitcoin stocks, have a place in mainstream investing. More regulation could hasten adoption. But it could dampen some of the big gains that have made Bitcoin popular.

Bitcoin Stocks
Bitcoin stocks are not all the same.

Some, such as Riot Blockchain (RIOT), are in the business of mining Bitcoin. Some, like MicroStrategy (MSTR), simply buy Bitcoin, giving investors a way to play the cryptocurrency on the major exchanges. The rise of Bitcoin ETFs may make such companies that buy Bitcoin less appealing.

Bitcoin miners and buyers are directly tied to Bitcoin and the cryptocurrencies they hold.

Other Bitcoin stocks serve as cryptocurrency's financial plumbing. Silvergate Capital (SI) is known as a "crypto bank" and runs a digital-currency exchange platform. Coinbase is a leading Bitcoin and cryptocurrency exchange, and makes money from fees on transactions. But the companies' stock prices are still affected by the day-to-day fluctuations of Bitcoin and other crypto prices.

Other companies, like the trading platform Robinhood (HOOD), can sometimes function as crypto stocks. Block (SQ), formerly known as Square, as well as PayPal (PYPL) also allow their users to buy Bitcoin.

Coinbase Stock
Cryptocurrency exchange Coinbase has a 45 Composite Rating. Its EPS Rating is 76.

Coinbase stock began trading on April 14. COIN stock fell almost immediately, tumbling from an opening day high of 429.74 to 208 on May 19. The stock rebounded through October, but later gave up those gains.

Coinbase this month reported fourth-quarter results that soundly beat expectations. However, the company noted that for the first quarter, it had seen "a decline in crypto asset volatility and crypto asset prices compared to all-time high levels in Q4 2021."

"Recent market performance has been driven by macroeconomic factors such as tightening financial conditions (particularly after the U.S. Federal Reserve raised the possibility of quantitative tightening in 2022) 
and geopolitical instability in parts of the world," Coinbase said.

The company has said it wants to become the "Amazon (AMZN)" of digital assets. But putting more of those assets on its platform could bring complications with compliance, and currencies that pose bigger risks to investors.

Silvergate Capital Stock
Silvergate Capital is the holding company for Silvergate Bank, which provides financial services for digital currencies that try to keep up with the 24/7 pace of cryptocurrency trading.

SI stock broke out of a loose cup-with-handle base in late October as Bitcoin powered to record highs. But the stock sold off after consolidating. Silvergate has a 78 Composite Rating and a 98 EPS Rating.

Along with traditional commercial and residential lending services, Silvergate runs an exchange network that allows its digital-currency clients and institutional investors to send money to accounts of other Silvergate clients at any time. Its digital-currency customers include digital-currency exchanges and institutional investors, and the network is used for cryptocurrency settlements.

Silvergate's network, which takes dollars and euros, also allows digital-currency customers to borrow dollars from the bank to buy Bitcoin, using Bitcoin as collateral. Silvergate plans to launch a so-called stablecoin this year.

"Through conversations with our customers, we identified a need for a U.S. dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers," it said in a recent release.

In January, the company reported fourth-quarter earnings per share and revenue that missed expectations. Digital-currency customers increased 6% from the prior quarter to 1,381.

At the end of that month, Silvergate announced that it had acquired intellectual property and technology related to operating a blockchain-based payment network from the Diem Group in a cash-and-stock deal valued at $182 million, based on Silvergate's closing price on Jan. 31. The network, which Silvergate said had been running in a pre-launch phase, was designed to make it easier to make payments and cross-border remittances.

ProShares Bitcoin Strategy

The ProShares Bitcoin Strategy ETF began trading in October, not long before Bitcoin's peak. It has since seesawed in tandem with Bitcoin. The BITO ETF does not have ratings from IBD.

The SEC has been reluctant to approve an ETF directly tied to Bitcoin's twists and turns. But last year, SEC Chair Gary Gensler indicated that the agency could be more receptive to applications for ETFs tied to Bitcoin futures.

Still, the U.S. government has remained wary of Bitcoin's volatility, energy consumption and its role in illicit financial activity.

Bitfarms Stock
Bitfarms, a Bitcoin miner, is down from highs reached in November.

The stock has a 37 Composite Rating. Its EPS Rating is 58.

Signature Bank Stock
Signature Bank stock has retreated from record highs. The stock has a 98 Composite Rating. Its EPS Rating is 85. Shares are above their 50-day line, but off highs reached in January.

Signature has a blockchain-based digital payments platform called Signet. The company's fourth-quarter results beat expectations. Its digital-asset banking team helped boost deposit growth.