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In the last week, the crypto market went through one of the worst phases. Flagship currencies, Bitcoin and Ethereum, fell below the $20,000 and $1,000 mark, respectively. The event again reminded investors of the high volatility of the crypto market. The question now arises: Should investors invest in blockchain stocks or not?
For the uninitiated, Blockchain stocks are companies whose businesses are powered through the crypto ecosystem, such as cryptocurrency mining, trading, and technology development.
According to a global investment platform, Vested Finance, Coinbase, AMD, Block, and Nvidia are among the top 25 stocks in terms of trading volumes in May.
Microstrategy, one of the largest corporate holders of Bitcoin in the world, and Robinhood are other leading crypto stocks.
The stocks of companies such as Robinhood and Coinbase that offer crypto trading have fared more than digital assets. On the other hand, companies like AMD and Nvidia, whose operations include manufacturing chips and designing technologies used for crypto mining too, have fared better.
Viram Shah, co-founder, and CEO of Vested Finance, explained this is because these latter companies are not dependent on crypto for revenue . Shah says that poor earnings forecasts and missed revenue estimates also had an effect on their stock prices.
Bitcoin is down around 42%, Ethereum 48%, Coinbase 78%, and Microstrategy 74%, on a one-year basis.
Experts believe that volatility makes investing in crypto stocks or assets riskier.
According to Shah, it is safer to invest in stocks of companies that are exposed to crypto. However, they do not rely on its earnings from space. On top of that, it makes for a great option for investors who do not seek to buy and store digital assets. Shah also added that since the price of digital assets has experienced a major downturn, some investors might be interested in buying the dip.
According to the experts, both crypto and blockchain stocks have their merits and demerits. Meanwhile, some experts believe that there are both pros and cons associated with crypto and stocks.
Ramkumar Venkatramani, lead at investment advisory Kristal.AI, says that cryptocurrency investment is a sure bet if done with the intention that out of them, some could replace the traditional assets, including gold and currency. Moreover, Venkatramani believes that there is an expectation associated with an investment in blockchain companies that the technology is expanding in terms of value and importance.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
