These 2 Stocks Offer Safer Ways to Invest in Crypto

Crypto markets have been hot this year, with Bitcoin (CRYPTO: BTC) reaching all-time highs in March. One way for new investors to gain exposure to cryptocurrency is through exchange-traded funds (ETFs); Earlier in the year, regulators approved several spot Bitcoin ETFs.

These ETFs track Bitcoin and provide investors with direct exposure to Bitcoin’s price movements. This means they won’t necessarily offer you safer, less volatile options for investing in Bitcoin. You will still be vulnerable to sharp fluctuations in the crypto market.

Instead, you might consider investing in stocks with strong fundamental businesses and exposure to Bitcoin. Two such examples are Block (NYSE: SQ) and PayPal (NASDAQ: PYPL). Here’s why these might be better options for you than spot Bitcoin ETFs.

Block 1

Block, formerly Square, helps merchants easily process payments using its app and point-of-sale devices. Bitcoin has also been an important part of its business.

It was the company’s largest source of revenue last year; Bitcoin-related transactions brought in a whopping $9.5 billion in sales, representing 43% of the company’s top-line revenue ($21.9 billion). Block’s next largest source of revenue came from its subscriptions and services, which generated $5.9 billion in sales. Although Block did not generate strong margins on Bitcoin transactions, the company generated overall net income of $9.8 million last year.

The company’s Cash App makes it easy for people to buy and sell Bitcoin. Block is delving deeper into cryptocurrency as he plans to build his own Bitcoin mining system. It also recently completed development of its own Bitcoin mining chip.

For crypto investors, Block may be a safer long-term play than investing in spot Bitcoin ETFs. With a diversified and profitable business, it is easy to track the company’s performance and growth; It’s a less speculative investment than crypto could be. Considering the factor Bitcoin plays in Block’s operations, Bitcoin may be a better overall investment option, although investors will continue to face risks associated with the stock.

The stock is currently trading at a price-to-earnings-growth (PEG) ratio below 0.9, suggesting this could be a cheap option for growth investors to hold on to for the long term.

2.PayPal

PayPal also allows users to buy and sell crypto, but its operations are smaller and it doesn’t have a segment dedicated to Bitcoin-related revenue like Block does. In this sense, PayPal may be an even safer option for investors. However, bullish sentiment is still evident in crypto as it has launched its own stablecoin, PayPal USD, which it says is designed for payments.

The story continues

Unlike Block, investors have come to expect consistent profits from PayPal. The biggest blow to the business was that the growth rate was very low. However, it is a very safe option for crypto enthusiasts.

The payment processing company reported earnings on Tuesday, with revenue for the first three months of the year rising 9% year over year to $7.7 billion. Net income of $888 million also increased by 12% compared to the same period last year.

PayPal is another reasonably valued stock, as it trades at just 13 times expected future earnings (based on analyst expectations) and has a PEG ratio around 0.6. If you’re looking for relatively safe exposure to crypto or simply own a cheap growth stock, PayPal could be a great option to add to your portfolio today.

Should you invest $1,000 in Block right now?

Before buying shares in Block, consider:

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Block, and PayPal. The Motley Fool recommends these options: Short calls on PayPal for $67.50 in June 2024. The Motley Fool has a disclosure policy.

Forget Spot Bitcoin ETFs: These 2 Stocks Offer Safer Ways to Invest in Crypto Originally published by The Motley Fool