2023 Crypto Rebound Paves the Way for a Promising 2024: 2 Crypto-Centric Stocks

Cryptocurrency prices have been on the rise after the so-called “crypto winter” deepened by the collapse of the FTX exchange in 2022. Bitcoin is up more than 150% year-to-date, mainly strengthened by optimism for a spot bitcoin ETF. As this year’s crypto recovery paves the way for a promising 2024, crypto-centric stocks NVIDIA (NVDA) and Block (SQ) could be ideal watchlist additions. Read on….

The crypto market has witnessed a roller coaster ride this year but has generated profitable returns. In early December, the digital currency topped around $44,000 for the first time since April last year and gained above 150% year-to-date, primarily fueled by optimism for a spot bitcoin ETF.

Amid this backdrop, it could be wise to add quality crypto-centric stocks NVIDIA Corporation (NVDA) and Block, Inc. (SQ)  to your watchlist.

Cryptocurrency prices are rebounding after a so-called “crypto winter” that was aggravated by the collapse of the FTX exchange in 2022. Last year was highlighted by hedge fund collapses, crypto lender failures, and worsening losses at miners, which was punctuated in November 2022 when the FTX spiraled into bankruptcy.

While the Bitcoin price surged more than 150% from the same time last year, shares of Coinbase (COIN), MicroStrategy (MSTR), and the Grayscale Bitcoin Trust (GBTC), all closely tied to the digital currency, rose more than 300% in value. Ethereum, another major coin, is up approximately 85% from this time in 2022.

Yesterday, the Bitcoin price jumped to nearly $43,446.82, a significant win for investors who got in at the start of the year when the price was around $16,500.

One of the primary drivers for the Bitcoin surge this year was an easing of the Fed’s interest rate increases, which created an attractive case for riskier assets. Crypto prices were further strengthened by the upcoming bitcoin halving, which occurs every four years and is scheduled for May 2024. During the halving process, the reward for mining is slashed in half, capping the supply of bitcoin.

Additional buying was fueled by the potential for a flurry of bitcoin ETFs emerging in the new year.

This year, various leading financial firms, including BlackRock, WisdomTree, Fidelity, and others, asked the Securities and Exchange Commission (SEC) to approve a spot bitcoin ETF. This approval of the first U.S. spot bitcoin ETF awaited in January 2024,  would be a milestone for cryptocurrency investors.

“For ETF investors, this would be the best product on the market,” said Bryan Armour, director of passive strategies research for North America at Morningstar. “All the other options right now have flaws to varying degrees.”

At present, U.S. investors can buy bitcoin futures ETFs, which own bitcoin futures contracts or agreements to buy or sell the asset later for an agreed-upon price. This long-awaited bitcoin spot ETF can invest in the digital asset directly.

Given an enhanced optimism surrounding the crypto space, crypto-centric stocks NVDA and SQ could be solid watchlist additions now.

Let’s take a closer look at the fundamentals of these stocks:

NVIDIA Corporation (NVDA)

NVDA offers graphics, and compute and networking solutions globally. It provides GeForce GPUs for gaming and PCs, Quadro/NVIDIA RTX GPUs for enterprise workstation graphics, Data Center platforms and systems for AI, HPC, and accelerated computing, cryptocurrency mining processors, and more. The company serves the gaming, data center, and automotive markets.

Cryptocurrency mining requires specialized computer hardware, including GPUs. NVDA saw an immense opportunity in this market and boosted the production of specialized GPUs for cryptocurrency mining. For instance, the NVIDIA GeForce GTX 1070 became highly popular among miners due to its high hash rate and power efficiency.

On November 13, NVDA announced that it had supercharged the world’s leading AI computing platform with the introduction of the NVIDIA HGX™ H200. Based on NVIDIA Hopper™ architecture, the platform features the NVIDIA H200 Tensor Core GPU with advanced memory to handle enormous amounts of data for generative AI and high-performance computing workloads.

The NVIDIA H200 is the first GPU to offer HBM3e — faster, larger memory to boost the acceleration of generative AI and large language models while advancing scientific computing for HPC workloads. This new processor optimized for AI applications is expected to extend the company’s market reach and drive its growth.

NVDA’s trailing-12-month gross profit margin and EBITDA margin of 69.85% and 49.39% are favorably higher than the industry averages of 49.14% and 9.25%, respectively. Likewise, the stock’s trailing-12-month net income margin of 42.10% is 1,694.7% higher than the industry average of 2.35%.

In terms of forward non-GAAP P/E, NVDA is trading at 40.18x, 59.7% higher than the industry average of 25.16x. Moreover, the stock’s forward EV/Sales and Price/Sales…