Best Cryptocurrency Stocks for a Retirement Portfolio: 3 Experts Pick Their Favorites
Cryptocurrencies are all the rage these days, especially as traders see stories circulating about people making huge profits from tokens. The Winklevoss twins, famous for their involvement in Facebook, made $ 3 billion each by investing in Bitcoin (CRYPTO: BTC). Two other top cryptocurrency investors Michael Saylor and Matthew Rosak earned $ 2.3 billion and $ 1.5 billion respectively. Stories like this make it hard to resist the urge to invest some money in the trend.
Now, on the one hand, most people don’t fill their retirement portfolios with highly volatile investments unless they are both ambitious and have plenty of time to weather crazy fluctuations. On the flip side, even older investors need to have some exposure to growth assets, and cryptocurrencies have a lot of potential to generate big gains.
To that end, we asked three Motley Fool contributors to each share an investment in the cryptocurrency space that they would be willing to add to their retirement portfolios. Their choices: Global Coinbase (NASDAQ: COIN), Hut 8 Mining (NASDAQ: HUT), and the Siren Nasdaq NexGen Economics ETF (NASDAQ: BLCN).
Buy a broker
Eric Volkman (Coinbase Global): An effective way to play on the cryptocurrency trend is to buy shares in a company that charges transaction fees on the transactions of all major tokens. Say hello to Coinbase Global, operator of one of the world’s largest cryptocurrency exchanges.
Coinbase’s results have increased with the popularity of cryptocurrencies. Fueled almost entirely by trading revenue, its revenue grew from $ 178 million in the second quarter of 2020 to nearly $ 500 million in the fourth quarter and then to $ 2.03 billion in the second quarter of 2021. Its number of monthly transaction users also increased dramatically throughout this period, from 1.5 million. to 8.8 million.
And like other intermediary securities exchanges – which take little or no investment risk – Coinbase has been very profitable. He continues to show impressive bottom line results and his net margin continues to increase. It made a net profit of more than $ 1.6 billion for the second quarter, its last reporting period.
Certainly, cryptocurrencies are the a hot asset in finance these days, much of that growth is trend-driven. In addition, Coinbase remains primarily a broker. Since almost all of his income comes from fees, he is highly dependent on the volume of transactions.
But this is only the beginning for cryptocurrencies and blockchains, and the coming years will bring even more new products and services. Already, Coinbase is looking to capitalize on next-generation offerings related to these assets: it is launching an NFT service called, not-so-creative, Coinbase NFT.
The company describes it as “a peer-to-peer marketplace that will make typing, buying, presenting and discovering NFTs easier than ever.” As such activities are not yet necessarily practical or easy, it will certainly attract customers keen to get started in this growing aspect of blockchain technology.
By seeking new ways to earn coins from Bitcoin and the like, the company is forging important partnerships with high-end companies. Earlier this month, she announced her partnership with Facebook providing custody services for the social media giant’s Novi digital wallet, which is currently in its pilot phase.
Coinbase clearly has a future, but some investors and analysts are wary of the title. The average analyst forecast is for lower revenues and profitability in 2022; many clearly believe the temperature will drop in the currently hot cryptocurrency market. This view helped keep Coinbase’s share price above the level of its initial public offering earlier this year.
But savvy investors leap when sentiment is low. We can expect cryptocurrencies and blockchains to become increasingly vital parts of the global financial fabric. As they do, this business will benefit greatly … and probably for a very long time.
An environmentally conscious miner
Barbara Eisner Bayer (Hut 8 Mining): About eight years ago, I was visiting a friend in his twenties who was talking about Bitcoin and the future of cryptocurrency. He said now is the time to buy and insisted it would be the next big thing. I walked away from this conversation rolling my eyes, laughing at his naivety, and believing this would be the next Tulip Mania. I couldn’t wait for the day when I could say, “I told you so!”
Fast forward to today, and guess who is laughing now? In October 2013, a Bitcoin was valued at $ 196.02; As of October 27, 2021, a Bitcoin was selling for around $ 60,400. My friend got married, had a baby and, thanks to his early bets on the trend, has a healthy savings account.
While I still think cryptocurrencies, in general, are too risky to hold in a retirement wallet, I have recently been looking for a way to invest in the crypto space. After all, even retirees need to hold assets that can continue to grow in value, at least enough to keep up with inflation. And I like to be forward looking when it comes to my investments.
Finally, I found one that suits me perfectly: Hut 8 Mining.
I love Hut 8 because it is involved in mining Bitcoin, the grand daddy of tokens. One of the huge issues with mining most cryptocurrencies is that the process uses a load of electricity, which leaves a huge carbon footprint and is bad for the environment. This means that getting involved financially doesn’t align well with my philosophical stance – unlike the many alternative energy stocks I currently own.
But Hut 8, which operates out of Alberta, Canada, spares me the ethical dilemma. Its mining platforms are powered by a combination of natural gas, wind power and solar power. It costs the company just $ 0.022 per kilowatt hour to mine, one of the cheapest rates of its competitors.
If you are unsure of the impact of all this digital activity on the real world, consider this: a single Bitcoin transaction consumes as much electricity as 1.2 million. Visa transactions!
In any event, Hut 8 is an indirect play on Bitcoin itself, as the company is mining between eight and 12 tokens per day, with a total value of between $ 500,000 and $ 800,000 at current token prices. And it also takes into consideration the interests of its shareholders. As my colleague Zhiyuan Sun wrote earlier this month:
At the moment he [HUT] owns around 4,450 BTC, valued at around $ 219.5 million, but unlike other miners, he’s not just planning to sell them ASAP. To maximize shareholder returns, Hut 8 lends out the BTC it operates. Coin owners can receive up to 6.20% interest per year on Bitcoin loans, based on current rates.
Finally, Hut 8 is investing in its future by modernizing its systems and adding more power generation capacity, which will eventually allow it to operate additional mining platforms, thereby increasing its revenues and profits.
For me, it was the right deed at the right time to add to my retirement portfolio. But if you want to add it to yours, be aware that like all cryptocurrency investments, it is extremely volatile. If you are uncomfortable with seeing your investments go up 5% one day and drop 4% the next, this may not be the choice for you. But if you can handle crazy price swings, this can be the perfect crypto stock to add to your retirement portfolio.
When you can’t pick a single winner, consider an ETF
Chuck saletta: (Siren Nasdaq NexGen Economy ETF): I’ll be the first to admit that I really don’t ‘get’ cryptocurrency. Tokens are too volatile – and as their massive proliferation demonstrates, they are apparently too easy to create to be a serious monetary alternative.
In order for something to serve as legitimate currency, it must hold its value at least reasonably well relative to a basket of goods. Manic-depressive surges and falls in cryptocurrencies make it difficult to call them stores of value, even in relation to the gradual decline in the dollar’s purchasing power over time due to inflation.
Also, while for some individual cryptocurrencies there are firm limits on the total number of tokens that can be mined, there are currently over 6,800 different types of tokens and the number is growing all the time. This makes it harder to believe that there will really be enough scarcity in the concept to allow a given token to hold its value over the long term.
This is where the Siren Nasdaq NexGen Economy ETF comes in handy. It presents itself as an index fund that invests in companies that use blockchain technologies in their operations. Blockchain is the underlying technology behind cryptocurrencies. At the very least, the current popularity of cryptocurrencies makes blockchain-focused businesses a modern day equivalent of buying a set of ‘pick and shovel’ during the Gold Rush.
As an index fund, the Siren Nasdaq NexGen Economy ETF does not have to distinguish winners from losers. Considering the uncertainty of space, this is a good thing. This is also what makes it the only cryptocurrency investment I would consider purchasing for my wallet. If I want to invest in something and don’t understand it well enough, an index investment is my preferred way to gain financial exposure without necessarily having to develop expertise.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.