Meme Stocks like GameStop and BlackBerry have received all the hype of late. However, crypto plays such as Hive Technologies (TSXV:HIVE) have quietly boomed in an incredible fashion as of late. This growth in crypto applies not only to cryptocurrencies like Bitcoin but also blockchain plays.
Here’s why those looking for a trendy pick with incredible upside potential may be intrigued by Hive today.
Bitcoin vs. crypto miners
Bitcoin is picking up traction once again, with its price nearing the US$60,000 mark. A number of high-profile targets have been set at or above US$100,000 of late.
Indeed, several funds, ETFs, and crypto mining stocks are now listed on the TSX. Thus, investors have more than one avenue to channel money into this trade.
Investors high on the future of cryptocurrencies may consider that buying and holding Bitcoin mining stocks may be a safer bet than holding cryptos directly in a wallet. At least, for an average investor, it is a much easier alternative. This is because companies like Hive are publicly traded. Thus, investments are more liquid. Investors are able to dip their toes into a volatile market without having to go through the hassle of setting up a wallet or a mining rig.
However, playing crypto miners like Hive is a leveraged way to play the underlying asset price. When playing such miners, investors need to have complete faith in the underlying commodity (Bitcoin). If Bitcoin prices drop substantially, or mining becomes uneconomical, such stocks could be in for a world of pain. That said, since Hive also mines Ethereum, it provides investors with a diversified way to bet on cryptocurrencies beyond a single coin.
Hive is a highly speculative play
While Hive is one of the safest and most well-run crypto miners, it is not immune to major corrections. Indeed, if the crypto trade collapses like it did in 2017, Hive investors would be on the hook. These stocks remain highly speculative, and investors should not bet what they can’t afford to lose.
Social media platforms like Reddit and Twitter have started playing a massive role in deciding how investors allocate assets in their portfolios. First seen in the cases of GameStop and BlackBerry, when a group on these platforms starts promoting a stock, it incites more trades in this sector, causing price inflation. In a highly speculative bull market, cryptocurrencies are performing well, like other commodity-based businesses.
However, there is some credibility in crypto now, with Elon Musk and Jack Dorsey embracing Bitcoin with their massive investments. Meaning, Bitcoin is moving away from its negative reputation of facilitating illegal activities like tax evasion. While I’m usually not bullish on cryptos, I think this legitimacy could provide some downside protection.
That said, the intrinsic value of these investments remains questionable. Hive is a speculative pick and should be treated as such.
