All the hype surrounding the Coinbase (NYSE:COIN) IPO could set the stage for an epic bust, with volatility now returning to Bitcoin and the rest of the crypto market. The boom and bust of recent Initial Public Offerings (IPOs) are really nothing new. Add Bitcoin and cryptocurrency into the equation and the booms and busts could be that much more pronounced. Indeed, people who get the timing right can make a quick buck. But for the many whose timing is off (most beginner investors), the damages can mount and quickly.
While Coinbase stock has cooled off in recent weeks, plunging from around US$350 to around US$300, I still think those itching to bet on Bitcoin or other cryptocurrencies would be far better served with a name like HIVE Blockchain (TSXV:HIVE), which, I believe, has more upside for retail investors who remain bullish on Bitcoin and the like despite the recent uptick in volatility.
There’s no question that Coinbase stock could have immense upside potential if Bitcoin were to soar past the US$120,000 mark, a recent price target of the analysts at JP Morgan. But at north of 45 times sales, you’ll be paying a pretty penny to get into the crypto game. I’d argue that the price of admission is far too high, even for those who believe Bitcoin will skyrocket past the six-figure mark by year’s end. There’s just too much hype surrounding Coinbase stock. While I suspect it will amplify any upside in Bitcoin, I still think HIVE stock is the best way for Canadians to profit from the cryptocurrency market’s next leg up.
The case for buying HIVE stock over Coinbase or Bitcoin itself
At the time of writing, HIVE stock trades at 28.6 times sales, which is considerably lower than the price you’ll have to pay to get into Coinbase, the hottest exchange out there these days. For Canadians, you don’t even need to swap your loonies for greenbacks. While the loonie has been strong of late, you’d still stand to get dinged at the exchange by around 2-3%.
Moreover, HIVE Blockchain, while hyped, isn’t nearly as hot stock as Coinbase. HIVE is a cost-effective cryptocurrency miner with locations in some of the colder areas of the world, with below-average energy costs. I view the Vancouver-based crypto miner as one of the more economical ones out there.
Of course, like any other miner of commodities, HIVE stock is a levered way to play the price of the underlying commodity that’s mined. In HIVE’s case, it mines Bitcoin and Ethereum, which tend to exhibit similar magnitudes of volatility.
HIVE is one of the best ways to bet on cryptocurrencies, far better than Bitcoin or Ether ETFs and certainly better than bid-up crypto- or blockchain-focused IPOs like Coinbase. While HIVE stock will amplify any gains by Bitcoin or Ethereum, it’s important to note that leverage works both ways. As a result, HIVE stock will be far more volatile than the already volatile cryptocurrencies it mines. So, unless you truly believe that Bitcoin and the like will appreciate into year’s end, HIVE stock may not be your cup of tea.
With the return of volatility to the crypto market, double-digit daily percentage moves in HIVE stock can be expected. The stock is fresh off a 48% peak-to-trough plunge, appreciating nearly 12% in Monday’s trading session, as Bitcoin bounced back from its latest correction.
Speaking of ample upside, you need to check out this incredible Bitcoin report, on the house!
Before you consider Hive Blockchain, you may want to hear this.
Motley Fool Canadian Chief Investment Advisor, Iain Butler, and his Stock Advisor Canada team just revealed what they believe are the 10 best stocks for investors to buy right now... and Hive Blockchain wasn't one of them.
The online investing service they've run since 2013, Motley Fool Stock Advisor Canada, has beaten the stock market by over 3X. And right now, they think there are 10 stocks that are better buys.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joey Frenette has no position in any of the stocks mentioned.