2 Tech Stocks That Benefit From the Decline of Crypto

Crypto’s bear market creates opportunities for traditional rivals like Lightspeed (TSX:LSPD)(NYSE:LSPD).

| More on:
analyze data

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The cryptocurrency boom is over. Bitcoin (CRYPTO:BTC) has lost 70% of its value since November last year. Other cryptocurrencies have lost even more. In fact, some service providers and lenders in the industry are on the verge of bankruptcy.  

The bear market has been painful for new investors who entered the market late. There’s no way to say if this decline is permanent or another phase of the crypto cycle. However, the decline of the sector has created opportunities for other tech and financial companies to plug the gap. 

Here are the top two stocks that benefit from the decline of cryptocurrencies. 

Payment processor stock

Cryptocurrencies were designed to be peer-to-peer payment networks. Bitcoin’s core promise was a decentralized way to transact with anyone, anywhere for minimal costs. However, the decline in this sector’s value has slowed down adoption.  

Traditional payment companies like Lightspeed (TSX:LSPD)(NYSE:LSPD) could plug the gap. Digital payment networks and point-of-sale payment processing are much more appealing for most merchants. 

Lightspeed saw significant adoption during the pandemic, but some of its markets was captured by crypto payment companies and FinTech startups. Now that some of its competitors are going out of business, Lightspeed could have more room to grow. 

The company is also well positioned for the current economic climate. Merchants raise prices during periods of inflation, which could lead to higher transaction volumes for Lightspeed. Meanwhile, the stock has lost 81% of its value, so it’s much cheaper than it used to be. This could be a bargain opportunity for long-term investors. 

Financial services

Decentralized financial tools enabled people to borrow and lend on crypto networks. Some of these tools were obvious scams (promising yields of 10,000% or more). But others were just blockchain-enabled versions of peer-to-peer lending systems. These tools could face challenges as the underlying assets lose value. 

Traditional lenders like goeasy (TSX:GSY) could plug the gap. The company offers loans and mortgages to borrowers who are new to the country or have a less-than-ideal credit history. Rates on these loans are higher than average. 

In 2022, goeasy could see a jump in net income. Rising interest rates should allow the lender to raise its lending rate to subprime borrowers. Now that the company doesn’t have to compete with DeFi networks, it could have more room to expand its market share. 

Currently trading at 11 times earnings per share, goeasy is cheaper than traditional financial institutions. Long-term investors should add this growth stock to their watch list. 

Bottom line

The cryptocurrency market has entered a cold winter. The sector’s valuation has been cut in half, while some companies are on the verge of bankruptcy. This creates opportunities for traditional financial service providers like Lightspeed and goeasy. Investors who are skeptical of cryptocurrencies could bet on these traditional rivals. 

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 Vishesh Raisinghani has positions in Bitcoin. The Motley Fool recommends Bitcoin and Lightspeed Commerce.

More on Cryptocurrency

A depiction of the cryptocurrency Bitcoin
Cryptocurrency

Cryptocurrency Investors: Where to Invest $1,000 Right Now?

Cryptocurrency investors could benefit from inflation protection and price appreciation by placing bets on leading digital assets like Bitcoin and…

Read more »

crypto, chart, stocks
Cryptocurrency

Why Hut 8 Mining (TSX:HUT) Stock Soared 75% in August

If you are bullish on Bitcoin for the long term, consider this crypto miner stock.

Read more »

Question marks in a pile
Cryptocurrency

Is Coinbase Stock Worth a Speculative Buy?

Investors looking at Coinbase stock as a speculative buy may want to consider these bullish and bearish factors when looking…

Read more »

cryptocurrency, crypto, blockcahin
Cryptocurrency

Up 22% in 1 Month, Is Bitcoin Now a Buy?

Bitcoin (CRYPTO:BTC) is still down about 50% but has seen solid movement in the last month, up 22%!

Read more »

Economic Turbulence
Cryptocurrency

Top Bitcoin (CRYPTO:BTC) Investor Lost US$917 Million

A top institutional investor in Bitcoin reported close to US$1 billion quarterly losses due to the crypto’s free fall in…

Read more »

edit Sale sign, value, discount
Cryptocurrency

3 Fire-Sale Cryptos to Buy Right Now

These three top fire-sale cryptos could be worth a buy for investors looking to dig through the rubble in a…

Read more »

Diagonal chain made of zeros and ones. Cryptocurrency and mining.
Cryptocurrency

Time to Bottom Fish These 2 Beaten-Down Cryptocurrencies

Here's why Ethereum (CRYPTO:ETH) and Cardano (CRYPTO:ADA) are two top cryptocurrencies to consider in this beaten-down market.

Read more »

cryptocurrency, crypto, blockchain
Cryptocurrency

2 Cryptos That Could Benefit From Ethereum’s Merge More Than Ethereum

Following the upcoming Ethereum (CRYPTO:ETH) merge, these two tokens could actually see more beneficial buying on the horizon.

Read more »