Dynamic and volatile are just some words used to describe the crypto market as a whole and most cryptocurrencies. Cryptocurrencies and, to an extent, the crypto stocks that rely upon the underlying crypto assets may offer rapid growth for a few months and then slump hard enough to lose more than half of their value in weeks.
But this volatility isn’t necessarily all bad because, after these frequent falls, the crypto recoveries tend to be quite profitable. So, now that the major cryptocurrencies are on a roll after the slump they experienced in 2022 (though it started in Nov. 2021), you may consider investing in the market.
Cryptocurrencies may give you the purest exposure, but you can’t keep them in tax-deferred accounts like Tax-Free Savings Accounts, so instead, consider tapping into that recovery via crypto stocks.
Hut 8 (TSX:HUT) is one of the stocks that offer you almost direct exposure to the underlying crypto asset, thanks to the nature of their business — i.e., mining. Through the acquisition of a U.S.-based miner, the company has grown the number of its mining facilities from two to six.
Even though crypto mining is the core business of Hut 8, and the stock has been influenced by the movement of Bitcoin, the primary mining focus of the company, it’s not the full breadth of its operations. The company also offers high-performance computing services and data centres to a variety of clients.
The stock has replicated and even built on the growth of Bitcoin in 2023. The underlying crypto asset grew by about 77% in 2023, whereas the stock has grown by about 260%. The current direction of the stock is downward, but another growth spurt in Bitcoin can have a positive impact on the stock as well.
Galaxy Digital Holdings (TSX:GLXY) has a different model of operations. The company is committed to making digital assets like cryptocurrencies more mainstream, and through its services, it’s bridging the gap between conventional financial systems and models and digital assets.
This includes bringing conventional financial institutions offering services like asset management/capital management related to crypto assets into the fold. The company already has about $2.5 billion worth of digital assets under management, and it’s steadily growing its presence in this sphere.
Galaxy Digital Holdings’s connection with the crypto market and crypto assets is not as strong as a miner’s, and it’s reflected in its performance. Since the beginning of 2023, it has only grown by about half as much as Bitcoin grew. However, it still mimics stronger, long-term patterns of the market quite faithfully.
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The two small-cap stocks, even though they experienced a positively uplifting 2023, are trading at a fraction of their 2021 peak. The chances of either stock reaching that level again in the next few years might be low, but the payout would be quite amazing if that happens. You can expect at least four-fold growth in Hut 8 and at least seven-fold in Galaxy Digital if you buy now and the stocks rise to their 2021 peaks.