The crypto market is one that is both difficult for most investors to understand and very intriguing. Indeed, looking at some of the returns investors in this space have received from buying little-known tokens (in many cases over short time spans), it’s clear there’s money to be made if one knows what they’re doing and has the risk tolerance to invest in this space.
I say that because investing in any digital asset is an extremely risky exercise. When the market is going up, as it is now, plenty of gains are to be had. However, investors can quickly forget the significant market-wide drawdowns we’ve seen in the past.
I’m still trying to decide if crypto overall will ultimately be viewed as a safe haven or store of value asset, or if these tokens will be seen as speculative vehicles to play bull market rallies. Right now, the jury is out on this front.
With that said, here are two top Canadian crypto stocks for investors who want to get a foot in the door but don’t want to set up a wallet. Each of these stocks is publicly traded.
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WonderFi
One of the more compelling crypto companies in this space, WonderFi (TSX: WNDR) has become not only the option of choice for many Canadian crypto traders, but a global phenomenon.
The company posted more than $10 million in revenue this past quarter, with 100% year-over-year growth recorded in annual income. That’s some solid growth, indicating that WonderFi isn’t only participating in the crypto rally we’ve seen, but is also a major beneficiary.
With more partnerships and acquisitions expected, WonderFi has an opportunity to become a key player in the diversified treasury strategies of many companies and individuals in the market. Now, WonderFi is not yet profitable. However, I can certainly see a scenario in which the company breaks into the green in the next year or two. If that’s the case, this stock is very undervalued here.
Hive Digital Technologies
One of the leading crypto miners globally, Hive Digital Technologies (NASDAQ: HIVE) has seen a tremendous amount of turmoil over the past five years.
What the chart above shows is a rather sad story around how investors view the crypto mining sector. In the pandemic-era rally we saw in 2021, companies like Hive Digital absolutely rocketed as investors wanted not only Bitcoin exposure, but also exposure to companies that are leveraged to the price of Bitcoin.
Using debt to buy crypto mining hardware (in the form of dollars), as the price of Bitcoin rises, the company’s revenue rises in a disproportionate fashion to its underlying debt load. This is a model that works in a rising price environment, but we all saw what happened in 2022’s “crypto winter.”
I’d certainly point out that Hive, as well as its crypto mining peers, is a risky bet. But the recent uptick we’ve seen since April is notable. Zooming in and over short time horizons, these stocks can do very well. So, I guess an investment decision in this case would really need to come down to an individual investor’s risk tolerance level and time horizon.
