Prediction: This could be the best-performing cryptocurrency stock by 2030

Currently trading near all-time highs. bitcoin (BTC 4.33%) It continues to drive the cryptocurrency market higher. As a result, analysts and investors continue to increase their price estimates of how much Bitcoin will rise. One of the most aggressive price predictions came from Cathie Wood’s Ark Invest, which detailed a scenario in which Bitcoin could surpass $2 million by 2030.

If that turns out to be true, people will be kicking themselves for not participating in stocks whose success is largely tied to the price of Bitcoin. The two works I am currently watching are MicroStrategy (MSTR 4.11%) and Coinbase Global (coin -0.95%).

MicroStrategy

Over the past year, investors have viewed MicroStrategy as a proxy stock for Bitcoin investments. This is because MicroStrategy currently holds the largest Bitcoin holdings of any publicly traded company in the world. The company currently has 193,000 Bitcoins on its balance sheet, worth about $13 billion at current market prices. By comparison, MicroStrategy’s total stock market capitalization is $21 billion.

And anyway, this extremely leveraged Bitcoin position will only grow in the coming years as the company announces a massive $700 million convertible bond offering. The purpose of the new proposal is surprisingly simple. This means buying more Bitcoin. So get ready to hear more about MicroStrategy’s all-in-one Bitcoin strategy. Already, an aggressive Bitcoin strategy has pushed the company’s stock price to its highest in 24 years.

Of course, the only caveat here is that a company could reach a point where it has too much Bitcoin on its balance sheet. If the price of Bitcoin declines significantly for an extended period of time, MicroStrategy’s value could plummet.

For this reason, I hope MicroStrategy continues to build its core software business over the next few years. The company has hinted that new AI-related software products may be coming. This would provide at least some diversification and help mitigate the risk of having the company’s Bitcoin holdings worth more than half the company’s own value.

Coinbase Global

The price of Coinbase Global stock also leverages the price of Bitcoin, but not nearly to the same extent as MicroStrategy. From my perspective, Coinbase is much more invested in the future direction of the cryptocurrency market, as well as the future trajectory of Bitcoin.

That said, investors trading on the cryptocurrency trading platform, which is a core component of Coinbase’s business model, has seen a significant increase recently due to Bitcoin’s price fluctuations. With Bitcoin hitting record highs, retail investors were lured back into the cryptocurrency market. Bitcoin accounts for more than a quarter of total trading volume on the Coinbase platform, so this is a welcome development. Perhaps as the bull market rally expands, trading in other cryptocurrencies will also increase.

Image source: Getty Images.

At the same time, Coinbase is an indirect beneficiary of the new spot Bitcoin ETF. That’s because it is the custodian of many new ETFs, including some very successful ones launched by Coinbase. black stone And Ark Invest. This new management fee revenue will boost Coinbase’s subscription and services revenue. Over time, this will help level out the company’s profits during difficult market patches.

This non-transaction related revenue is actually a fast-growing category at Coinbase and also includes stablecoin revenue and blockchain rewards revenue. This is why I believe Coinbase is driving the growth of not only Bitcoin, but the entire cryptocurrency and blockchain space.

What will happen by 2030?

Keep in mind that it is impossible to predict exactly what will happen in the cryptocurrency market over the next almost seven years. There is too much uncertainty in the regulatory environment, and the cryptocurrency asset class has historically been very volatile.

However, it is possible to piece together key trends and milestones that could push cryptocurrency stocks higher. If both retail and institutional investors continue to allocate more of their portfolios to Bitcoin, this is good news for cryptocurrency stocks. And if the Securities and Exchange Commission continues to approve new cryptocurrency investment products, it would be a positive development.

As long as Bitcoin remains one of the best-performing assets, it’s likely that cryptocurrency stocks like MicroStrategy and Coinbase Global will continue to rise.