Blockchain technology-backed bitcoin and broader cryptocurrency space witnessed a resurgence in 2020.
The linchpin technology that powers bitcoin and other cryptocurrencies like ethereum, litecoin, ripple, monero and zcash has become mainstream in 2020, owing to coronavirus crisis induced momentum in digital payments and contactless trading.
In this data-driven world, cryptocurrency is gaining solid traction on the heels of an increasing bitcoin adoption — the most popular and widely used digital currency.
Following a roller coaster ride in the past two years, cryptocurrency is now climbing new highs with resurgence in bitcoin trading. Notably, bitcoin hit an new all-time high by surpassing the $24,000 mark on Dec 21.
On a year-to-date basis, bitcoin has gained more than 200%. This strong bounce-back remains a major positive for companies like JPMorgan Chase & Co. (JPM – Free Report) , Overstock.com (OSTK – Free Report) , Microsoft (MSFT – Free Report) , DocuSign (DOCU – Free Report) and NVIDIA (NVDA – Free Report) .
The companies are poised to tap in gains from this resurgence with active involvement in cryptocurrency and investments in next gen blockchain technology capabilities.
Growth Prospects Abound
Cryptocurrencies, which hold the potential to revolutionize the process of peer-to-peer and remittance transactions, are gaining strongly from the decentralized system, low fees, transparency of distributed ledger technology, protection from consumer chargebacks and quick international transfers.
Blockchain-based automated system is transparent and incorruptible, and meant to provide unaltered information. Since blockchain utilizes a distributed consensus, it is difficult to tamper with the records without being noticed by an entire network. Thereby, the possibility of monetary losses is low with minimum chances of double counting and hacking.
Additionally, coronavirus crisis has presented new challenges and exposed several loopholes in the current digital ecosystem. The prominent issues that have surfaced are data tracing, security, visibility and management, and supervision.
Evolution of blockchain practices in a bid to address these challenges is expected to democratize the use of cryptocurrency in the days ahead and aid in countering the pandemic in an efficient way.
Notably, Coherent Market Insights estimates the blockchain technology market to witness a CAGR of 58.7% between 2019 and 2027.
Also, growing demand for alternative currency as a result of the ongoing pandemic remains a tailwind.
These factors are driving growth in digital currency (especially bitcoin) transactions throughout the world. Per a report from Statista, the number of daily bitcoin transactions at end of third-quarter 2020 exceeded the mark of 351 million, jumping significantly from around 200 million in first-quarter 2016.
Further, a report from Fortune Business Insights shows that the global cryptocurrency market is expected to hit $1.8 billion in 2027 from $754 million in 2019 by witnessing a CAGR of 11.2%
Here we discuss these five stocks, which have strong fundamentals that poise them well to capitalize on the bitcoin wave.
Year-to-Date Price Performance
Top Picks
NVIDIA is poised to gain from growing momentum of its GPUs in the cryptocurrency space, which provides the company with a strong competitive edge against other chipmakers.
In third-quarter fiscal 2021, this Zacks Rank #2 (Buy) company experienced solid traction among the ethereum, monero and zcash miners. Reportedly, NVIDIA’s GPU sales to crypto-miners were around $175 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Further, the new Ampere GPU chips of the company are well-designed to meet requirements of the upcoming advanced cryptocurrencies.
We believe that expanding presence of NVIDIA in the booming cryptocurrency market is likely to contribute well to the stock’s performance in the near term.
JPMorgan Chase & Co. is poised to capitalize on gains stemming from the bullish sentiments toward bitcoin with commercial use of its blockchain technology based planned dollar-backed cryptocurrency — JPM Coin — which will be helpful in handling digital settlements.
Per a CNBC article, JPMorgan, with Zacks Rank of 2, is looking to monetize its crypto efforts and has created a new business unit called Onyx, with more than 100 dedicated staff members, to focus on its blockchain and digital currency efforts.
Overstock.com is riding on strong demand for digital assets, backed by its Medici Ventures and tZERO businesses, and has strengthened presence in the lucrative blockchain-technology space.
Notably, tZERO technology business is focused on democratizing access to private capital markets. The tZERO ATS, a subsidiary of tZERO, traded over 2.3 million digital securities in August 2020, marking a 21x increase on a year-over-year basis.
Moreover, the tZERO Crypto app, which is independently managed by tZERO’s subsidiary, tZERO Crypto, Inc., is witnessing robust growth in user base, which is a tailwind for this Zacks Rank #2 company.
Moreover, tZERO has attained Financial Industry Regulatory Authority’s (FINRA) clearance to offer retail-brokerage services for digital securities through its tZERO Markets. FINRA’s approval will enable tZERO Markets to offer issuers with investment banking and placement-agent services in connection with capital-raising activities.
Microsoft is focusing on developing advanced Azure-powered blockchain solutions in decentralized identity space.
The company’s fully managed Azure Blockchain Service, which accelerates development of robust blockchain-enabled smart contract applications, holds promise. The flexibility in usage and Azure’s secure broad-based availability are anticipated to bolster adoption of the service.
The tech giant has also joined Hyperledger community and entered into a partnership with JPMorgan to develop Ethereum-based open source blockchain platform, Quorum. Markedly, JPMorgan divested Quorum to ConsenSys per a strategic investment deal in August, this year.
Moreover, the acquisition of GitHub, touted to be the largest open-source repository, provides Microsoft ample exposure to development of robust blockchain tools.
The beta version of the tech giant’s bitcoin-backed decentralized identity tool — ION — went live in early June on mainnet. The tool is aimed at fast-tracking of data, which can be utilized by anyone to improve the reach of the coronavirus crisis response programs.
The above factors are likely to provide an edge to this Zacks Rank #2 stock over cloud rivals including Amazon Web Services (AWS) and Alibaba Cloud, which are also eyeing the blockchain-as-a-service market.
DocuSign is a popular name for authenticating documents over the Internet through electronic signature. The stock, with Zacks Rank of 3 (Hold), leverages blockchain technology to enable customers adapt to smart tech and make paper agreements digital.
The company’s Trust Service Provider model helps users to integrate any blockchain-based identity providers and enhance security while authenticating a signer.
Notably, per ResearchAndMarkets data, the blockchain identity management market is set to hit $1.93 billion by 2023 from $90.4 million in 2018 at a CAGR of 84.5%. This projection favors prospects of the company.
Zacks Top 10 Stocks for 2021
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