2 top crypto stocks to buy in 2022

| December 21, 2021

About a decade ago, cryptocurrencies were not seen as a viable investment by most at hardly existed beyond a few mainstream tokens. Fast forward to today, and these digital assets have found their way even to the mainstream economy. The meteoric rise of cryptocurrencies caught many by surprise. But given their complexity and volatility, it may be worthwhile investing in businesses that deal with them rather than invest directly. With that in mind, here are 2 crypto stocks I’m considering to buy for my portfolio in 2022.

A leading cryptocurrency exchange platform

Coinbase Global (NASDAQ:COIN), founded in 2012, is one of the world-leading cryptocurrency exchange platforms. It enables individuals, institutions and businesses to buy, sell, transfer, and store digital currency. The company is one of several to benefit from a digital currency revolution. And went public in April earlier this year to maximise the opportunity.

Considering that the cryptocurrency economy is still evolving, this crypto stock to buy could turn in explosive returns for investors in 2022 and beyond. At least, that’s the impression I got when looking at its latest results.

In Q3 2021, Coinbase outperformed the crypto market with a total trading volume of $327bn. Though this was a decline of 37% compared to the previous quarter, it speaks volumes of the place of Coinbase among its competitors. In the same vein, the company grew its verified users to 73 million and retail monthly transacting users by 7.4 million. And that’s not all. Revenue grew above $1bn for the third consecutive quarter. Needless to say, I think the firm has delivered some rather impressive results so far. And that’s why it’s on my top crypto stocks to buy list.

However, Cryptocurrencies are very volatile and remain largely speculative. That means, Coinbase’s operations and in turn, share price is highly influenced by the crypto market. Beyond this, the group also faces competition from other exchange platforms such as Binance and Bitstamp. Meanwhile, financial regulators are starting to introduce new legislation that could undermine the performance of these digital tokens.

All of this is to say, that Coinbase faces a lot of threats, most of which are out of its control. But, given the growth opportunity, it’s a risk I’m considering to take for my portfolio.

Another top crypto stock to buy

Block (NYSE:SQ) formerly Square is another crypto stock on my list to buy in 2022. Its share price is down 23.24% year to date as of writing. However, the company has managed to beat market estimates in earnings per share in three of its last four quarters results. I think the resignation of Jack Dorsey as CEO of Twitter to focus entirely on Block, could largely benefit the group.

The results of the business in its most recent quarterly report are quite encouraging. It generated a gross profit of $1.13bn, up 43% year-over-year (YOY). In the same vein, the company’s seller ecosystem generated a gross profit of $606m, up 48% YOY. Meanwhile Block’s Cash App returned a gross profit of $512m, up 33% YOY.

Interestingly, Cash App, a peer-to-peer payment system, has consistently improved its active monthly user base. At the end of 2020, it had 36 million active users. The addition of the ability to buy and sell bitcoin in 2018 to Cash App drastically helped to expand the userbase for the company. In my view, the coming year will see more users turn to Cash App for their transactions. If I’m right, Block could be one of the best crypto stocks to buy right now for my portfolio.

But just like Coinbase, this is far from a risk-free business. Aside from strong competition from PayPal Zettle, Venmo and SumUp, Block is associated with the same cryptocurrency price and regulatory risks as Coinbase. Any new introduction of strict legislation could drastically affect the company and it’s crypto services. Consequently, growth could start slowing resulting in the share price to tumble alongside it. Nevertheless, I think the potential reward is worth the risk. Therefore, Block is another top crypto stock to buy in my mind.

Final thoughts

While I may not want to be overexposed to cryptocurrencies, Coinbase and Block are two stocks I think I can profit from. Unlike most digital tokens, these businesses are backed by seemingly solid fundamentals. That’s why I think they make a better investment than simply buying tokens directly.

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Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. The Money Cog Premium has analysed Coinbase Global Inc. Views expressed on the companies, assets and strategies mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.

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