The crypto market lost about $2 trillion this year in a debacle that left investors to pick up the pieces from whatever is left of the alternate currencies. However, there are a few trends that are making optimists hold on for dear life (HODL), as meme stock investors would say. Beneath the rubble are three stocks that are poised to benefit once the ongoing crypto winter is over: Block (NYSE: SQ), Riot Blockchain (NASDAQ: RIOT), and PayPal (NASDAQ: PYPL).
Is Crypto Still a Good Investment?
Despite the headwinds faced by the crypto market in 2022, it still has the potential to grow. Interestingly, the recently proposed bill to regulate cryptocurrencies is keeping the crypto winter slightly warm. If the bill is passed, the Commodities Futures Trading Commission (CFTC) will handle the regulation of the crypto market. Given the expertise of the CFTC, the passage of the bill can give the crypto market the support it needs to bring down the volatility.
Crypto bulls are thinking long-term and believe that, just like any other market, the crypto winter is also a market cycle that will run its course in due time. Optimists are saying that this crypto winter, which can last anywhere between one and three years, will sift out short-term investors and pave the way for a recovery.
That said, the optimism around crypto is based largely on speculation. A “Paying With Cryptocurrency” survey by PYMNTS and BitPay revealed that 56% of respondents are interested in investing in the crypto market this year. Among them, about 50% are attracted by the possibility of making money as they did back in 2020 and 2021, and about 15% are just in it for the “fear of missing out.”
Additionally, the industry is now looking forward to a potential saving grace: The Merge. The Merge is a software upgrade of Ethereum, which supports scores of crypto projects. The Merge, which has been elusive for more than eight years, is finally expected to commence around September 15, migrating Ethereum to an energy-efficient infrastructure. This would lead to more upgrades that will make transactions on the platform’s signature currency, Ether, more affordable.
As the crypto market successfully holds investors’ curiosity, Wall Street is pinning its hopes on the three following stocks.
The fintech giant Block (a name that plays on founder Jack Dorsey’s blockchain ambitions) is enjoying a slew of price target raises over the past month.
While it is true that Block’s exposure to the price of bitcoin is a dampener for its near-term prospects, experts are positive that the company has enough resources to bring game-changing technology to crypto infrastructure.
Is SQ Stock a Buy or Sell?
Among all the Wall Street bulls covering the SQ stock, BTIG analyst Mark Palmer is the most optimistic. Palmer has a Buy rating on the stock, and the highest price target among all, at $175.
The analyst expects Block’s peer-to-peer payment platform Cash App to bring in about $4 billion in revenues, excluding revenues from Bitcoin. He was upbeat about the healthy growth of the company’s Seller ecosystem in the U.S., which gave him hope for promising prospects on the front of international growth as well.
Block enjoys a Strong Buy rating from the consensus of analysts. This is based on 26 Buys, six Holds, and one Sell. Block’s stock prediction points at an average price target of $112.97, indicating 70.32% upside from current levels.
Payments solutions provider PayPal recently joined the crypto industry-standard group TRUST, which supports crypto service providers’ customer privacy and helps companies comply with the Travel Rule. This development can help the company dodge regulatory or compliance issues in its efforts to build its crypto business, which is still in its nascent stages.
Moreover, the company announced a share buyback program of $15 billion, which can give an impetus to the stock price.
Baird analyst Colin Sebastian recently said that he is positive about PayPal’s performance in the second half of the year because of easing comps and strong growth trends driven by improvement in e-commerce.
PayPal is also claiming more share in the core digital wallet market. Sebastian is also upbeat about a more optimized cost profile, which is likely to boost its bottom line. Of course, the commitment to improving shareholder returns is likely to help the company attract more investors.
Is PayPal a Buy, Sell, or Hold?
Sebastian maintained a Buy rating on the PYPL stock, with a price target of $120. In addition, PayPal is a Strong Buy consensus rating based on 24 Buys and seven holds assigned in the past three months. PayPal’s stock price forecast indicates an average price target of $119.85, reflecting an upside of 31.52% from the current price level.
Riot Blockchain has an intriguing business horizon: it offers digital infrastructure, mines and sells Bitcoin (owns a mining data center in central Texas to that end), and has operations in Denver, Colorado, that deals in electrical switchgear engineering and fabrication.
The company’s efforts to grow its hash capacity (computational power used to mine and conduct transactions on the original algorithm of a blockchain) have been attracting the interest of investors. Importantly, by January 2023, the company is expected to achieve a hash capacity of 12.6EH/s. If this materializes, then the foundation for solid growth in 2023 and 2024 will be laid.
Will Riot Stock Go Back Up?
Wall Street analysts are unanimously bullish on Riot, with a Strong Buy consensus rating based on six Buys. Riot stock’s price prediction shows an average price target of $14.83, indicating a whopping 124% upside potential from current price levels.
It should be kept in mind, though, that Riot’s EBITDA margin is under a lot of pressure now, with Bitcoin below $20,000 as of writing. However, if the crypto market regains momentum once the crypto winter is over, and Bitcoin manages to cross the $40,000 mark by the end of next year, then Riot stock would be poised for remarkable returns on investment.
Concluding Thoughts – Crypto Stocks are Worth Considering
Crypto stocks are worth considering for a few reasons. First, the crypto market has been battered by several headwinds this year, significantly lowering the valuation of many related assets. In addition, large companies are taking it seriously, and efforts are being made to regulate it into a more stable market. As a result, stocks like PayPal, Riot, and Block may be good buy options for investors who are not suffering from recency bias.