As the Bitcoin price hits $24k, should I buy cryptocurrency stocks?

Yesterday, the Bitcoin the price hit a level above $24,000, the highest price since last August. With some in the crypto space claiming that the worst is now in the past, investors are clearly excited again.

I am mainly a stock investor. So should I start investing in cryptocurrency stocks that are not directly influenced by Bitcoin movements?

Benefit from higher volatility

One type of stock I can consider is a crypto exchange platform. A good example here Coinbase Global (NASDAQ: COIN). The business is one of the world’s largest trading platforms for Bitcoin and other major coins. It generates revenue every time a user buys or sells. So in reality, Coinbase becomes more profitable when there is a jump in volatility. This results in a higher trading volume and number of transactions, incurring more fees in the process.

Given the recent interest in crypto over the past month due to the strong rally, I expect Q1 to show higher volumes for Coinbase. However, if I had waited until the results were released, I would have missed the boat. In fact, the stock price is up 135% in the past month alone.

The stock is still down 55% over the past year, so it could still benefit. But in the short term, I feel like I missed an opportunity here.

Options listed in the UK

Another possible angle is to revisit one of the most popular crypto stocks in the UK, ie Argo Blockchain. Back in early 2021, crypto-mining companies were in the spotlight. The stock jumped 20-fold in a few months as the price of Bitcoin rose to an all-time high.

Since then, the story has changed. The share price has fallen from above 200p in April 2021 to 16p today. It is down 78% on last year.

Financially, the business still looks good. The results of H1 2022 noted that the total number of Bitcoins and equivalents mined during the period was 939, an increase of 6% from the same period of the previous year. But due to the fall in the value of this coin, the real revenue from this fell. This left the business with a pre-tax loss of £36.9m.

In a similar way to Coinbase, the stock has jumped 99% in the past month, reflecting a change in sentiment in the market.

My thoughts are from here

The rally in Bitcoin price has been incredible. But I don’t feel comfortable being supported by the true change of the wind. The fallout from different exchanges is still fresh and highlights the risks inherent in this unregulated space.

I also feel that I am a little late to the party in this move, shown by the jump in the new week in Coinbase and Argo Blockchain. With all that in mind, I prefer to avoid investing out of fear of missing out (FOMO) in order to earn more. However, I will be patient and keep both stocks on my watch list for future opportunities.