Crypto stocks and cryptocurrencies in general have posted big gains in 2024. Many believe the run has just begun. You can, of course, opt to simply buy cryptocurrencies like Ethereum and Bitcoin. But there are other ways to profit from the rise of crypto.
There are two crypto stocks in particular that could skyrocket in value over the coming months and years.
A hidden way to bet on the mass adoption of crypto
Since the first Bitcoin was created in 2009, crypto fanatics have spoken about "mass adoption." What this phrase refers to is the point in time in which millions, perhaps even billions, of people would own and use crypto regularly. In some ways, mass adoption has already occurred. Most Americans have now heard of cryptocurrencies, while millions have owned or transacted in them. According to one survey, one-quarter of all Americans now own Bitcoin, and most of them are keen to accumulate more.
Still, billions of people don't own any crypto. That's especially true in emerging markets like Latin America, even though historically volatile exchange rates make the region a great fit for crypto adoption. If you want to bet on people in Latin America adopting cryptocurrencies -- a bet with considerable upside, given that the region boasts more than 650 million inhabitants -- you should consider buying some Nu Holdings (NU -0.36%) stock.
On the surface, Nu looks like a typical bank. The company offers checking and savings accounts, credit and debit cards, insurance policies, and personal loans. The trick is that Nu delivers all these services through an app, available to anyone with a smartphone. That's a big differentiator from incumbent banks, which often have hundreds of physical branches. Those branches cost money to operate, which results in competitors that can't move as fast or as efficiently as Nu.
On any given day, Nu can introduce a new product and deliver it to its nearly 100 million customers within seconds. That's exactly what it did in 2022 when it launched NuCripto, which allows its customer base to buy, sell, and transact in crypto. More than 1 million people signed up in the first month.
Most of Nu's business still comes from conventional revenue sources focused on fiat currencies, but the company clearly has a strong foothold in Latin America's crypto industry. If you believe regions like this will adopt crypto in the years to come, Nu will likely be a big beneficiary. With a market cap of only $50 billion, this is a stock you can trust holding over the long term.
This company is betting it all on Bitcoin
If Nu has a strong foothold in the Latin American market, Block (SQ 1.11%) arguably has a similar advantage in the U.S. market.
Formerly known as Square, Block changed its name in 2021 to reflect its growing focus on blockchain technologies like Bitcoin. Today, businesses can use its Square payment system to accept payments in crypto. Friends and family can buy and send each other crypto using Block's Cash App. Other Block ventures like Spiral and TBD are investing big to help accelerate Bitcoin's developer ecosystem. Put simply, Block is going all-in on the rise of Bitcoin.
Nu stock is quite expensive at 10.3 times sales -- a lofty but reasonable valuation given the firm's rapid growth. However, the good news is that Block stock trades at just 2.4 times sales. That's because Block is currently in the midst of a turnaround effort, headed by founder Jack Dorsey. In 2021, Block's stock was valued above 10 times sales, but since then, the company has posted a string of losses with slower revenue growth numbers.
The turnaround is already showing early signs of success, however, and the company just posted its first quarterly profit in more than two years. If you want to bet on rising adoption of cryptocurrencies at a rare discount, Block stock should top your buy list.