Cryptocurrencies have become a hot investment that is gaining mainstream adoption. Markets for digital currencies such as Bitcoin (BTC -1.56%) were virtually unheard of in 2012, but they have since grown into a massive industry.
The cryptocurrency sector reached a market value of $3 trillion in the fall of 2021 and has continued to rise to a total market cap of roughly $3.9 trillion. The sudden surge in value and rapid evolution created immense wealth for early crypto investors.
Everyone wants to know which token will become the next Bitcoin or Ethereum (ETH +1.36%). With thousands of active cryptocurrencies on the market, investing in technologies linking the digital blockchain space with society could be even more lucrative. And there is no shortage of innovative companies and investment vehicles trying to bridge the gap between the two.
Cardano (ADA)
[Cryptocurrency] is a new asset class, but like real estate, there's only so much Earth. So it's defined, and therefore this moving price of the commodity is just how much, within this finite class of a commodity, this new asset class, how much people value it or want it.
5. Robinhood Markets
Robinhood Markets (HOOD -1.25%) is a popular discount brokerage app that allows users to buy stocks, options, rare metals, and now, cryptocurrencies. Investors can buy and sell more than a dozen cryptocurrencies, including Bitcoin, Ethereum, and Dogecoin (DOGE -2.64%), commission-free on the platform, 24/7. The company already holds billions of dollars in crypto assets under custody, with crypto trading revenue now comprising a significant portion of overall sales.
Robinhood can combine its commission-free trading model with scaling the number of cryptocurrencies on the platform, gaining a massive competitive advantage over both traditional and decentralized exchanges. The company also could offer the same crypto analytics services as Coinbase to further promote trust in the sector and boost its adoption.
Bitcoin Cash (BCH)
6. CME Group
CME Group (CME -2.15%) operates the world's largest financial derivatives exchange, allowing investors to trade futures, which bet on the future price of an asset, and options, which grant investors the option to sell or buy an asset in the future at a predetermined price. CME Group's exchange trades a diverse assortment of assets, including agricultural and mining products, energy, stocks, and currencies. It's the latter that makes CME Group a crypto stock.
At the end of 2017, CME established the first market for Bitcoin futures. At the start of 2020, the company created a market for options on Bitcoin futures. By March 2022, Ether (units of the crypto platform Ethereum) also had futures available on the exchange. Both Ether and Bitcoin futures were joined by micro futures this year, based on smaller slices of the underlying cryptocurrencies.
Establishing a full-featured exchange for derivatives of the best-known cryptocurrencies has given Bitcoin and Ethereum some extra legitimacy and provided a way for digital currency owners (both individuals and a growing list of businesses that accept cryptocurrencies as payment) to mitigate risk from changes in cryptocurrency prices. Cryptocurrency derivatives are still a small market for CME Group, but adding more exchanges for crypto assets in the future is possible -- and even likely.
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