Two Surprising Stocks Set to Benefit from the Crypto Bull Market in 2024

December 26, 2023
By The Investing Insider Staff

Key Takeaways:

  • Block Inc. (Ticker: SQ) is strategically positioned in digital payments and financial services, with revenue growth driven by innovation and expansion of Square and Cash App.

  • Interactive Brokers (Ticker: IBKR) offers cryptocurrency trading alongside traditional brokerage, positioning itself to capitalize on the crypto boom with its robust platform.

  • Both companies have seen consistent revenue and profit growth in recent quarters, indicating strong financial health amid the current crypto surge.

The cryptocurrency space is gaining momentum.  Bitcoin prices have surged over 140% so far this year, and there could be more room to run.

Many positive tailwinds are helping propel crypto including speculation that the Securities and Exchange Commission (SEC) may approve a Bitcoin exchange-traded fund (ETF). Additionally, the crypto industry has seen several legal victories, likely contributing to investor confidence.

Factors Propelling Crypto Higher

On November 30th, the SEC called for public opinion on a proposed rule change that would allow Fidelity Investments, an asset management giant, to list and trade shares of the Fidelity Ethereum Fund.

Institutional investors have been the driving force behind the recent surge in the crypto space. BlackRock Inc.'s decision to launch a Bitcoin ETF and a Charles Schwab led consortium's decision to create a new crypto exchange called EDX Markets, have attracted many investors to cryptocurrencies.

PayPal Holdings Inc. has joined this trend, becoming the first major U.S. fintech company to offer its crypto token with a dollar-pegged stablecoin known as PayPal USD.

That’s not all…

"A Bitcoin Halving"

The next Bitcoin Halving will also occur in the first half of 2024.

When a halving occurs, the reward for mining new blocks is halved, making it more challenging for miners to earn net Bitcoin. Historically, this event has led to increased scarcity and has driven up the value of Bitcoin due to a reduced supply.

As a result, prices of major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Dogecoin (DOGE), and BNB (BNB) are expected to remain buoyant for the rest of 2023.

On December 3rd, Bitcoin surged past the $42,000 mark for the first time since April 2022, representing a year-over-year increase of 142% in the cryptocurrency's value.

But what stocks are set to capitalize on this surge? 

Today, we’ll look at two surprising stocks you might not think are poised to benefit from the anticipated cryptocurrency bull run in 2024.  They are: Block Inc (Ticker:SQ) and Interactive Brokers (Ticker: IBKR).

Crypto Stock to Buy #1: Block Inc (Ticker: SQ)

Block Inc

Block Inc Summary:

Block Inc. (Ticker: SQ) is a formidable entity in the digital payments and financial services industry, renowned for its robust growth and innovation.

The company's strategic positioning and focus on technology advancement make it a compelling investment choice in the rapidly changing financial landscape.

Block is also the parent company of Square and Cash App. Cash App users have the capability to trade Bitcoin, including buying, selling, and transferring it. Furthermore, SQ is leading the way with its TBD platform, a decentralized framework that enables the creation of DeFi applications on programmable blockchains.

SQ also stands out as one of the major Bitcoin investors in the market.

Why We Think Block Inc is a Crypto Stock to Buy:

Block Inc. is distinguished for its diversified offerings across payment processing and financial services.

The firm's agility and innovative prowess in a dynamic market underscore its long-term growth potential. The company strategically caters to both consumer and merchant services, positioning itself to leverage emerging financial trends effectively.

The Q3 2023 Shareholder Letter and earnings call detail a gross profit of $1.90 billion, up 21% year-over-year, indicating strong profitability and operational efficiency. The company's investment framework and growth strategies are well-aligned with market opportunities.

Block Inc. is well-positioned to leverage its ecosystems, including Square and Cash App, for sustained growth. Its focus on innovation and customer-centric solutions continues to drive its market presence and profitability.

Latest Results:

Block Inc. has consistently escalated its revenue across seven quarters, growing from $3.96 billion to $5.61 billion, marking an average quarterly growth of 5.95%. This steady ascent is indicative of Block's expanding market reach and effective business strategies.

The company has seen a significant enhancement in net profit over the past two quarters, decreasing losses from $122.50 million to $28.95 million. This remarkable 381.8% average quarterly improvement underscores efficient cost management and a robust business model.

Investing Insider Growth Catalysts:

  • Innovation and Technology: Persistent investment in innovation and technology remains a primary growth driver, enabling Block to maintain its lead in the competitive digital payments space.
  • Market Expansion: Block's strategic expansion in domestic and international markets presents significant growth avenues. The emphasis on growing Square and Cash App ecosystems, along with market expansion, is a key driver for future growth.
  • Financial Services Diversification: Diversifying into various financial services, including lending and banking, opens new revenue channels. With “Path to Rule of 40 by 2026”, the company aims to achieve a balance of growth and profitability through disciplined investment and operational efficiency.
  • Capital Allocation Strategy: Block's strategy includes a share repurchase program, reflecting a commitment to shareholder value and efficient capital management. The company is focusing on streamlining team sizes, optimizing spend across corporate areas, and improving cost structures within its ecosystems.

Crypto Stock to Buy #2: Interactive Brokers (Ticker: IBKR)

Interactive Brokers Summary:

Interactive Brokers Group, Inc. (Ticker: IBKR) is a prominent entity in the financial services and brokerage industry, particularly known for its strong capabilities in the emerging cryptocurrency market.

As a global automated electronic broker, IBKR not only processes and executes trades in cryptocurrencies but also offers its customers the opportunity to trade in cryptocurrency futures through its commodities futures trading desk.

Amid the ongoing crypto boom, IBKR's robust technology and expansive platform make it an attractive investment option.

Why We Think Interactive Brokers is a Crypto Stock to Buy:

IBKR's strategic integration of cryptocurrency trading and investment services, alongside its traditional brokerage offerings, positions the company uniquely in the current market. This dual approach caters to traditional investors while tapping into the growing demand for crypto-related services.

IBKR ‘s reputation and track record also offer investors an extra level of trust over other scandal-afflicted crypto exchanges.

Latest Results:

IBKR has seen a consistent rise in revenue over the past two quarters, from $1.05 billion to $1.16 billion, an average quarterly increase of 5.2%. This growth reflects the company's expanding customer base and diversification of services.

Net profit has also grown from $125.0 million to $167.0 million in the same period, marking an average quarterly increase of 16%, indicative of strong operational efficiency and strategic investments.

Investing Insider Growth Catalysts:

  • Expansion in Crypto Services: IBKR's integration into the crypto market is a significant catalyst. Their platform offers access to cryptocurrency trading, appealing to both traditional investors and the growing number of crypto enthusiasts. This strategic move positions IBKR at the forefront of a strengthening financial sector. Amid the crypto boom, IBKR's focus on expanding cryptocurrency trading and investment services is a key growth driver.
  • Innovative Trading Platform: IBKR's state-of-the-art trading platform, which supports a wide array of financial instruments, including cryptocurrencies, enhances user experience and attracts a broader customer base. The company's success in attracting a diverse range of client segments, including individual investors and proprietary traders, supports sustainable growth.
  • Geographical Expansion: IBKR's successful expansion in Europe and Asia and growing presence across different geographies helps the company diversify, mitigate regional market volatility, and tap into new customer segments.
  • Interest Rate Environment: The current interest rate environment has favorably impacted IBKR's net interest income, reflecting strong financial management and strategic foresight in an evolving economic landscape.

Final Thoughts:

Cryptocurrencies are highly volatile, which can lead to significant fluctuations in the revenue and earnings of companies exposed to the crypto sector.

Despite this, the use of digital currencies is gaining mainstream acceptance rapidly, and we can expect more companies to join the blockchain revolution – which could result in further momentum in crypto stocks.

However, one should keep a watchful eye on the evolving regulatory framework as the crypto market adapts to the ever-changing global economy.

The stocks mentioned above are smart investments in digital currencies, and most have significant business operations beyond the crypto sector. As a result, many investors find these stocks more appealing than buying cryptocurrencies until regulators and governments worldwide have a clear long-term strategy for digital assets.

It's essential to keep in mind that investing always carries risk.

Before making investment decisions, it's vital to research and seek advice from a financial professional to ensure that the investment aligns with your risk tolerance and financial objectives. Making informed investment decisions that match your personal risk appetite and financial goals is crucial to achieving success in the long term.

However, with that in mind, two surprising stocks set benefit from a crypto surge are Block Inc (Ticker: SQ) and Interactive Brokers (Ticker: IBKR).

Frequently Asked Questions:

Q: Why is there optimism around the crypto market for 2024?

A: Positive catalysts like potential Bitcoin ETF approval, institutional adoption, the 2024 Bitcoin halving event, and legal victories are driving momentum.

Q: How does Square's business stand to benefit from crypto growth?

A: The Cash App allows users to buy, sell and transfer Bitcoin. Square is also building a decentralized exchange platform to enable DeFi applications.

Q: What capabilities does Interactive Brokers offer for cryptocurrency trading?

A: Users can trade crypto on the platform. It also provides access to trade crypto futures through its commodities futures desk.

Q: How have Block and Interactive Brokers performed financially amid the crypto boom?

A: Both have seen steady revenue growth and improved profitability in recent quarters, indicating strength even without the crypto catalysts.

-Investing Insider Staff
This article is informational purposes only and is not investment advice.  See full disclaimer here
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