The cryptocurrency sector has recently faced significant challenges as various factors have created doubts regarding the overall health of the economy, prompting investors to shy away from more speculative assets. Bitcoin (BTC) has been particularly impacted, undergoing a notable selloff last week. Nonetheless, the cryptocurrency has shown signs of recovery and has managed to rise above the $100,000 threshold. Historically, November has been a strong month for Bitcoin, raising expectations for a potential rebound as economic uncertainties begin to subside. In light of these market dynamics, many investors are considering a buy-the-dip strategy, particularly in crypto-related stocks. We have identified three promising stocks: NVIDIA Corporation (NVDA), Robinhood Markets, Inc. (HOOD), and Interactive Brokers Group, Inc. (IBKR). Each of these companies is poised for significant growth by 2025 and has recently seen favorable revisions in earnings estimates.
Bitcoin’s Gradual Recovery
Last week marked a pivotal moment for Bitcoin as it dipped below the $100,000 level for the first time since June, reflecting a decrease of over 20% from its peak of $126,300 reached on October 6. This downturn was primarily attributed to long-term investors cashing out profits rather than actions from leveraged traders. The steep decline followed a major selloff in October, which was exacerbated by approximately $19 billion in liquidations affecting leveraged positions. Investor sentiment has been shaken by ongoing uncertainties regarding the economy, leading to a selloff of riskier assets like cryptocurrencies. The Federal Reserve’s decision to reduce interest rates by a quarter percentage point last month did not have the anticipated positive impact on the markets, especially in light of Fed Chair Jerome Powell’s cautious remarks regarding potential future rate cuts. Moreover, the recent government shutdown has deprived investors of critical economic data for about six weeks, leaving them without a clear outlook for the economy. However, Bitcoin has since recovered from its recent lows, trading above $104,400 on Tuesday. Despite this decline, Bitcoin remains significantly higher than its yearly low of $66,000, and there is a prevailing optimism for November, historically Bitcoin’s strongest month, with an average gain of 42.5% since 2013.
Three Promising Crypto-Centric Stocks
NVIDIA Corporation
NVIDIA Corporation stands out in the semiconductor sector and has been a remarkable success story in 2023. As a leading manufacturer of graphics processing units (GPUs), the value of NVDA stock tends to rise significantly during crypto market booms, given the integral role GPUs play in data centers, artificial intelligence applications, and cryptocurrency mining. The company’s anticipated earnings growth rate for the current year is an impressive 49.2%, with the Zacks Consensus Estimate for earnings having increased by 0.5% over the past two months. Currently, NVIDIA holds a Zacks Rank of #2 (Buy).
Robinhood Markets
Robinhood Markets, Inc. operates a financial services platform in the U.S. that enables users to invest in a variety of assets, including stocks, exchange-traded funds, options, gold, and cryptocurrencies. Through its Robinhood Crypto platform, the company facilitates the buying and selling of cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin. The expected earnings growth rate for Robinhood this year stands at 74.3%, with the Zacks Consensus Estimate for earnings having improved by 22.6% in the last 60 days. Robinhood currently boasts a Zacks Rank of #1 (Strong Buy).
Interactive Brokers Group, Inc.
Interactive Brokers Group is a global electronic brokerage firm that specializes in executing and processing trades in cryptocurrencies. Additionally, the firm offers customers the ability to trade cryptocurrency futures through its commodities futures trading desk. The expected earnings growth rate for Interactive Brokers for this year is 17.1%, with the Zacks Consensus Estimate for earnings having improved by 5.1% in the past two months. The company currently holds a Zacks Rank of #1 (Strong Buy).
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