The rise of blockchain has seen many companies come up that are using the technology to offer people various services. In this piece, we will take a look at two of the hottest blockchain stocks to watch out for this year.
SQ
Square (NYSE: SQ) has a continually expanding commerce ecosystem that makes it a popular commerce tool as well as one of the best blockchain stocks in the market. The company hired five open-source engineers to work on the enhancement of the ecosystem, not to mention the services of Matt Corallo, renowned developer of Bitcoin. This Bitcoin-focused division is also headed by Steve Lee, former director of Google.
Square CEO Jack Dorsey is an ardent supporter of Bitcoin, integrating its Cash App to allow the buying and selling of the said cryptocurrency to users. This is a sought after feature among cryptocurrency fans, and to prove its point, the service resulted in over $190 million in revenue over the first two quarters of 2019 and yielded a gross profit of almost $3 million.
This move has made Square a blockchain stock player in terms of popular tech stocks to buy. The CEO and co-founder of the blockchain stock also said that in the long run, cryptocurrencies will allow for the launch of a product that people can make use of globally, just like an Internet company.
This way, users don’t have to go to different markets, banks, and regulatory bodies to do so.
With that said, in 2020, Square represents one of the best blockchain growth stocks, and its definitely one of the blockchain stocks to invest in.
GBTC
Another top tech and blockchain stock to watch out for in 2020 is Grayscale Bitcoin Trust (Btc) OTCMKTS: GBTC.
Storing one of the best blockchain stocks and cryptocurrency safely can be challenging, and according to Grayscale, GBTC’s fund management is worth more than the annual fee, stressing on its security system that uses industry-leading security standards.
However, Andrew Left of Citron Research thinks that this might not be wise, especially with the high premiums, annual fee, and risk factors associated with the overall volatility in the cryptocurrency market.
It also doesn’t help that the investment vehicle isn’t required to register with the SEC. The Trust’s private placement shares are also restricted to a one-year holding period before investors can resell them in the public market, so the risks of having no liquidity for that period of time should be considered.
GBTC Stocks Performance
As of Oct. 2018, each share of GBTC stock price is equivalent to less than 0.0001 Bitcoin, which means you need more than 1,000 shares of GBTC to own one bitcoin. GBTC saw a steady increase in 2017 and peaked at the end of the year.
However, its performance in 2018 fluctuated, and overall, it has trended downward, with a nearly 65% year-to-date decline as of Oct. 2018. Steeper declines could mean that shares could lose most or all of their value. Bitcoin’s price trended upward in 2019, and GBTC naturally followed.
GBTC Blockchain Stock Is Not A Stock
Grayscale Bitcoin Trust is not a true common stock, and GBTC shareholders own part of an open-ended grantor trust. Grantor trusts often hold physical commodities and currencies and are required to hold a fixed portfolio, rather than a variable one.
GBTC is a trust that only holds one of the best blockchain stocks Bitcoin and the Investment Company Act of 1940 does not cover grantor trusts, so they provide none of those investor protections. They also do not qualify for regulation by the Commodity Futures Trading Commission.
Is GBTC Stock A Good Investment?
GBTC is a trust that only holds Bitcoin, but unlike crypto market prices, the GBTC stock price does not exactly match the underlying Bitcoin price, which is prone to wild swings. Its shares can trade at a premium to its assets, or even at a discount to its total Bitcoin holdings depending on investor sentiment.
Most investors would be better off studying the stock market and keeping a watchlist of profitable companies for the best blockchain stocks to buy.
For those willing to accept huge risks, GBTC does offer an opportunity for big gains.
Both Square (NYSE: SQ) and Grayscale Bitcoin Trust (Btc) OTCMKTS: GBTC represents two promising tech stocks to watch for in 2020. However, ensure you do your own due diligence to ensure you make the right decisions.
