The price of Bitcoin (BTC-USD) and the broader indices continue to fall, creating an opportunity to scoop up undervalued blockchain stocks. The book value of many of these companies is tethered to the crypto market. Blockchain stocks still have a lot of potential to run, which makes them great growth picks.
One advantage of investing in blockchain stocks is that they can be seen as synthetic leverage, which may amplify both gains and losses. These companies are known to go on massive rallies when the market peaks and fall dramatically when the bulls need a rest. Holding these companies in your portfolio along with coins like Bitcoin may provide an overlay to an already bullish thesis on the future of blockchain technology. That means investors may see large returns by holding only a small position.
So as the rest of the market sells off in fear of a possible reversal in this year’s tech rally, here are the best blockchain stocks to add to your portfolio in August.
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Intel (NASDAQ:INTC) has been growing due to its association with AI and its potential in the blockchain. The company introduced Bitcoin mining chips last year but discontinued production in mid-April 2023. Some could see Intel’s decision to stop production as a setback. Still, the company’s ability to pivot and reassess opportunities in the space could make it an intriguing hybrid blockchain/AI investment.
Meanwhile, Intel’s upcoming 14th-Gen Meteor Lake CPUs are generating excitement with potential performance boosts. Expected to be announced at the Intel Innovation 2023 event, the new lineup may include both Meteor Lake and an improved iteration of Raptor Lake architecture. A Chinese PC manufacturer, Mechanic, hinted at a release by October powered by Intel’s 14th Gen CPUs.
Other reasons make INTC stock one of those blockchain stocks to buy. Wall Street gave it a price target of $35.14, and the stock currently trades below its 52-week high.
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MicroStrategy (NASDAQ:MSTR) sells analytics software and holds a massive amount of Bitcoin in its treasury. So, the cryptocurrency’s prices significantly influence its share prices. MicroStrategy’s heavy investment in Bitcoin makes it a unique play in the blockchain space.
MicroStrategy’s Chief Executive Officer (CEO) Michael Saylor has announced the company’s intention to buy more Bitcoin, potentially using $750 million from selling class A common stock. At the time of writing, the company held 152,800 bitcoins, worth about $4.5 billion.
If you are bullish on Bitcoin’s potential, a great buying opportunity could be on the horizon relatively soon. A potential drop in Bitcoin’s price to around $25,000 could further impact MicroStrategy’s shares. Technical analysis indicates a bearish outlook for MicroStrategy stock, with the possibility of a slump of approximately 20%.
A long-term investment thesis for these assets means one is naturally less sensitive to the cyclical ups and downs of the market, so drawdowns like these should be both welcome and expected for buy-and-hold investors.
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Formerly known as Square, Block (NYSE:SQ) is primarily a fintech stock with significant investment in blockchain technology. Share prices recently plummeted, but sales exceeded expectations. Block’s recent price drop might be seen as an overreaction, making it a contrarian play at the moment.
The company reported a rise in Q2 revenue to $5.53 billion, up from $4.4 billion a year ago, beating estimates. The company’s gross profit increased by 27% to $1.87 billion, and its earnings outlook for 2023 was revised to $1.5 billion, up from $1.3 billion. The growth was driven by strong payment volumes and a 37% increase in gross profit from its mainstay online payments service, Cash App, while its Square business reported an 18% rise in gross profit year-over-year.
While stocks like MSTR may be more of a pure-play blockchain stock, SQ could fill a hole in an investor’s portfolio if they want blockchain as well as fintech exposure. It’s also slightly more diversified than other options available to investors.
Due to the explosion in interest in tech stocks, a healthy pullback may have been warranted in the broader indices. The growth potential of these companies is huge, so it may provide valuable entry points to motivate people to keep the long-term rally going.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.
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