Crypto stocks offer ’a smart play on Bitcoin’, BCA says

Investing.com -- Crypto equities are seen as “a smart play on Bitcoin” following the recent regulatory developments in the digital assets space, BCA Research analysts said.

According to the investment research firm, the passage of the GENIUS Act is set to drive broader institutional adoption of digital assets and thus support a long-term investment case for publicly traded crypto-exposed firms.

“Crypto equities are a new strategic allocation, and we recommend using pullbacks to build a long-term position using ETFs,” analysts led by Irene Tunkel wrote.

BCA notes that crypto equities operate with high beta to digital assets, meaning they tend to outperform in bull markets but also carry elevated volatility and operational risk.

Diversified ETFs, such as Bitwise’s BITQ (NYSE:BITQ), have a market beta of 2.2, which “reflects the high operating leverage embedded in crypto-related equities,” the analysts said. The fund is up 144% since January 2024, outperforming both the S&P 500 and Nasdaq.

The crypto equity universe spans several categories—from miners and treasury holders to exchanges, asset managers, and infrastructure providers, each with a distinct risk profile.

Miners like Marathon Digital Holdings Inc (NASDAQ:MARA) and Riot Platforms (NASDAQ:RIOT) offer direct leverage to Bitcoin price moves but suffer from thin margins and rising costs.

Treasury holders such as MicroStrategy (NASDAQ:MSTR) accumulate Bitcoin on their balance sheets, creating a leveraged bet on BTC price appreciation. BCA cautions, however, that this model “is self-reinforcing only in bull markets, and highly vulnerable in bear markets.”

More insulated from crypto mining economics are exchanges like Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD), as well as asset managers and infrastructure firms. These businesses benefit from broader adoption and rising transaction volumes.

BCA calls them “the least speculative investments of all the categories.”

Due to the sector’s volatility and dispersion in performance, analysts recommend investors “accessing this opportunity through a diversified ETF, rather than category baskets or individual stocks.”

While BITQ is the most established vehicle, the report also highlights alternatives such as FDIG (NASDAQ:FDIG), DAPP (NASDAQ:DAPP), and CRPT (NYSE:CRPT).

Earlier this month, U.S. lawmakers passed the GENIUS Act, the country’s first major national cryptocurrency legislation.

The bill establishes a regulatory framework for stablecoins, requiring them to be backed one-to-one with U.S. dollars or similarly low-risk assets.

Supporters say the move provides clarity for the growing sector and helps the U.S. stay competitive in payment innovation.

The crypto industry hopes the rules will accelerate mainstream adoption of digital currencies.