Bitcoin-Related Stocks: The Good and the Bad This has been a year of new highs. All the major indexes climbed to new peaks, as have a ton of stocks. I often get multiple alerts a day about stocks I own or recommend that have hit new high after new high. And then there’s bitcoin (BTC). The granddaddy of cryptocurrencies topped $100,000 last week for the first time in its 15-year history. Bitcoin has soared 130% so far this year, and a lot of experts think it can keep moving higher. Bitcoin went through its latest “halving” in April. Every four years, the “reward” to successful miners automatically reduces by 50%. It’s coded into bitcoin, which means new supply slows down. If demand is strong, the price rises. In addition, Donald Trump plans to nominate a crypto supporter to head the Securities and Exchange Commission in Paul Adkins. Trump himself has also become pro crypto. I’m crypto agnostic. And if you want to know why I would agnostic to a hot investment, I can tell you in one word… Data. More specifically, the lack of data. Yes, Bitcoin has a 15-year price chart, and we can see volume, circulating supply, and total value. But beyond that, the whole idea behind crytpos and blockchain technology is privacy. I’m all for privacy, but I am not comfortable investing if it means in sufficient data. I tried investing without data when I started investing professionally, and it didn’t work very well. Actually, I guess it did work out well because it set me on the course to design and build my Quantum Edge system. It has been so successful and outperformed the market by such a wide margin because of data and analysis. It pulls in over a million data points each day and runs them through algorithms I wrote to identify stocks with the highest probability of making money. As regular readers know, the analysis focuses on three primary factors: fundamentals, technicals, and Big Money inflows. Bitcoin may have some technical data, it falls short on fundamentals and tracking Big Money. I can’t use my unique experience facilitating those trades to sniff out unusual activity, and bitcoin doesn’t have sales growth, earnings growth, a PE ratio, or other data critical to forecasting future price movement. I’m not anti-bitcoin or anti-cryptocurrency. In fact, I find blockchain technology pretty cool, and it is being used in more places. But I’m not ready to invest directly in bitcoin or altcoins. The next best thing would be bitcoin-related stocks, right? Maybe. Let’s look at a few of those now and see what that all-important data says. 
Source: TradeSmith Finance Coinbase (COIN) is the largest cryptocurrency exchange in the United States. It was started 12 years ago, and shares began trading on Nasdaq in April of 2021. They have been up as much as 40% from their initial listing and down as much as 85%. At the moment, they are up about 25% in three-and-a-half years. You can see COIN’s Quantum Score of 74.1 is in the green zone. That’s in our optimum buy zone between 70 and 85, so on that basis, it rates a buy. But this is one instance where it pays to dig a little deeper. That Technical Score of 85.3 is super strong – close to being what I consider overbought around 90. That’s because shares have gone parabolic and more than doubled in just the last three months. And yes, I have seen multiple Big Money buy signals. That makes it a stock right now, but I’m not completely sold on it with that Fundamental Score of 58.3. One-year sales and earnings growth are negative, and the stock now trades pretty rich at 60.5 times expected earnings. Coinbase also has a surprisingly low profit margin of 3%. COIN has taken off because of bitcoin’s popularity and the seemingly changing landscape for cryptocurrencies. Those are rational reasons, but they are not data reasons – at least not Quantum Edge data. Until the fundamentals improve, there are better opportunities out there. 
Source: TradeSmith Finance You can’t talk about bitcoin-related stocks without talking about Microstrategy (MSTR). The company provides cloud-based software analytics to companies, but it’s probably better known as one of the world’s largest owners of bitcoin. With the company’s latest bitcoin purchase worth $2.1 billion, it now owns more than 2% of all outstanding bitcoin worth about $41.5 billion. That’s nearly half of the company’s $85.5 billion market cap. The company even financed its latest bitcoin buy by selling more stock. MSTR’s Quantum Score of 65.5 is below where I like to see it. Also notice that Technical Score of 85.3 matches that of COIN, which tells me a lot of the upward momentum is coming from the price of bitcoin. But this is a company and a stock, and that Fundamental Score of 37.5 just doesn’t cut it. Maybe MSTR will get rich on bitcoin, but earnings are expected to fall 210% this year and 99% next year. Bitcoin boom or bust, I’m passing on MSTR. 
Source: TradeSmith Finance Marathon Digital Holdings (MARA) is one of the largest bitcoin “miners” in the world. They are not wading through streams like gold miners did, but they do solve solutions to problems that create new blocks that are added to the blockchain. They are rewarded in bitcoin. Competition is fierce. Heavy computing power is needed, and so is heavy electrical power. Miners have come under some fire for the amount of electricity they require. MARA’s Quantum Score of 62.1 is under the buy zone. The fundamentals and technicals are more balanced than in COIN and MSTR, and some recent data is more promising. But earnings are forecast to fall 128% next year, which could be a problem. The best bitcoin-related plays at the moment are ones where bitcoin is only one part of the company’s business. Nvidia’s (NVDA) chips are in demand for miners, and its Quantum Score is 79.3. BlackRock (BLK), the mammoth asset management company, is a big owner of bitcoin and is behind the iShares Bitcoin Trust (IBIT) ETF. Its Quantum Score is 75.9. And even a company like Shopify (SHOP), which accepts bitcoin and other cryptocurrencies as payment. Its Quantum Score is 82.8. When it comes to bitcoin and cryptos, I’m sticking to the data. Which means I’m sticking with stocks until the data for cryptos becomes as effective in forecasting future prices. We’ve talked today about a few that rate well and not-so-well. For the highest probability of success, stay with the stocks that generate the highest ratings because of their strong fundamentals, technicals, and Big Money inflows. Talk soon,  Jason Bodner
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