Trump Teases His Plan for Cryptocurrencies

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Former President Donald Trump has a plan to make the U.S. "the crypto capital of the planet," he wrote on X last week but has not provided the details yet, CNBC reported.

What he has stated recently is that if he is elected the country's next president in November, he would create a federal strategic bitcoin reserve, McAlinden Research reported. To do this, the 213,000 Bitcoins, now held by the Justice Department, would be transferred to the U.S. Department of the Treasury. They're valued at US$14.8 billion ($14.8B) in total.

Trump also said he would make it so the federal government could not sell this bitcoin stockpile, reported CNBC in July, and he would establish a federal crypto advisory council.

Meanwhile, financial services and investment banks continue bolstering their ties to the cryptocurrency sector. Earlier this year, several of them, the likes of BlackRock and Fidelity, debuted bitcoin exchange-traded funds (ETFs), so now there are 11, according to an August 29 Forbes article. Goldman Sachs, for instance, holds more than US$400 million ($400M) in seven of these, Brian Hicks of Wealth Daily reported on August 16.

Cantor Fitzgerald plans to launch a bitcoin financing business to provide leverage to investors owning the cryptocurrency. The investment bank will allocate US$2B to start, increasing the amount as necessary, and will partner with certain Bitcoin custodians.

"My view is that bitcoin, like gold, should be free to trade everywhere in the world, and as the largest wholesaler in the world, we are going to do everything in our power to make it so," Cantor Chairman and Chief Executive Officer Howard Lutnick said at the Bitcoin Conference in July.

Emerging, Evolving Sector

Forecasters say the U.S. and global cryptocurrency markets will grow over the next several years, albeit with bouts of volatility.

One of two near-term catalysts expected to boost digital asset prices is rate cutting by the U.S. Federal Reserve, Forbes reported QCP Capital, a Chinese bitcoin and crypto investment firm, having written in an August 28 market insight note.

"With Powell and the Fed ready to kickstart a rate-cutting cycle, increased liquidity will eventually push risk assets higher," QCP analysts wrote.

Another likely stock-moving event is the November presidential election. A Trump win could lead to "a rush of new buyers," taking bitcoin's price over US$100,000, Michael Terpin, founder of crypto venture capital firm Transform Ventures, told Forbes. He added that October and November tend to be strong months for bitcoin, especially during the year of the halving and the following year. Regardless of the election outcome, according to BitMEX co-founder Arthur Hayes, bitcoin could hit "hundreds of thousands of dollars, maybe US$1M." (The currency's  price is about US$57,000 at the time of this article.)

Looking further ahead, the U.S. cryptocurrency market is forecasted to reach US$32.9B by 2028, reflecting "unprecedented growth" of 9.10% per year during the period, according to FinSMEs. Institutional adoption, expansion in retail investments, and technological advancements will spur the growth. Volatility is a market risk.

The global cryptocurrency market is projected to reach US$1.9B by 2028 from US$910.3M in 2021, reflecting an 11.1% compound annual growth rate, according to an August Fortune Business Insights report.

The report noted that drivers of global market growth in the coming years include the increasing popularity of digital assets like Bitcoin, the world's hottest and most prominent digital currency, and Litecoin. With these cryptocurrencies, blockchain technology is often used for "decentralized, fast, transparent, secure, and reliable transactions."

Further, Fortune Business Insights indicated, "With these advantages of blockchain and digital currency, companies are investing in cryptocurrency and collaborating with other companies to deliver efficient and quality services to the users."

Factors now hampering market growth include the use of digital currencies for illegal activities, from money laundering to terrorist financing, and security attacks, noted Fortune Business Insights.

Given that the market is emerging and quickly evolving, volatility and corrections are expected. 

Sampling of Cryptocurrency Stocks

For those looking to invest in the sector, crypto stocks are one way to do so.

These are publicly traded companies running businesses that are highly exposed to the cryptocurrency market or blockchain technology, as described by Forbes. These stocks encompass popular crypto exchanges, cryptocurrency miners, blockchain technology specialists, and other companies with sizable cryptocurrency holdings.

Coinbase Global

Coinbase Global Inc. (COIN:NASDAQ) provides a platform through which people and institutions can trade, stake, safekeep, spend and transfer digital assets, according to the company's website.

About 245,000 entities in more than 100 countries use Coinbase to interact with cryptocurrencies.

The company's credit rating is attractive in terms of its leverage, liquidity, and coverage, an investment research firm New Constructs wrote in an August 24 report. This determination is based on a proprietary analysis of Coinbase's profits and balance sheets.

Most recently, Coinbase developed and launched a machine learning model that predicts spikes in traffic to databases and, in advance of these, scales up to accommodate them, it announced in late August.

According to Refinitiv, management and insiders own 2.15% of Coinbase. 

Strategic investor SVB Financial owns 0.20% with 0.42 million shares.

Institutions hold the bulk of the stock at 55.56%. The largest shareholder in this category is The Vanguard Group Inc. at 8.66%, with 17.58 million shares. 

The rest is in retail.

Market Watch notes that Coinbase has a market cap of US$45.56 billion, 202.95 shares outstanding, and trades in the 52-week range between US$69.63 and US$283.48.

CME Group

Illinois-based CME Group (CME:NASDAQ) provides a marketplace and financial infrastructure for administrating and setting up futures contracts and options on Bitcoin and Ether derivatives, allowing for hedging cryptocurrency exposure, the company website notes.

Its products are integrated into six bitcoin ETFs in the U.S. The company also provides cryptocurrency reference rates and real-time indices.

On September 30, CME intends to launch Bitcoin Friday futures, weekly futures contracts that will be cash-settled to the CME CF Bitcoin Reference Rate - New York Variant at 4 pm every Friday. They will be smaller contract size trades at 1/50 of a bitcoin, via a venue regulated by the Commodity Futures Trading Commission.

CME Group is one of the Best Crypto Stocks of September 2024 and "could thrive in the years to come," according to Forbes Advisor. It has a consensus analyst rating of Buy or better and a consensus 12-month upside potential of at least 12% based on average analyst price targets. The company was chosen from among a group of the most common stocks in the Top 20 holdings of Forbes Advisor's best Bitcoin and blockchain ETFs.

Financial research and analysis firm Trefis has share price and market cap estimates on CME Group that imply a 20% upside, as noted in an August report.

Also, CME earned a Very Attractive credit rating with respect to liquidity, leverage, and coverage, according to New Constructs on August 24.

According to Refinitiv, 0.30% of the company is held by management and insiders.

0.15% is with strategic investors Sumitomo Mitsui Financial Group Inc., City Holding Company, Banco Santander SA, and Vitol Holding BV.

The bulk of the shares, 89.60%, is owned by institutions. Out of this category, the largest investor is The Vanguard Group Inc. at 9.28%, with 33.41 million shares.

The rest is in retail. 

Market Watch states that CME Group has a market cap of US$77.69 billion, 360.09 million shares outstanding, and trades in the 52-week range between US$190.70 and US$223.80.

FRNT Financial 

For investors wanting to invest in smaller-cap crypto stocks, FRNT Financial Inc. (FRNT: TSX) is one option.

Headquartered in British Columbia, FRNT is an institutional capital markets and advisory platform focused on digital assets, as described by Bloomberg. The company bridges the world of traditional finance with that of web-based finance and cryptocurrency.

Independent research firm, SADIF Investment Analytics, rates FRNT's stock Above Average and gives it an overall score of 89 out of 100. In a July report, SADIF wrote that FRNT is a "high-quality company" with "a bright prospect."

"We expect FRNT Financial Inc. to be a good long-term investment that is likely to deliver long-term returns," added SADIF.

According to Refinitiv, management and insiders own most of FRNT Financial, holding 52.45% of the company's stock. The largest shareholder in this category is Co-founder and CEO Stéphane Ouellette, who owns 42.25%, with 15.73 million shares.

Strategic Investor Coinsquare Ltd. owns 10.79%, with 4.02 million shares.

1.27% is with institutions.

The rest is in retail.

Market Watch reports that FRNT Financial has a market cap of CA$15.81 million, 26.8 million shares outstanding, and trades in the 52- week range between CA$0.25 and CA$0.87.