Do you want to invest in crypto today? Two of the most popular options include investing in the leading digital currency Bitcoin (CRYPTO: BTC) or a company that can’t stop loading up on Bitcoins: MicroStrategy (NASDAQ: MSTR).
Bitcoin has grown in popularity and is now in the mainstream, with its valuation rivaling many of the top companies in the world. Many analysts remain bullish on more growth ahead for the crypto markets, with Bitcoin leading the charge.
MicroStrategy, which has rebranded itself as Strategy, isn’t a cryptocurrency. However, given its egregious valuation, which is disconnected from its revenue and earnings numbers, it trades more like a digital currency than a stock.
Speculation plays a big role in its valuation, and as Bitcoin has risen in value, so has Strategy. What may surprise you is that over the past five years, Strategy has outperformed Bitcoin by a wide margin.
Which is the better investment option if you’re still bullish on crypto’s long-term growth potential? Bitcoin or Strategy?
Image source: Getty Images.
Bitcoin is the most popular and most valuable digital currency in the world. As of July 7, its market cap was $2.1 trillion. The next-closest cryptocurrency is Ethereum, with a valuation of just $306 billion.
Investing in Bitcoin has been synonymous with investing in crypto. Going with the top digital currency is arguably the safest way for investors to do so.
While there are more modestly valued cryptocurrencies out there, they come with much greater risk. With Bitcoin maturing and becoming more mainstream, investors don’t even need to worry about long passwords and digital wallets anymore. By simply investing in a spot Bitcoin exchange-traded fund (ETF), it’s easier than ever to add it to your portfolio.
Plus, U.S. President Donald Trump is looking to enact more favorable crypto policies, and Bitcoin may stand to benefit the most from those trends since it’s the most recognizable coin in the world. Holding Bitcoin or a spot Bitcoin ETF can be a great way to benefit from crypto’s growth.
Over the past five years, the cryptocurrency has amassed gains of more than 1,000%, and there’s still room for it to rise higher. Ark Invest CEO Cathie Wood believes that the digital currency could hit a price of $1.5 million by 2030.
Strategy is bullish on the price of Bitcoin, as well. Executive Chairman Michael Saylor is often the cryptocurrency’s best spokesperson, talking up the high expectations he has for crypto. He believes Bitcoin could hit a value of $13 million by 2045.
It’s little wonder, then, why Strategy has continued to load up on Bitcoins, as it has benefited from the digital currency’s rising valuation over the years. The company had nearly 600,000 Bitcoins as of the end of June, as it adds to its position on a regular basis.
Because Strategy is being led by a big Bitcoin bull, it’s been a hot buy with investors, who may still prefer to invest in a stock than a spot ETF or digital currency. In five years, Strategy’s stock has soared more than 3,200%.
Strategy’s advantage is that it can invest in other cryptocurrencies. While right now, its focus is clearly to load up on Bitcoins, it may not stay that way forever. If there are changing market conditions in crypto, it has the freedom to diversify or pivot to other assets.
It’s also a top Nasdaq stock, so it’s also included within the Nasdaq 100 index, which means it’s included in many professionally managed portfolios. While fund managers may be hesitant to invest in Bitcoin directly, they may invest in the Nasdaq 100, which will give Strategy’s stock a boost.
Both Bitcoin and Strategy are risky and speculative investments. Even though Strategy is involved with business intelligence, that’s not what moves the needle for the crypto stock. The company’s revenue has actually been declining in recent years — it’s now largely a crypto play.
Strategy has a big crypto enthusiast in Saylor and has been stockpiling Bitcoins. It’s also more easily traded and included in more portfolios and has the flexibility to hold other digital currencies. Therefore, it’s a more compelling crypto investment today than directly buying Bitcoin. If you have a high risk tolerance and want significant exposure to crypto, Strategy is the better cryptocurrency option to consider for your portfolio.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
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