HSBC Just Released a Bitcoin Stocks List, but Our 2 Picks Are the Real Winners

With the cryptocurrency market as hot as it is, pundits have recommended all sorts of ways to indirectly play Bitcoin and other cryptos. Just this week, analysts at HSBC Holdings Plc. (NYSE: HSBC) identified a handful of "Bitcoin stocks" that let investors do just that.

But its Bitcoin stocks list completely misses the point. And that's why we'll be showing you two better cryptocurrency stocks to buy in just a bit...


For its list, HSBC simply screened for stocks in the MSCI's All Country World Index whose business descriptions had any of the following terms: "mobile payment," "electronic money," "Internet finance," and "mobile commerce."

The resulting basket of one dozen stocks gained 119.9% over the past five years, while the MSCI ACWI gained about 51%.

That's pretty good, but Money Morning Chief Investment Strategist Keith Fitz-Gerald's two picks are even better. Their five-year gains were 201.6% and 1,516.2%, respectively. And they are solid, U.S.-based companies...

Betting on the Future with Blockchain

As you're probably aware, Bitcoin is but one end product for a technology called blockchain.

This is a distributed method of recording transactions and storing data that is not subject to the whims of a central authority, whether it be a corporation, government, or even an exchange. It's secure, and it cuts out the middleman altogether, allowing people to exchange goods and services for payment anonymously.

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The uses are endless, from currencies to the recording of real estate transactions and copyrights. And it creates the basis for a peer-to-peer economy that will take the "sharing economy" of the likes of Uber and Airbnb to new heights.

Think of blockchain today as the Internet was in the early 1990s - an economic revolution in its infancy. Investing in such a generational technology will lead to massive wealth buildup for those who know what to do and jump aboard early.

The Two Best "Bitcoin Stocks" in 2018

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HSBC's list includes stocks from Japan, China, and the United States, and it does include one of our favorite long-term plays - Alibaba Group Holding Ltd. (NYSE: BABA). However, we like Alibaba for many other reasons aside from its Bitcoin connection.

Fitz-Gerald's two favorite plays on Bitcoin are CME Group Inc. (Nasdaq: CME) and NVIDIA Corp. (Nasdaq: NVDA). Both have been stellar performers and are perfectly positioned to continue outperforming.

CME Group is one of the world's leading derivatives and futures exchange operators. Known as "The Merc," it is now the largest futures exchange in the world following the merger between the Chicago Mercantile Exchange and the Chicago Board of Trade in 2006. It handles trading in stock indexes, Treasury bonds, energy, precious metals, agricultural products, and regular currencies, such as the euro.

CME recently began offering Bitcoin futures contracts in mid-December based on the CME CF Bitcoin Reference Rate (BRR). That is important, because the BRR aggregates information in U.S. dollars per bitcoin, as drawn from the world's major Bitcoin spot exchanges.

By making Bitcoin instantly accessible to a much wider range of traders, the hope is that Bitcoin prices continue to rally and draw in even more investors to participate.


The Top 5 Cryptocurrencies to Invest in Today

But whether prices soar, stay where they are, or fall, it does not matter. CME makes money as long as people trade.

The second "Bitcoin stock," NVIDIA, has been one of Fitz-Gerald's top picks for years.

The company manufactures high-powered graphics processing units - or GPUs for short. Its chips are in high demand, with high-end gamers and visual artists who demand top-notch graphics. It also delivers a superior visual and multimedia experience on tablets and smart devices while consuming minimal power.

That's key for Bitcoin, as its computers and networks consume huge amounts of electricity. Bitcoin is approximately 5,000 times more energy-intensive than a single credit card transaction.

According to Digiconomist, the estimated power use of the Bitcoin network, which is responsible for verifying transactions made with the cryptocurrency, is 30.14 TWh a year. That exceeds the annual consumption of Ireland and 19 other European countries. The network consumes five times more electricity than is produced by the largest wind farm in Europe.

And as Bitcoin becomes more popular - and the need to defend it from crashes and hacking grows - this problem will only get worse.

But it doesn't matter whether the price of Bitcoin triples or collapses. As long as NVIDIA's chips get used, the company makes money.

The moral of the story is to be a merchant, not a miner. Make hay while the sun shines, and also when it doesn't.

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