Coinbase raked in $1 billion in 2017, and the cryptocurrency exchange seems like the perfect backdoor investing opportunity to play the crypto market. After all, you can own a share of the exchange that generates billions without owning Bitcoin directly.
But Coinbase is a private company, so you won't be able to buy Coinbase stock anytime soon. And even if it goes public, it might not be quite as good of an investment as it sounds.
Today, we'll show you exactly why we wouldn't recommend buying Coinbase stock.
And even more importantly, we'll show you an even better backdoor strategy to profit from Bitcoin's meteoric rise...
All IPOs are subject to volatile price swings, no matter the industry.
After Snap Inc. (NYSE: SNAP) went public on March 2, 2017, shares opened at an all-time high of $28.17 four days later, on March 6.
But retail investors who bought shares of SNAP at those prices, hoping it would be the next Facebook Inc. (Nasdaq: FB), got burned.
From today's opening price of $14.28, some early investors have now lost 49.30% of their original investment.
And it's not just tech company stock prices that can have volatile price swings after an IPO...
On Jan. 19, ADT Inc. (NYSE: ADT) stock opened to the public at $12.65 per share.
After reaching an intraday high of $12.97, the excitement around a new public offering died down, and the ADT stock price fell to $11.91 per share this morning.
Investors who bought in at the peak have now lost 8.17% of their investment in under a week.
As you can see, because of the volatile price swings, IPOs are not for those averse to risk.
However, we still found a way to profit from the cryptocurrency market without having to buy a risky IPO.
Money Morning readers can invest in it today.
In fact, some of our readers have already made a profit of 23.43% in the two months since our first report about this company came out on Nov. 27, 2017. In that same time, the Dow Jones Industrial Average climbed just 11.71%.
If you missed the report, though, it's okay.
In the next 12 months, wealth management company DA Davidson projects this company's stock price could climb another 37.84%.
Don't Miss This Shot at a $78,000 Windfall: This tiny firm is about to make the entire world wire-free. As its game-changing technology revolutionizes the global power structure, its stock could hand investors a massive return. Learn more...
That's why, today, we wanted to provide our readers with a backdoor crypto investing play through an established company that's been in business since 1999 and is worth $1.9 billion.
And if you know about this stock right now, over the next 12 months, you can take part in the potential 37.84% gains...
Forget Coinbase Stock, Here's the Real Crypto Profit Play
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Overstock.com Inc. (Nasdaq: OSTK) is our backdoor Bitcoin investing strategy.
Yes, it may seem odd that Overstock.com is a way to invest in Bitcoin, but CEO Patrick Byrne was one of the first to accept Bitcoin payments...
While Overstock sells surplus and returned merchandise from other retailers, as well as new merchandise, Overstock started accepting Bitcoin as payment when it was just $754.97 per coin, in January 2014.
The online retailer has kept 10% of its Bitcoin earnings in Bitcoin and converted the rest into U.S. dollars, according to CoinDesk.com.
However, on an Aug. 3 earnings call, Bryne said the board of directors approved a plan to keep 50% of Bitcoin payments as Bitcoin.
That means Overstock is actually stashing away the bitcoins it collects as payment, so shareholders are getting a slice of Bitcoin's price growth.
Now, we don't know exactly how many bitcoins Overstock.com is holding right now.
But we do know roughly how much in Bitcoin people are spending...
Byrne didn't give a time frame, but he said in an August 2017 earnings call that Overstock was receiving $50,000 per week in Bitcoin payments.
At the time of the call, Bitcoin prices opened at $2,709.56 on Aug. 3. Since Bitcoin prices are now trading at $11,130.50, Overstock has booked a 310.78% gain since Byrne announced Overstock will hold 50% of its Bitcoin payments as Bitcoin.
And that's not the only way Overstock is giving you exposure to Bitcoin. Overstock also operates a blockchain investment division, Medici Ventures.
Medici researches how to incorporate blockchain technology into banking, identification services, land ownership and sales, and voting. For example, its PeerNova holding is building blockchain-inspired technology that enables financial institutions to securely and verifiably manage their data.
As blockchain technology is used more and Bitcoin payments become more common, one analyst has a bullish price prediction for the Overstock.com stock price.
Investment firm DA Davidson predicted on Nov. 9 that the OSTK stock price will climb to $85 per share.
Now that OSTK is close to hitting that price, at $79.80 per share, DA Davidson hiked its price target to $110 per share today (Jan. 25, 2018).
That's a potential profit of 37.84% in the next 12 months.
Of course, that doesn't come close to the 1,364% Bitcoin price gains between Jan. 1, 2017, and Jan. 1, 2018.
However, buying OSTK stock removes two of the biggest problems with owning Bitcoin directly...
The first issue is you have to store cryptocurrencies in a digital wallet to keep them safe, which can be a complicated process for new investors. Because keeping track of the private keys (the way to identify a coin) can be difficult, over 30% of all bitcoins in existence are projected to be lost forever, according to a June 22, 2014, report from LetsTalkBitcoin.com.
The second issue is that you have to be comfortable with volatile price swings.
For example, Bitcoin prices opened at $7,404.52 on Nov. 5, but they fell to an intraday low of $5,519.01 on Nov. 12.
That's a 25% drop in a week.
But Overstock lets you profit from Bitcoin while also limiting your risk.
By holding up to 50% of Bitcoin payments, any Bitcoin price jump makes Overstock more valuable. On the flip side, Overstock's core retail business won't collapse if Bitcoin prices take a dive.
The company sells goods and accepts Bitcoin payments, rather than just mining Bitcoin as its core operation. On top of that, the company also accepts 40 different cryptocurrencies, like Ethereum.
If the price of Bitcoin goes down and another digital currency becomes more popular, like Litecoin or Ethereum, Overstock can hold those coins instead as a long-term investment.
Up next, there's a game-changing device that has just been approved by the FCC that could spark the most monumental technological transformation you'll ever see...
Critical: FCC Approves Revolutionary Device (This Changes Everything)
A tiny company's game-changing device has just been approved by the FCC... and it's set to spark the most monumental technological transformation you'll ever see.
This is the only device of its kind to receive this historic approval, and the floodgates are set to open any minute.
With one tiny company at the heart of this revolution, even a small stake could reward you with astronomical gains.