7 Blockchain Stock Picks for the Fed’s New Growth Cycle

If Federal Reserve Chair Jerome Powell really does reduce interest rates, then forward-looking investors ought to consider blockchain stocks. True, you can always go for the individual cryptocurrencies. However, this arena carries both market and what I would term “administrative” risks. From data breaches to agonizingly forgetting passwords, a lot of stuff can go wrong.

I’m not saying that with blockchain stock picks that nothing can go wrong. Of course, this sector naturally carries high risks. For one thing, the underlying asset class is incredibly volatile and that translates into wildness in the charts. Also, data breaches are not an exclusive problem for crypto traders. That said, since equities trading involves custodial accounts, things like forgotten passwords aren’t really major issues.

On a much more important note, the Fed could be set to effectively make money cheaper. During prior cycles when interest rates were rising, the incentivization structure favored saving greenbacks. Under declining rates, the structure favors spending (or investing) dollars.

That should be good for cryptos. And what’s good for cryptos is usually positive for blockchain stocks.

IBM (IBM)

I’m going to ease into this topic of blockchain stocks with names that I can trust. For that, I’m going with IBM (NYSE:IBM). Now, before I get pummeled with emails – the good stuff is coming, I promise! – not too many enterprises related to decentralized transactional platforms (no matter how remotely) pay dividends. IBM does. At the moment, it carries a forward yield of 4%, much higher than the technology sector’s average yield of 1.37%.

If I were to use an (American) football analogy, IBM is to blockchain stock picks what a free safety is to your defensive. It’s just good to know that as a cornerback, there’s somebody behind you that will assist in covering the long ball. And that’s what IBM offers. With its enterprise blockchain solutions and services, it’s not the sexiest way to manifest decentralization. But it gets the job done for high-level functionalities.

I must say that are not enthused with Big Blue, rating shares a consensus hold. However, it’s undervalued and underappreciated. Given its myriad other relevancies, it could be a surprise idea among blockchain stocks.

Intel (INTC)

Another oddball idea for blockchain stock picks, Intel (NASDAQ:INTC) doesn’t seem particularly attractive. For example, Intel only pays a forward dividend yield of 1.06%, which is below the tech sector’s average yield. Also, analysts are not at all enthusiastic about INTC, pegging it a consensus hold. With both Intel and IBM, the average price targets imply downside. What the heck?

First, while Intel doesn’t offer a pure-play idea for blockchain stocks (obviously), it does bring relevance to the table. Specifically, its blockchain ASIC solution enables high-performance energy efficient hashing for demanding proof-of-work (PoW) workloads. And before you say that proof of stake (PoS) is becoming the standard mining protocol, it’s also a less-proven directive. From a meritocracy perspective, PoW arguably makes more sense.

Second, INTC in my opinion will frustrate the bears this year. I say that because institutional traders continue to sell call options. Basically, these short traders are egging on the bulls to take the opposite side of the wager. Well, given the speculative fervor post-pandemic, I’d say they will accept the challenge.

Nvidia (NVDA)

One of the biggest winners of 2023, Nvidia (NASDAQ:NVDA) – which offers graphics processors used in blockchain mining – is a tech juggernaut. In the past 52 weeks, NVDA gained nearly 224% of its equity value. That’s quite a lot, which makes some people think. After all, the trailing-six-month stat comes in at only 19% up. So, is the powerhouse losing gas?

I don’t want to doubt Nvidia, especially since it’s off to an auspicious start in 2024 as well. Further, analysts rate shares a consensus strong buy. Among 36 experts, four voices offer a dissenting opinion. But as holds and no sells, short traders would be taking a huge risk going against the grain. Plus, if cryptos soar because of the Fed’s monetary policy pivot, NVDA could once again fly higher.

It’s almost not fair – some semiconductor companies have all the luck. Last year, it was artificial intelligence. This year, it’s the rise of virtual currencies. Still, you got to respect the mass bullish sentiment. Because of that, NVDA could be one of the blockchain stocks to buy.

Riot Platforms (RIOT)

Now we’re getting into the good stuff, beginning with Riot Platforms (NASDAQ:RIOT). Based in Castle Rock, Colorado, Riot Platforms is building the world’s leading benchmark-crypto-driven infrastructure platform. Per its website, digital assets create new value opportunities through the convergence of money and energy. As a result, Riot built massive mining facilities, which admittedly has sparked energy-consumption controversies.

I can see both sides of this issue and I often go back and forth on it. Ultimately, though, the market will find a way to feed demand. And here’s the thing. While we’re on the cusp of a possible monetary policy pivot, we’re also sitting on a demographic goldmine. With members of Generation Z entering into the workforce every year, their purchasing power collectively increases. And what will they invest in?

I believe the answer is obvious. Crypto investing skews young – that’s what every report I’ve seen states. Because Gen Z is the first digital-only generation that lacks awareness of the analog paradigm, it inherently gravitates toward cryptos. That’s probably good news for blockchain stock picks like RIOT.

Cipher Mining (CIFR)

For another enticing look at blockchain stocks, Cipher Mining (NASDAQ:CIFR) could be up your alley. Per its website, Cipher is dedicated to expanding and strengthening the benchmark crypto’s critical infrastructure in the U.S. In this vein, it’s almost identical to Riot Platforms. Notably, analysts rate shares a unanimous strong buy (among five expert voices). Plus, the price target lands at $5.20, implying almost 60% upside.

It’s really a toss-up whether you want to go with Cipher or Riot. As far as analyst ratings are concerned, RIOT is a consensus strong buy with a robust (but lower) implied upside potential. However, for speculators, the edge might go to CIFR simply based on the mobility aspect. Riot is more established, featuring a multi-billion-dollar market capitalization. On the other hand, CIFR features a market value of $838 million.

Theoretically, if the stars align in the underlying crypto space, Cipher could yield greater capital gains. Of course, if circumstances go wrong, then CIFR may absorb a greater magnitude of red ink. The choice is yours.

Canaan (CAN)

For those that want to ramp up their risk-reward profile with blockchain stocks, I give you Canaan (NASDAQ:CAN). Unlike other crypto-related market ideas, CAN has been a losing entity. In the past 52 weeks, shares incurred downside of more than 34%. That’s the opposite of many other mining enterprises, which have seen incredible returns. So, what gives?

Contrary to a company like Riot Platforms or Cipher Mining, Canaan isn’t a direct mining business. Rather, it provides specialized mining equipment. Now, the aforementioned pivot to PoS protocols presents a headwind. That’s because PoS emphasizes stake in the underlying network whereas PoW emphasizes raw computing power. Less influence among PoW blockchains might spell problems for Canaan.

However, I still like CAN as a speculative idea for blockchain stock picks because again, PoS is relatively unproven. And the protocol tends to benefit early adopters because they would have the most stake in the target network. That’s not decentralization – that’s an aristocracy, a concept that blockchain advocates generally despise.

So, look for Canaan to be a dark horse play among blockchain stocks.

Coinbase (COIN)

I’m going to save what I consider the wildcard among blockchain stocks for last and that would be Coinbase (NASDAQ:COIN). Clearly, as a crypto exchange and wallet service, Coinbase is a blockchain play under a tangential interpretation. Still, I think we can all agree that Coinbase wouldn’t exist if it weren’t for the blockchain. Plus, it has done so much to help forward awareness of decentralized digital assets.

Still, it’s not without its challenges. Due to the recent volatility that impacted the crypto space, COIN lost about 12% of equity value for the week ending Jan. 12. Since the beginning of the year, it’s down almost 25% so not the most auspicious of starts. And to add to the misery, analysts rate shares a consensus hold with a $119.22 price target. That implies almost 9% downside risk.

Nevertheless, the Fed could change everything with its monetary policy pivot. Under a dovish environment, an incentive to do something with dollars – rather than stuffing them under the mattress – materializes. Further, the more aggressive the cuts, the more that risk-on assets may benefit.

That could be a huge positive for cryptos and subsequently COIN stock. Therefore, it’s one of the blockchain stock picks for market gamblers to consider.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.