Stocks to Buy, 43 Crypto-Linked Names Poised to Surge in Value: BofA

• Bank of America believes that the $2.56 trillion crypto industry has become “too large to ignore.”
• The industry was boosted by $17 billion of crypto VC investments in the first half of 2021 alone. 
• BofA shares 43 stocks that are set to expand market value due to their digital-asset exposure.

With bitcoin surging to a new all-time high above $66,000 on Wednesday, the $2.6 trillion crypto industry has become “too large to ignore,” as Bank of America’s digital-asset strategists Alkesh Shah and Andrew Moss said in a Monday note. 

“We believe crypto-based digital assets could form an entirely new asset class,” they said. 

Aside from bitcoin, the still-nascent asset class includes altcoins that function like operating systems, decentralized applications that perform financial services without middlemen, stablecoins pegged to fiat currencies, central bank digital currencies that could replace national currencies, and non-fungible tokens enabling connections between creators and fans, according to the strategists. 

Venture capital investments into digital assets and blockchain technology, which surged to $17 billion in the first half of this year from $5.5 billion last year, also turbocharged the growth of the industry. 

“This creates a new generation of companies for digital assets trading, offerings and new applications across industries, including finance, supply chain, gaming and social media,” they said. “And yet we believe we’re still in the early innings.”

The team considers regulatory uncertainty to be the “largest near-term risk.” While the Securities and Exchange Commission Chairman Gary Gensler has said that the agency has no plan to ban cryptocurrencies, regulators are increasingly scrutinizing sub-industries from stablecoins to crypto lending products. 

‘Ease-of-use is a killer app’

However, the regulators did allow the crypto industry a historic win on Tuesday. The industry cheered on the launch of the first bitcoin futures ETF by ProShares under the ticker “BITO,” which saw almost $1 billion worth of shares changing hands on its first day of trading. 

Matt Hougan, chief investment officer of the $1.5 billion Bitwise Asset Management, interpreted the strong early trading of the ETF as a reflection of investors’ desire to access bitcoin through brokerage accounts.

“Lots of people questioned this, noting that you can already buy bitcoin through apps, custodians, etc,” Hougan said in a Tuesday tweet. “But ease-of-use is a killer app.”

The same could be said of crypto-linked stocks, which are exposed to digital assets either through their use of blockchain technology or the addition of bitcoin onto their balance sheet. Investors in these stocks can gain exposure to oftentimes blue-chip technology stocks without delving deep into the wild west of altcoins and DeFi tokens. 

To that end, Bank of America’s digital asset strategy team has identified 43 buy- and neutral-rated stocks that may see market value expansion due to their digital asset exposure. The list of stocks, along with their tickers, market caps, ratings, and analyst commentaries, are listed below.