In this article, we will take a look at the recent news from the crypto industry while discussing the 20 cryptocurrency stocks to buy according to hedge funds.

A Review of the Crypto World: Latest Updates

Crypto has emerged as a major political issue in the US with the campaigns for election going on. Head of Firmwide research Galaxy Digital Alex Thorn called August a rough and seasonally bad week for Bitcoin. He mentioned how eight out of the eleven prior Augusts witnessed the major coin trading down. However, political events have also played a role in the crypto landscape.

In Thorn’s opinion, most people view Trump’s victory as bullish for the crypto market. Trump who is now running for President brought the hopes of the crypto world higher by promising to deliver a plan to make the United States the ‘crypto capital of the planet’. Crypto became an even hotter topic as Kamala Haris simultaneously supported policies for the expansion of the industry. In the opinion of Thorn, most people view Trump’s victory as bullish for the crypto market. He predicts crypto will run quite higher if Trump ends up winning the election based on an anticipated easing of the regulations. On the other hand, he expects the victory of Harris to be more neutral even for the industry since those advising her belong to the Biden administration on crypto policy.

Looking forward to September which is a seasonally weak month for crypto too, the next months including October, November, and December are crypto’s most bullish months based on the seasonality factor. Regardless of the highly awaited Fed interest rate cuts just ahead of us, the crypto market investors still remain concerned as JPMorgan’s Head of Global and European Equity Strategy dismissed the potential of a crypto bull market. While September has been a historically worst month for US stocks, the upcoming rate cut might be an outlier in history.

In an interview with CNBC, Anthony Pompliano, Professional Capital Management CEO, talked about the recent price moves in Bitcoin. The German government offloading Bitcoin through as many exchanges and the Bitcoin exchange Mt. Gox unloading coins onto the market are two important events defining this supply. Pompliano refers to Bitcoin as really illiquid with many Bitcoin holders having a long-term view of it. At the start of 2024, the Bitcoin amount that had not moved in more than a year was over 70%. Some of it started to get distributed as prices rose, as expected in a bull market. Although Pompliano expects this percentage to drop to 50% to 55% but still at least half of the Bitcoin would still be in the hands of people who have an over 10-year time horizon. Thus, the question revolves around whether these hands are strong enough to outlast the aforementioned two events. Pompliano finally states time as the only catalyst for Bitcoin rather than a pro-crypto candidate in the upcoming US elections. While the summer season is a bit slow, prices typically go back up in September and beyond.

With that, let’s look at the 20 best cryptocurrency stocks to buy now.

Our Methodology:

In order to compile a list of the 20 best cryptocurrency stocks to buy according to hedge funds, we sifted through ETFs and online rankings to compile a preliminary list of 40 companies involved in the crypto space. Moving on, we shortlisted the top 20 stocks from our list which had the highest number of hedge fund holders. The 20 best cryptocurrency stocks to buy according to hedge funds have been arranged in ascending order of the number of hedge fund holders they have, as of Q2 2024.

At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

20 Best Cryptocurrency Stocks to Buy According to Hedge Funds

20. Hut 8 Mining Corp (NASDAQ:HUT)

Number of Hedge Fund Holders: 13

Hut 8 Mining Corp (NASDAQ:HUT) is a Bitcoin mining company headquartered in Miami, Florida. The company has self-mining, hosting, managed services, and traditional data center operations across North America. It has a portfolio comprising 20 sites including 10 Bitcoin mining, hosting, and managed services sites in Alberta, New York, and Texas, 4 power generation assets in Ontario, 5 high-performance computing data centers in British Columbia and Ontario, and one newly announced site in the Texas Panhandle.

Hut 8 Mining Corp (NASDAQ:HUT) serves as one of North America’s largest Bitcoin miners and a leading vertically integrated operator of large-scale energy infrastructure. Its unique business model revolves around profitable digital asset mining, high-performance computing, and yield programs that complement its self-mined Bitcoin reserves’ value. The firm has years of experience mining digital assets with the most efficient mining servers which makes its operations one of the strongest in the mining industry. It has a proven track record of successfully navigating bull and bear Bitcoin market cycles. Despite the network halving during the second quarter, the firm’s gross margins in the Digital Assets Mining segment increased to 46% year-over-year.

An expanding footprint is core to the firm’s differentiated energy strategy. While the firm announced a new site in the Texas Panhandle, it is discussing a large-scale commercial partnership for the site which can power up to 205 megawatts of NVIDIA Blackwell GPUs. Emphasizing this business strategy, here is what the CEO Asher Genoot said during the Q1 2024 results conference call:

“We believe our strategy will position us for market leadership—first in Bitcoin mining then in the broader energy infrastructure sector. And with our commitment to disciplined capital allocation, focus on non-dilutive sources of funding, and exceptional team and board, we are more confident than ever that we are building a business that endures for generations and delivers lasting shareholder value.”

The firm’s strategy of building a portfolio that drives long-term market leadership, diversified business lines, and a strong and liquid balance sheet makes it attractive. As of Q2 2024, Hut 8 Mining Corp (NASDAQ:HUT) was held by 13 hedge funds thereby ranking among the 20 best cryptocurrency stocks to buy according to hedge funds.

19. Cipher Mining Inc. (NASDAQ:CIFR)

Number of Hedge Fund Holders: 15

Cipher Mining Inc. (NASDAQ:CIFR) is an industrial-scale Bitcoin mining company that dedicates itself to expanding and strengthening the Bitcoin network’s critical infrastructure in the United States. Cipher focuses on the development and operation of bitcoin mining data centers in the country. The US-based Bitcoin mining company was incorporated in 2020 and aims to be the market leader in Bitcoin mining growth and innovation.

Cipher is in an attractive industry position to maximize opportunities in both Bitcoin mining and HPC infrastructure. It is currently developing HPC infrastructure to be complementary to its Bitcoin mining business. The firm strategically expanded into the High-Performance Computing (HPC) business and has the potential to become a market-leading HPC infrastructure provider by securing 4 new North American sites with up to 1.7 GW of capacity while all sites have adequate access to consistent power, land, and fiber necessary to accommodate HPC. With experienced industry experts from Google, Vantage, and Meta on the team and significant early interest from a broad set of potential investors and financiers, Cipher is poised to grow.

As indicated by the CEO of Cipher, the firm currently operates at 8.7 exahashes per second of self-mining hashrate and is on target to achieve 13.5 exahashes per second by the year’s end and 35.0 exahashes per second by 2025’s end, almost 4 times than the current. Amidst ambitious plans for expansion and consistent growth in Bitcoin mining capacity and efficiency, Cipher Mining Inc. (NASDAQ:CIFR) is aiming for the right balance between the two business lines. The stock was held by 15 hedge funds at the close of Q2 2024 and is one of the best cryptocurrency stocks to buy according to hedge funds.

18. Marathon Digital Holdings, Inc. (NASDAQ:MARA)

Number of Hedge Fund Holders: 16

Marathon Digital Holdings, Inc. (NASDAQ:MARA) operates as a global leader in digital asset compute. The company mines digital assets with a focus on the Bitcoin ecosystem in the United States. Marathon leverages digital asset compute to support the energy transformation by the conversion of clean, stranded, or underutilized energy into economic value.

Marathon is one of the largest and most liquid miners which continues to efficiently scale and expand its operations thereby setting the pace for the Bitcoin mining industry. The firm has a diversified portfolio of Bitcoin mining operations. All of this has translated into strong financial results. From Q4 2022 to Q4 2023, the company witnessed its hashrate, BTC production, efficiency, and market share rise. For the second quarter of 2024, the BTC production fell as a result of the increased global hash rate, the April halving event, and unexpected third-party equipment failures and transmission line maintenance. However, the company recorded its energized hash rate increasing 78% to 31.5 exahashes per second, up from 17.7 exahashes per second in Q2 2023. Revenue increased by 78% year-over-year.

To better align its internal structure with the pursuit of growth opportunities, the company was organized into three strategic business teams including Utility Scale Mining, Energy Harvesting, and Technology. It also diversified its portfolio of digital asset compute with the launch of Kaspa mining operations.

With an all-time high installed current hash rate of 31.5 exahashes per second, the strategic move towards a streamlined organization with three specialized business teams, Marathon Digital Holdings, Inc. (NASDAQ:MARA) qualifies as one of the best cryptocurrency stocks to buy which was held by 16 hedge funds and Citadel Investment Group was the top shareholder, as of Q2 2024.

17. Bitfarms Ltd. (NASDAQ:BITF)

Number of Hedge Fund Holders: 16

Bitfarms Ltd. (NASDAQ:BITF) is a global Bitcoin self-mining company which was founded in 2017. The company runs vertically integrated mining operations with onsite technical repair, proprietary data analytics, and company-owned electrical engineering and installation services. The Bitcoin miner has a diversified production platform comprising 8 industrial-scale facilities in Canada, 2 in the United States, 1 in Argentina, and 3 in Paraguay. The firm’s data centers are powered by more than 75% renewable power.

Currently, Bitfarms serves as the only publicly traded crypto mining company audited by a Big Four accounting firm. The firm manages one of the largest internationally diversified portfolios of energy contracts in the Bitcoin data center business. It recently added 220 MW of capacity in Paraguay and Pennsylvania while it energized its 70 MW site in Paso Pe, the company’s largest site to date. Simultaneously, it stepped into the most attractive energy market in the US through its new site in Sharon while unlocking new opportunities beyond Bitcoin mining, such as HPC/AI. For the second quarter, Bitfarms had a hashrate of 11.1 exahashes per second, up from 6.5 exahashes per second in the first quarter. This implies that Bitfarms is implementing a robust growth strategy with a focus on US expansion and diversification from Bitcoin mining.

At the end of August, Bitfarms Ltd. (NASDAQ:BITF) revealed its plans to acquire Stronghold Digital Mining, Inc., a vertically integrated crypto asset mining company. This transformative acquisition is anticipated to potentially raise Bitfarm’s energy portfolio to over 950 MW by the end of 2025. The transaction is expected to close in the first quarter of 2025.

Based on the aforementioned plans, the firm is well set to reach over 35 exahashes per second in 2025 which will be a 67% growth from 21 exahashes per second, the year-end target for 2024.  With the appointment of Ben Gagnon as the Chief Executive Officer who has a prior 9-year full-time experience in the mining industry, Bitframs is positioned for accelerated growth through 2024. The firm’s impressive energy portfolio and strategic approach to growth rank it among some of the best crypto stocks to buy. As of Q2 2024, the stock was held by 16 hedge funds while Millennium Management was the most dominant shareholder.

Bitcoin prices took a tumble today, falling close to 8% in less than 24 hours as markets responded to several bearish variables including lackluster jobs data.

The world’s most prominent digital currency dropped to $52,530 around 5 p.m. EST, according to Coinbase data provided by TradingView.

At this point, the cryptocurrency was down approximately 7.8% after rising to nearly $57,000 earlier in the day, additional Coinbase figures pulled from the same source reveal.

Since falling to roughly $52,500, the digital asset has bounced back somewhat, trading close to $53,800 at the time of this writing. However, the cryptocurrency has failed to recoup most of the losses it suffered today.

Multiple Causal Factors

When asked to explain these latest price fluctuations, analysts pointed to several developments.

“Bitcoin’s price action continues to be in a downtrend, attributing to a combination of macroeconomic factors, underwhelming ETF flows, and seasonality effects,” Jacob Joseph, senior research analyst at CCData, said via emailed comments.

He pointed to the latest U.S. jobs data, which showed that the nation’s economy created 142,000 net positions in August, according to a Labor Department news release.

“Recent revisions to job data indicate a weaker labour market than previously thought, raising fears about economic slowdown,” he stated.

“This has led to risk aversion among investors, causing them to shy away from riskier assets like Bitcoin,” Joseph added.

Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management, also weighed in on the key role that this development played in the downward movement the cryptocurrency experienced today.

“The sell off was started by the recent jobs report, which is causing investors to wonder about the state of the economy and if we’re heading into a recession,” he stated via comments submitted through email.

All Eyes On The Fed

In spite of the bearish impact today’s jobs data had on bitcoin, the figures could cause Fed officials “to be much more dovish and lower rates this month,” Sifling stated, emphasizing the frequently repeated sentiment that “Lower rates have historically been seen as a positive development for Bitcoin.”

Several other market observers highlighted how the lackluster jobs figures could potentially impact the decision making of these government officials.

Tim Enneking, managing partner of Psalion, spoke to this via email, stating that “the cuts will almost certainly total 75-100 bps this year (which is quite rapid) and the US (and global) economy looks to be set for a soft landing.”

Seasonality

Recently, the cryptocurrency markets have been impacted by the specific time of the year, Joseph emphasized, stating that “the seasonality effects in the summer have slowed down the inflow of capital to the ETFs, leading to a lack of fresh capital to support Bitcoin’s price.”

Over the next several weeks, the digital asset could experience further weakness, at least if bitcoin experiences performance this September that is similar to previous years.

“Historically, since 2010, Bitcoin’s average returns in September have averaged -4.51%, making it the worst-performing month on record, contributing to negative expectations,” the analyst noted.

“Moreover, the market is more likely to be risk averse entering a period of catalysts that can induce high volatility; with the US Presidential Election debate on Sept 10th, CPI and FOMC decision on the 12th and 20th,” he added.

Meanwhile, bitcoin has been experiencing lackluster demand over the last several months, Julio Moreno, head of research for CryptoQuant, noted via Telegram.

He provided the chart below, which illustrates these developments:

Uncertain Outlook

While analysts were able to create a consensus regarding the key impact that monetary policy will likely have on bitcoin markets going forward, they offered varying takes on how the digital currency will behave going forward.

“We’re in a transition period right now, though, with no clear bullish drivers for the BTC price, especially since the furor over the spot BTC ETFs is over, and the price is drifting lower,” said Enneking.

“Now that $56k, the mid-August low, has fallen, there’s some decent support at $54k, but if that doesn’t hold (and, as of right now, it doesn’t look good), we risk dropping to the early August low of $49k,” he stated.

Greg Magadini, director of derivatives for digital asset data provider Amberdata, provided a different take.

“Bitcoin’s price will probably continue to range in the $55-65k band for a while longer,” he stated via email.

“It could touch the high 40’s, which would be a great buy opportunity but not a concern,” Magadini added.

“Bitcoin price is poised to continue a run up from the $16k bear market lows over the next 12-18 months given rising global liquidity, $16bn being issued in cash to FTX creditors, and a fiscal environment which favors asset prices.”

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.

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