It is no surprise that the blockchain sector has garnered strong optimistic future projections from research firms. For instance, PricewaterhouseCoopers, which is one of the biggest accounting firms in the world, believes that blockchain technology can contribute $1.76 trillion to the global economy by 2030. Some of the areas that the firm's research division believes will benefit from adopting blockchain technologies include contracts and dispute resolution, financial services, supply chain management across a diverse array of industries such as fashion and mining and other areas such as credential and identity verification.
Research firm Fortune Business Insights estimates a compound annual growth rate (CAGR) of 56.1% for the blockchain sector by 2027, anticipating that the market will be worth $69.04 by the year.
Similarly, Markets And Markets believes that the blockchain sector will have a CAGR of 67.3% from 2020 to 2025, a figure that is even more optimistic than that reported by Fortune Business Insights. The research firm goes on to state that by the end of 2025, the market with the help of the CAGR reported above will have grown to $39.7 billion from an estimated size of $3 billion from the end of 2020.
Finally, Mordor Intelligence, who analyzes the Blockchain as a Service segment of the market, which is one that caters mostly to enterprises, believes that by the end of 2026, this segment will have grown by a CAGR of 15.2%.
Best Blockchain Stocks to Buy
11. Canaan Inc. (NASDAQ:CAN)
Number of Hedge Fund Holders: 11
Canaan Inc. (NASDAQ:CAN) is a Chinese company that sits at the heart of the Chinese Bitcoin boom as it is responsible for manufacturing the hardware which is used to run the blockchain based cryptocurrency's software. Despite the fact that China has now fully banned Bitcoin, Canaan Inc. (NASDAQ:CAN) will see future demand for its products as the miners are expected to simply move to other companies for setting up their operations.
Out of the 873 hedge funds polled by Insider Monkey by the end of the second quarter of this year 11 had holdings in Canaan Inc. (NASDAQ:CAN).
10. MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Fund Holders: 16
MicroStrategy Incorporated (NASDAQ: MSTR) 's Bitcoin portfolio is also one of the largest out there, as the company owned close to $3 billion of the cryptocurrency by the end of June this year.
Investment firm Alger had shining words for MicroStrategy Incorporated (NASDAQ: MSTR) in a recent investor letter:
"Shares of MicroStrategy outperformed in the first quarter due to the appreciation of the company’s bitcoin asset, as the price of bitcoin relative to the U.S. dollar rose materially in the quarter. This bitcoin appreciation was driven by concerns about U.S. dollar inflation as well as other public companies deciding to acquire bitcoin to diversify reserve assets. MicroStrategy is establishing itself as a thought leader in the bitcoin space, and the company hosted an event at its February user conference to help other organizations understand the benefits of bitcoin as a reserve asset. MicroStrategy’s core software business is also benefitting from its status as a leader in the bitcoin space, with the increased public attention aiding MicroStrategy’s recruitment and marketing efforts as the software business continues to transition to a cloud-based subscription model.”
Of the 873 hedge funds polled by Insider Monkey, 16 had a stake in MicroStrategy Incorporated (NASDAQ: MSTR) by the end of the second half of the year.
9. Riot Blockchain, Inc. (NASDAQ:RIOT)
Number of Hedge Fund Holders: 17
Riot Blockchain, Inc. (NASDAQ:RIOT) is another company like Marathon Digital Holdings, Inc. (NASDAQ:MARA) that focuses on mining Bitcoin on a large scale. Riot Blockchain, Inc. (NASDAQ:RIOT) has been massively popular on the stock market as well, especially due to the strong surge in Bitcoin prices earlier this year.
The recent crackdown in China on Bitcoin miners has also injected Riot Blockchain, Inc. (NASDAQ:RIOT) with fresh optimism. According to B. Riley analyst Lucas Pipes, the company is heavily undervalued, with the analyst setting a price target of $82.
B. Riley's sentiment for Riot Blockchain, Inc. (NASDAQ:RIOT) is also mirrored by hedge funds. The number of hedge fund holdings in the company grew to 17 out of the 873 polled by Insider Monkey by the end of the second quarter of this year, as compared to 12 out of 866 polled at the end of the first quarter.
8. Marathon Digital Holdings, Inc. (NASDAQ:MARA)
Number of Hedge Fund Holders: 19
Marathon Digital Holdings, Inc. (NASDAQ:MARA) emerged in the market in the aftermath of the boom in cryptocurrencies and it is also a publicly traded company. As of September 28th, 2021, Marathon Digital Holdings, Inc. (NASDAQ: MARA) had a market capitalization of $3.3 billion and, more importantly, the company has also seen growing interest from hedge funds, who have flocked to invest in it this year.
Marathon Digital Holdings, Inc. (NASDAQ:MARA) runs cryptocurrency mining facilities capable of consuming megawatts of electrical power and it reported $38 million in revenue during the first half of this year.
Hedge fund interest in Marathon Digital Holdings, Inc. (NASDAQ:MARA) is evident by the fact that out of the 866 hedge funds polled by Insider Monkey during the first quarter of this year, 10 had holdings in the company. However, by the end of the second quarter, the number of hedge funds who had invested in Marathon Digital Holdings, Inc. (NASDAQ:MARA) had grown to 19 out of the 873 polled by Insider Monkey.
7. VMware, Inc. (NYSE:VMW)
Number of Hedge Fund Holders: 28
VMware, Inc. (NYSE:VMW) offers its enterprise customers the VMware Blockchain platform which is primarily focused on providing the companies with a secure platform for their daily transactions and other record keeping needs.
VMware, Inc. (NYSE:VMW)'s biggest hedge fund investor is the Two Sigma Advisors group, which owns roughly $200 million worth of the company's equity.
As a testament to the popularity of VMware, Inc. (NYSE:VMW), at the end of the first quarter of this year, 25 of the 866 hedge funds surveyed by Insider Monkey held positions in the company, a figure that grew to 28 out of 873 polled at the end of the second quarter.
6. Silvergate Capital Corporation (NYSE:SI)
Number of Hedge Fund Holders: 31
Silvergate Capital Corporation (NYSE:SI) is one of the companies that sits at the heart of the modern day transactions that take place through Bitcoin. Since the value of Bitcoin is measured primarily in terms of the United States Dollar, Silvergate Capital Corporation (NYSE:SI)'s bank allows its customers to convert the USD into Bitcoin and vice versa. Silvergate Capital Corporation (NYSE:SI) has a presence all over the world with several customers.
Out of the 873 hedge funds polled by Insider Monkey by the end of the first half of this year, 31 held a stake in Silvergate Capital Corporation (NYSE:SI), also marking a slight increase in the second quarter from the first.
5. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 41
International Business Machines Corporation (NYSE:IBM) is one of the oldest computing companies in the world and it has evolved with the passage of time. While at one time International Business Machines Corporation (NYSE: IBM) also manufactured personal computers, now its sole focus are the enterprise and government segments.
At this front, International Business Machines Corporation (NYSE:IBM) also has a presence in the blockchain sector as it provides companies with a secure platform to process and store their transactions.
4. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 49
Coinbase Global, Inc. (NASDAQ: COIN) is the largest cryptocurrency exchange in the United States and it has a market capitalization of roughly $49 billion. Coinbase Global, Inc. (NASDAQ: COIN) is also known for not having physical offices and operating fully virtually. It offers products for all types of users such as retail and institutional, alongside partnering up with payment companies.
According to JMP Securities, Coinbase Global, Inc. (NASDAQ: COIN) is likely to lead the cryptocurrency economy’s charge into the mainstream markets. Miller Value Partners had the following to say about Coinbase Global, Inc. (NASDAQ: COIN) in a fresh investor letter:
“Coinbase (COIN) became a public company in mid-April following their direct listing at a reference price of $250. Coinbase is a cryptocurrency exchange that allows consumers, financial institutions and businesses to transact between fiat and cryptocurrencies and securely store and use cryptocurrencies. We believe over the long term the company has the potential to be the leading technology platform in the growing cryptocurrency space.
COIN’s 2021 revenues are expected to be 4.5x its 2020 revenues as crypto prices and volumes have exploded. It trades at 30x this year’s earnings, which is quite a steal for a quickly growing company in this market. That’s because the market believes this is peak cycle revenues and earnings, and retail margins will be pressured. That all very well may be true, but we see significant potential for the business over the long term as the nascent industry continues to grow and COIN cements it’s position as the leading platform.”
Out of the 873 hedge funds polled by Insider Monkey by the end of the second quarter of this year, 49 had held a stake in Coinbase Global, Inc. (NASDAQ: COIN).
3. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 57
Honeywell International Inc. (NASDAQ: HON) is one of the oldest American companies in existence, after having survived for a whopping 115 years. It operates in four segments which cover the productivity, building technologies, materials and aerospace markets. Honeywell International Inc. (NASDAQ:HON) also became one of the first companies in the world in 2019 to bring the reliability of blockchain technologies to the aerospace segment, as it used the secure ledger platform to introduce an online marketplace which significantly reduced transaction times in a highly sensitive market which needed secure part authentication.
Honeywell International Inc. (NASDAQ:HON) had 57 institutional holders out of the 873 polled by Insider Monkey at the end of the second quarter.
ClearBridge Investments had the following to say about Honeywell International Inc. (NASDAQ: HON) earlier this year:
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included industrials, Honeywell also lagged in the quarter after previously generating strong returns over extended periods.”
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 86
Any mention of the blockchain or cryptocurrency sector without NVIDIA Corporation (NASDAQ:NVDA) would be incomplete as its graphics processing units (GPUs) sit at the very heart of blockchain processing. NVIDIA Corporation (NASDAQ:NVDA) has been at the center of the Bitcoin boom and has seen its fortunes fall and rise in tandem with the cryptocurrency. It offers customized GPUs for miners and its products are some of the most popular in the sector.
Harding Loevner, an investment management firm, had the following to say about NVIDIA Corporation (NASDAQ:NVDA) in its second quarter investor letter:
“Within IT, shares of US-based computer chip developer NVIDIA continued their climb as rising demand across segments-from work-from-home laptops to data centers to cryptocurrency mining rigs-led to shortages that translated into surging prices for its chips. Such was the windfall that NVIDIA even made technical changes to some of its products to make them towards waht it believes are more sustainable uses. Less attractive to cryptocurrency miners, to steer scarce supply viewed by geography, the lion’s share of excess returns came from good stock performance in the US. In addition to the contributions from NVIDIA and our health care holdings, a pair of IT software and service providers also aided relative returns.”
1. Square, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 94
Square, Inc. (NYSE:SQ) is one of the world’s leading financial payments processing platforms, which, like other firms, has also started to make profits from the Bitcoin market. Square, Inc. (NYSE: SQ) is also one of the largest companies in terms of revenue earned through Bitcoin, after it revealed that it had managed to bring in $6.2 billion from the cryptocurrency by the end of the first half of this year.
Square, Inc. (NYSE: SQ) is receiving significant attention from hedge funds, as Insider Monkey’s research reveals that 94 out of 873 funds polled by the end of the second quarter this year had held a stake in the company. The largest of these was Ark Investment Management who held shares worth roughly $2 billion.
Cowen analyst George Mihalos upgraded Square, Inc. (NYSE: SQ) to Outperform and increased the price target to $343 explaining that recent acquisitions would cement its position in the market.
