special rush alert: two “pure play” blockchain stocks …

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SPECIAL RUSH ALERT: TWO “PURE PLAY” BLOCKCHAIN STOCKS TO BUY TODAY

By Teeka Tiwari

www.palmbeachgroup.com 2

Special Rush Alert: Two “Pure Play” Blockchain Stocks to Buy TODAY

By Teeka Tiwari

We’re in the middle of an amazing time in crypto.

Coinbase, the world’s largest centralized crypto exchange, listed its shares on the Nasdaq stock exchange recently. It closed its first day with a valuation of $86 billion.

In its first public filing, Coinbase disclosed it had 43 million users. And during 2020, the compa-ny generated $1.2 billion in revenues with $322 million in profits.

In its first-quarter results, Coinbase announced revenues were roughly $1.8 billion. Net income is expected to be in the range of $730 to $800 million. And verified users jumped 30% to 56 million.

Those are amazing results. Should Coinbase keep it up, it could book over $3 billion in profits for the year. That puts it in the same league, profit-wise, as companies such as Deere, Nike, Baidu, Charles Schwab, AstraZeneca, and Northrop Grumman.

I’ve called Coinbase’s public listing a “Netscape moment” for crypto. Just as Netscape’s IPO brought the internet to everyday folks’ homes, so too will Coinbase’s public listing make crypto a household term.

It’s a big milestone for the company, for bitcoin, and for the broader crypto community in general. And the entire space is reacting with excitement.

We recently saw bitcoin smash through the $62,000 threshold for the first time.

And Ethereum soared above $3,000, reaching all-time highs.

But there’s another area that’s seeing a lot of mo-mentum in light of Coinbase going public: crypto- and blockchain-related stocks.

These picks-and-shovels plays use crypto in their day-to-day business or help onboard institutional investors. Bottom line is: By hitching their carts to the power of crypto, they benefit from its over-all growth.

And because they’re stocks, we can get exposure right through our brokerage accounts.

We’ve had great success with these “pure play” picks-and-shovels plays so far. Two of our port-folio holdings, Silvergate Capital (SI) and Hut 8 Mining (HUTMF), are quadruple-digit winners.

But we have to act fast on my latest recommen-dations. Thanks to Coinbase becoming a publicly traded company, I think the interest in this space is only set to grow exponentially. And some of the best names in this industry won’t be flying under the radar much longer.

That’s why I wanted to get this alert out to you as soon as I can. I think it’s crucial we add these names now.

Remember: Use limit orders and wait for the price to come within buy range if it’s trading above our recommendation. You don’t need to risk a lot to make huge gains in this fast-moving space.


Blockchain Stock Pick No. 1Cryptocurrency has long been dominated by retail traders. However, Wall Street is licking its chops at the returns we’ve seen in this market.

And Galaxy Digital Holdings (BRPHF) is opening the door for them to break in.

Galaxy’s goal is to be the bridge for institutional capital to invest in crypto markets.

Like our other crypto equity plays, Galaxy moves in conjunction with the overall crypto market. While shares may be down as a result of the entire crypto market being down, I want you to treat this temporary pullback as a great buying opportunity.

Because there are two catalysts that will send shares soaring in the coming months.

The first is one of the biggest acquisitions we’ve ever seen in crypto. And the second is an up-list-ing to a major U.S. exchange. I’ll get to both of these catalysts in a moment. But first, let me give you some background on the company.

Billionaire investor Mike Novogratz founded Galaxy in 2018. Before that, he was a hedge fund manager for Fortress Investment Group and Goldman Sachs. Novogratz is also an early bitcoin bull – he first bought BTC at $98 in 2012.

Since its launch, Novogratz has turned Galaxy into a one-stop shop for institutional crypto investors. Today, it has five divisions: Trading, asset management, investment banking, crypto mining, and principal investing.

Galaxy’s main line of business is trading. It’s an established market-maker for 200-plus institu-tional counterparties… and currently trades over $1 billion in digital assets each day. In the first quarter of 2021, this division generated $597 mil-lion in profits – up 103% from the prior quarter.

The other profit-driver for Galaxy is its asset man-

agement division. It holds $1.6 billion in assets – or about double what it held at the start of 2021. And in Q1 2021, the division generated over $248 million in fees… up 75% from the prior quarter.

As you can see, the growing demand for digital assets from both retail and institutional clients is having a direct impact on Galaxy. In fact, Morgan Stanley recently became the first big U.S. bank to offer its wealth management clients access to bitcoin through two of Galaxy Digital’s funds.

While these two segments provide Galaxy with steady streams of cash flow at an increasing rate… the real jewel is its principal investment division. This unit gives investors exposure to dozens of pre-IPO companies in the crypto space.

Through its EOS Venture Capital fund, Galaxy has raised $775 million in institutional assets to fund up-and-coming crypto businesses. It’s paired up with companies like Citigroup, Gold-man Sachs, and Wells Fargo to raise these funds. And past investments include Ripple, Bakkt, Bitfury, and BlockFi.

Within its investment banking division, Galaxy assists crypto-related businesses with tradition-al debt and equity offerings. So far, it’s helped Silvergate Capital and Canaan through their IPO processes. And it’s assisted in capital raises for Habitas and Confidential, to name a few.

Galaxy has also accumulated a sizable amount of bitcoin, Ethereum, Litecoin, and Tether in its corporate treasury. As of 2020, it held 14,932 BTC, currently worth $948 million. As demand for cryp-to assets increases, Galaxy will directly benefit.

But it’s the two recent catalysts I mentioned above that will kick shares into overdrive…

The first is one of the biggest acquisitions we’ve seen in the crypto space to date. In May 2021, Galaxy bought digital asset company BitGo for $1.2 billion. BitGo is a major crypto custodian for


institutional clients. According to BitGo, it holds over $40 billion of assets under custody, with more than 150 exchanges and over 400 institu-tional clients.

The acquisition of BitGo further cements Galaxy Digital’s position as the premier one-stop shop for institutional crypto clients. And BitGo will open another major stream of income with its best-in-class custody solutions.

The second major catalyst is Galaxy’s pending up-listing from over the counter (OTC) to a major U.S. exchange later this year. If Galaxy pulls it off, it’ll be a huge achievement.

First, it gives the company increased exposure to institutions and retail investors. And second, it attracts Big Money, including capital from mutual funds, ETFs, pensions, endowments, and insur-ance companies.

Institutions typically have rules excluding them from investing in smaller companies or stocks on OTC exchanges. The Nasdaq and NYSE are the world’s largest exchanges. And we expect the up-listing to light a fire under the BRPHF stock price.

As you can see, the future is very bright for Gal-axy Digital. And that’s excellent news for its share prices over the long term.

What’s It Worth?To determine Galaxy’s potential value, we seg-mented out its mining and investment banking divisions. We believe they have great potential… but their revenues are unpredictable at this point. So we consider them freebies.

That left us with its trading, asset management, and principal investing divisions.

As we showed above, the first two are generat-ing steady cash flows at an increasing rate. And the third owns private crypto-related companies

with huge upside. We then recombined the val-ues of those three divisions to come up with its overall value.

Let’s start with the trading and asset manage-ment divisions. If those two grow at half the rate they achieved over the last two quarters, they would generate $3.5 billion alone through 2021.

Based on those projections, we used the price-to-earnings (P/E) ratio to value Galaxy’s trading and asset management segments.

[The P/E ratio measures how much investors are paying for each dollar of current profits.]

Galaxy’s current P/E ratio is 17.5. But we think it should be much higher. Crypto companies gener-ally fetch valuations similar to high-growth tech companies. So we wouldn’t be surprised to see Galaxy eventually achieve a multiple double that.

Let’s be conservative and give Galaxy a P/E mul-tiple of 30. Based on the revenue generated from its trading and asset management divisions, that would give us a value of $103.6 billion.

Next, we valued Galaxy’s principal investing di-vision. In its most recent filing at time of writing, that division held $775 million in total assets. Re-member, these are private deals leveraged to the price of bitcoin. So when bitcoin rises, it acts as a slingshot propelling them even higher. For in-stance, if bitcoin goes up 10x… these assets could go up 20–50x on average.

If bitcoin hits my target price of $500,000, the principal investing division could be worth $43 billion. When you add that projection to the value of Galaxy’s other two divisions… the company’s to-tal combined value would be $146.6 billion. That’s over 20x higher from today’s value of $6.5 billion.

To find Galaxy Digital’s potential valuation based on how high bitcoin goes, my analyst team ran a variety of scenarios involving different bitcoin price projections ($100,000; $200,000; and


$500,000) and company strategies.

• At $100,000 per bitcoin, BRPHF would be $328 – a 1,619% increase from today’s prices.



Remember, for this valuation we only factored in three of Galaxy’s five business units. So our model doesn’t account for future revenues from its crypto mining and investment banking opera-tions. But whatever they generate would be icing on the cake.

If you haven’t established a position in this com-pany yet, now’s the time. This is a chance to get in early on what will become a blue-chip stock of the crypto space.

Action to Take: Buy Galaxy Digital Holdings (BRPHF). Buy-up-to Price: $42.25 per share Stop Loss: None Position Size: No more than $400 for smaller accounts or $500–1,000 for larger accounts.

Blockchain Stock Pick No. 2In August 2020, a small tech firm blazed a trail no company of its size had done before: It added bitcoin to its corporate treasury. Today, it’s the largest holder of bitcoin among publicly trad-ed companies. And it plans to continuously buy more with its future earnings.

That company is MicroStrategy (MSTR).

Founded in 1989 by Michael J. Saylor, Mi-croStrategy provides business intelligence, mo-bile software, and cloud-based services. But that’s not what attracted us to this stock.

In 2020, the company purchased $250 million worth of bitcoin. Since then, it’s gone on a buying

frenzy… purchasing $2 billion more.

As of today, MicroStrategy holds 92,079 bitcoins (about $3.9 billion at time of writing), or roughly 0.5% of the circulating supply. And it shows no signs of slowing down its bitcoin accumulation.

Saylor has become the poster child for diversify-ing corporate balance sheets away from depreci-ating fiat currencies like the U.S. dollar to appre-ciating crypto assets like bitcoin.

Over several months in 2021, MicroStrategy has made five separate purchases of BTC totaling $70 million.

Solidifying its commitment even further, the company announced in April that it would pay all non-employee directors in bitcoin.

While bitcoin’s explosive appreciation has been the main driver of MSTR’s price… it’s important to remember the company continues to generate profits from its software and cloud-based services (more on that below).

But it’s MicroStrategy’s accumulation of bitcoin that has us most excited. The company has basical-ly transformed itself into a stock market proxy for the price of bitcoin. In other words, it’s become a bitcoin ETF without the fees. So it’s a great way to leverage ourselves to the bitcoin bull market.

Since MicroStrategy moves in conjunction with bitcoin, we’re going to see massive volatility in its price. And like bitcoin, MSTR is getting slapped around. But if you believe that bitcoin will eventu-ally be worth $500,000 like I do… then you want to own this company. Its bitcoin holdings alone could make it the most valuable firm in the world.

Bitcoin HoardingMicroStrategy is a pioneer when it comes to managing corporate balance sheets. Instead of holding depreciating fiat currencies or buying short-term Treasuries that pay negative real rates


of return to its corporate treasury… it’s adding an appreciating asset like bitcoin.

This is something I’ve been predicting for years. In fact, as early as 2017, I said institutions would add bitcoin to their portfolios because it would tamp down volatility and increase their returns. MicroStrategy is the biggest example of this massive trend.

And you don’t have to take my word for it…

Recently, one of my analysts attended the Texas A&M Bitcoin Conference, where Saylor was a keynote speaker. During his speech, Saylor said conventional corporate financial management strategies are broken and the problem has be-come too large to ignore. Bitcoin is the solution.

The company’s growth strategy is simple: Con-tinue making healthy profits from its software services, and acquire and hold more bitcoin on its balance sheet.

MicroStrategy is generating almost $400 million in gross profits each year from its software ser-vices. In its Q1 results for 2021, it showed a 16% increase in profits from the year prior.

And MicroStrategy is using those operating profits – and other innovative strategies – to purchase more bitcoin. For example, in February, MicroStrategy issued $600 million in convertible notes to purchase additional bitcoin.

A convertible note is a debt instrument compa-nies can later convert to equity. It’s similar to a loan… but instead of receiving their money back with interest, investors receive equity in the com-pany at a discount.

The convertible note has a 7-year maturity date with a 0% coupon rate. So MicroStrategy can es-sentially raise funds to buy bitcoin without having to pay a penny in interest.

Demand for the bonds was so high, MicroStrategy

was able to raise $1.05 billion. And it used those funds to buy $1 billion more worth of bitcoin interest-free.

As demand for bitcoin skyrockets, MicroStrate-gy’s balance sheet will balloon. And that means big profits ahead for investors.

What’s It Worth?To find MicroStrategy’s potential valuation, my analyst team ran a variety of scenarios involving different bitcoin price projections ($100,000; $200,000; and $500,000) and company strategies.

First, we believe MicroStrategy will continue to aggressively buy bitcoin. Let’s assume it adds another $1 billion BTC to its balance sheet. As of this writing, bitcoin trades around $40,000. But we’ll be conservative and say it buys more bitcoin at $60,000.

MicroStrategy’s price-to-book (P/B) ratio is 12. But we believe it’ll decrease since bitcoin will account for a growing portion of its business. And while bitcoin appreciates, it doesn’t generate income.

[P/B ratio is a measure of the market cap of an asset compared to the value on its books.]

So we’ll lower MicroStrategy’s P/B ratio to 3.6. That’s the same multiple for BlackRock, the world’s largest asset manager. In this case, below is our potential price targets for the company’s stock based on the price of bitcoin:

For this valuation, we’ll assume a P/B ratio of 3.6. Currently, MSTR trades for $446.

Here’s what its price would be under our three scenarios:

• At $100,000 per bitcoin, MSTR would be $3,381 – a 658% increase from today’s prices.

• At $200,000 per bitcoin, MSTR would be $6,763 – a 1,416% increase from today’s prices.


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• At $500,000 per bitcoin, MSTR would be $16,908 – a 3,691% increase from today’s prices.

MicroStrategy has been a pioneer in the institu-tional adoption of bitcoin. And Saylor’s overall thesis and long-term outlook on bitcoin aligns well with our own. With him at the helm, Mi-croStrategy will continue leading the charge in this trend.

We believe the trajectory is unstoppable at this point. And right now is a great time to get involved with this company before it shoots out of range.

Action to Take: Buy MicroStrategy (MSTR). Buy-up-to Price: $1,060 per share Stop Loss: None Position Size: No more than $400 for smaller accounts or $500–1,000 for larger accounts.

Let the Game Come to You!

Big T

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special rush alert: two “pure play” blockchain stocks …

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