Cathie Wood Is Buying the Dip on Crypto. Here Are 2 Investments to Put on Your Crypto Shopping List.

Written by Dominic Basulto for The Motley Fool->

With cryptocurrency prices in the dumps, Cathie Wood of Ark Invest has been looking for bargain-priced investments.

Coinbase Global has been pivoting away from its reliance on traditional crypto trading.

Circle Internet Group remains one of the best pure-play stablecoin investment opportunities.

With crypto prices down across the board, it's perhaps no surprise that bargain-hunting investors are out in force, looking for mispriced cryptocurrencies and crypto stocks. The one that I'm watching right now is Cathie Wood of Ark Invest, who has been buying the dip on crypto.

Right now, there are two crypto stocks on Cathie Wood's investment radar. If she is right, they both could be ready to soar higher this year.

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First up is Coinbase Global (NASDAQ: COIN), which remains a key part of Cathie Wood's overall tech portfolio. In the ARK Innovation ETF (NYSEMKT: ARKK), for example, it is her sixth-largest holding, with a 4.2% portfolio share.

As soon as Coinbase missed its quarterly earnings estimate in August and the shares fell, Wood began to load up on the stock. At one point, Coinbase was down as much as 14%, and it suddenly became a prime buy-the-dip candidate. All told, Wood spent nearly $8 million to acquire more Coinbase stock for her funds.

Ark Investment Management CEO Cathie Wood. Image source: Getty Images.

That's because Wood sees plenty more growth ahead for Coinbase, which is rapidly transforming from a crypto exchange into an exchange where it is possible to buy and sell just about any digital asset. That includes prediction market contracts, tokenized equities, and crypto derivatives such as perpetual futures that let investor bet on various outcomes.

It's now been nearly a year since the launch of Coinbase's strategy, and it certainly seems to be bearing fruit. For example, even though Coinbase missed on earnings, it delivered strong growth in prediction market revenue. I expect an even greater shift away from traditional spot crypto trading.

Wood has also been loading up on Circle Internet Group (NYSE: CRCL). At the same time as she was buying $8 million worth of Coinbase, she was buying nearly $1.5 million worth of Circle.

This is, first and foremost, a bet on the future of stablecoins. Circle is the issuer of the popular USDC (CRYPTO: USDC) stablecoin, which currently ranks as the second-largest stablecoin in the world, with a huge $72 billion market cap. USDC has turned into a money-making machine for Circle.

The problem, however, is that other financial institutions now want in on the business. At the end of June, a consortium of more than 140 banks, fintechs, and tech companies announced the planned launch of a brand-new stablecoin called Open USD. That helps to explain why Circle sold off sharply this summer.

But, just as with Coinbase, this could be another buy-the-dip opportunity. What's exciting here is that Circle recently announced a group of its own, centered on the launch of its new Arc blockchain network. A dozen different firms, including top banks and financial institutions, now plan to use Arc.

Interestingly, some of the biggest names in the crypto market are not on this list. Strategy (NASDAQ: MSTR), the world's biggest Bitcoin (CRYPTO: BTC) treasury company, is not on the list, for example. In large part, that is due to Bitcoin's stunning fall from grace during the past 10 months. It's now down about 50% from its all-time high of $126,000 last October.

In addition, Wood has sent mixed signals about Robinhood Markets (NASDAQ: HOOD) and Bullish (NYSE: BLSH). Ark Invest has been a big buyer at times this year, but the consistency just isn't there. This is due, no doubt, to the uncertain story around retail crypto trading. It now looks as if many individual investors are abandoning crypto in favor of hot sectors such as artificial intelligence (AI).

That's why, for now, I'm sticking with crypto stocks with strong appeal for institutional investors, such as Coinbase and Circle. Both are bets on the future of crypto, of course. But more broadly, they are bets on the future of digital assets and the mainstream appeal of blockchain technology for large institutions. That's a winning combination, and one that could help you outperform the market.

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Dominic Basulto has positions in Bitcoin, Circle Internet Group, and USDC. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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