Crypto, the Metaverse, or the Stock Market: Which Is the Best Buy for 2023? | The Motley
There’s been no escape from the bear market of 2022. Stocks are down. Bonds are down. And formerly high-flying speculative bets (cryptocurrency and various metaverse projects) are down an especially egregious amount. Some of these investments are off 90% or more from all-time highs.
With such a mess on our hands right now, it’s time to start picking up the pieces in preparation for the next bull market. But if you’re a tech investor, which is the best buy for 2023: crypto, the metaverse, or stocks?
When the bull market revives, remain vigilant
Long gone are the boom times of 2020 and 2021. A seemingly endless wave of new crypto and non-fungible token (NFT) projects, 3D virtual worlds, and the like have been wiped out by the bear market of 2022 — hastened by the Federal Reserve’s record interest-rate increases, bringing an end to a decade-plus of easy-money policy.
Even if the Fed stops hiking rates in 2023, or starts lowering them again to help ease possible recessionary forces, you should remain vigilant. Most crypto and NFT projects had limited to no practical use. If a new wave of crypto projects pops up, remember how quickly such dubious investments can take a turn for the worse. If you must invest in crypto, stay focused on those select few projects that are trying to solve actual real-world problems or provide a genuinely useful service.
But also remember that the crypto industry has suffered a severe setback to mainstream adoption. Several exchanges have gone bust, including the huge FTX bankruptcy. This is going to stick in a lot of consumers’ minds for a long time.
Likewise, the metaverse has been building up toward more mainstream adoption, but a lot of consumers are confused by what the metaverse even is. For the record, according to Nvidia (NVDA -4.08%), it’s simply the “3D internet.” What many consumers do know about the metaverse is that Meta Platforms (META -4.47%), formerly Facebook, just blew billions of dollars in profit on it. The stock has collapsed in response.
A better way to invest in emerging tech
That doesn’t mean you need to avoid all things crypto and metaverse. But there could be a better way to realize growth without going speculative with your hard-earned savings.
That’s where the stock market comes in — especially tech stocks that survive the Fed’s flush of the market. Investing in actual businesses (stocks represent ownership of a company) is a top way to grow your money. Businesses are dynamic, able to adapt to changes in the economy, and can adjust their use of cash to benefit from growth trends. And for most investors, owning shares of quality companies is the best way to participate in economic growth.
Big tech is investing heavily in blockchain and the metaverse, and their core businesses are already turning a profit. Focusing on profitable growth is the best way to steadily build up your money over the long term.
Some top stocks to buy for crypto and the metaverse
They aren’t going to be pure plays on emerging tech like blockchain and crypto, but Alphabet (GOOGL -4.43%) (GOOG -4.31%) and Shopify (SHOP -4.84%) look like top buys for 2023. Alphabet’s Google Cloud has been expanding blockchain features for developers to work and experiment with. Be it a crypto project or using the blockchain to dynamically track and store some data, investing in Google Cloud’s parent could be a measured way to invest in this promising technology without taking unnecessary risks.
The same goes for Shopify, which isn’t profitable yet but has tremendous potential in e-commerce and has been experimenting with blockchain for its merchants. For example, the Tokengated Commerce feature allows brands to mint and sell their own NFTs to drive deeper customer engagement. Various Shopify app ecosystem partners also offer blockchain solutions.
As for the metaverse, Meta Platforms could actually be a timely purchase, with the market feeling particularly glum about the company right now. Sure, Meta has been blowing lots of cash on next-gen computing equipment, but not all of it is going strictly to virtual reality and this far-fetched idea of the metaverse.
The company is also making incremental investments to strengthen its core apps (like WhatsApp) and make them more useful for businesses and shoppers. And if Meta can reignite some revenue growth and increase its profit margins a bit, the stock could be mighty cheap.
Nvidia is another top metaverse buy. The chip designer already has its roots in video games, but it envisions the metaverse expanding well beyond digital play. In fact, the metaverse for businesses is already here thanks to Nvidia. Companies are using “digital twins” (a virtual replica of a physical place) in their planning and design work. Nvidia’s collaborative Omniverse software also has incredible potential in developing and virtually testing things like self-driving cars and new medical treatments.
After the bear market of 2022, it could take a couple of years for the economy (and the stock market) to recover. But investing in growing businesses — especially those with the ability to turn a profit — will indeed make a comeback and reward investors. But not so much for investments in crypto and other “metaverse” projects with little to no real-world use. Stocks are the better buy for 2023.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Nicholas Rossolillo and his clients have positions in Alphabet, Meta Platforms, Nvidia, and Shopify. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Nvidia, and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.
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