With bitcoin on the rebound, the majority of the blockchain stocks experienced a renewed bullish momentum. Also, the news about crypto wallet provider Coinbase making a $5 billion worth of transaction and their subsequent publication of the case study provided the market with a clear sense of how major platforms might tackle security issues in the future with a focus on the cold storage solution.
Reuters on December 20, 2018, reported that one of the Big Four auditors, PricewaterhouseCoopers (PwC), believes the lack of insurance coverage against the risk of hacks and theft is hindering the growth of crypto markets. It is partly because large fund managers cannot dive into this mostly unregulated market without proper insurance to reduce their systematic risk factors.
Meanwhile, a bipartisan bill from Reps. Warren Davidson (R) and Darren Soto (D) seek to exclude digital assets like cryptocurrencies as being defined as securities. However, one of the Congressman planned to introduce legislation to create an “asset class” for cryptocurrencies and digital assets at the beginning of December. The bill’s ultimate goal would be to regulate initial coin offerings more effectively in the United States.
In the private sector, we learned that PayPal co-founder Peter Thiel has made a substantial investment in cryptocurrency investment platform Layer1. Layer1 promotes itself as a platform that aims to be the category-defining investment company for cryptocurrencies.
Based on our research, we found that the following blockchain stocks demonstrated notable price movements based on shifts in their company fundamentals.
Bitcoin Investment Trust
Bitcoin Investment Trust (GBTC) is one of the few traditional investment vehicles that track the bitcoin market price and investors can become eligible to be holding it in certain IRA, Roth IRA, and other brokerage and investor accounts.
Last week, on December 15, 2018, investment portal The Motley Fool published an article that questioned that long-term viability of the fund. The author went on to predict that the Bitcoin Investment Trust will eventually stop existing within the next five years.
We believe the negative impact of the viewpoint will create a short-term opportunity to buy the blockchain stocks at a cheaper price.
Grayscale, the sponsor of the fund, has registered $216 million in net inflows into its Bitcoin Investment Trust in the three quarters of 2018. Consequently, Grayscale has custody of over one percent of total bitcoin circulation right now. After The Motley Fool article was published, it pushed the stock of Bitcoin Investment Trust to an artificial low that did not reflect the fundamentals of the market.
With the latest bullish momentum in bitcoin, we believe Bitcoin Investment Trust’s stock price will also experience a renewed uptrend. Hence, if price closes above the resistance around $4.50 per share, it will provide long-term investors an opportunity to increase their exposure to the fund.
BLOK Technologies Inc
BLOK Technologies Inc (BLPFF) invests in and develops emerging companies by providing capital, technology, and management expertise to produce blockchain-enabled business applications. Last week, there were some significant changes in the upper management of the company that might have positive implications for its stock price.
As we learned that David Alexander is resigning from his position as Chief Financial Officer, it might open the company to become more aggressive as the current director of the company, Mr. Yari Nieken, will be serving as Interim Chief Financial Officer.
Also, recently, BLOK Technologies Inc acquired 80% of the issued and outstanding common shares of The Worx Solutions Inc that developed a Customer Relationship Management (CRM) and data analytics software platform for the retail industry.
While these two major fundamental news will certainly have a bullish impact on BLOK Technologies Inc’s stock price, we also think there is a significant technical development to support a bullish thesis. The CCI and stock price of BLOK Technologies Inc have a common divergence known as a “Regular Bullish Divergence.” Hence, if we see the stock price moving above the resistance near $0.0275, we believe it will likely attract additional bullish momentum in the market.
After more than a month of sustained downturn, the bitcoin price moved above the $4,000 level this week. With the Christmas holidays approaching next week, we believe it may reduce the trading volume, but the with lower volume, there might be strong price swings in the market.
Hence, conservative investors should try to hedge their digital assets by increasing exposure to traditional investment vehicles such as the Bitcoin Investment Trust.
Blockchain Stocks has not been paid to mention any stock /company within this article nor do we own any stock in any company mentioned in this article. More information about our full disclosure can be found here – Full Disclaimer.