The Wall Street Journal published an eye-opening article this week, citing how top cryptocurrencies are trading with high correlation to traditional commodities and precious metals over the last week. The WSJ article cited research data from Excalibur Pro Inc that claimed bitcoin is trading with a 0.84 correlation to gold. As more institutional money pours into the crypto space, the correlation will likely become stronger in the coming days.
World’s third largest cryptocurrency spot market platform provider Huboi launched its Derivatives Market (DM) just last month. On December 25, Huboi said their DM platform has reached the $1 billion daily trading volume milestone. The renewed interest in crypto-based derivatives reaffirmed the growing interest of institutional investors in the crypto sphere.
When social media giant Facebook banned cryptocurrency ads on the platform, most analysts believed it would have a negative impact on the growing popularity of digital currencies. However, last week, Bloomberg reported that Facebook is actively developing a cryptocurrency of its own called stablecoin that will be pegged to the U.S. Dollar and it will be used for payment transactions in WhatsApp. Sources close to the company said Facebook that stablecoin will initially focus on remittance services in India.
In the public sector, the National Bank of Kuwait (NBK) announced to use Ripple’s blockchain-based payments network to facilitate cross-border money transfers. Currently, the NBK will use the blockchain based remittance system with Jordan only, but sources said it will soon expand the service to other countries.
Meanwhile, the holiday season has put more bearish pressure on cryptocurrencies across the board and the bitcoin made a fresh low of $3686 earlier on Thursday. However, it has rebounded on Friday and trading just below the resistance near $4000 level at the moment.
Based on our research, we found that the following blockchain stocks demonstrated notable price movements based on shifts in their company fundamentals.
GMO Internet Inc.
GMO Internet Inc. (9449) started operating back in 1995 and it is one of the IT giants in Japan. In recent years, GMO Internet Inc. started developing and manufacturing bitcoin mining hardware. However, as the bitcoin price plummeted over the last year, their cryptocurrency division lost a massive $321 million.
Out of the $321 million loss in Q4 2018, $217 million loss directly came from their hardware division. Consequently, this week, GMO Internet Inc. announced to walk away from cryptocurrencies operation.
“After taking into consideration changes in the current business environment, the company expects that it is difficult to recover the carrying amounts of the in-house-mining-related business assets,” the company said in statutory filings.
While GMO Internet Inc. will no longer operate their cryptocurrency division, the news had a bullish effect on its stock price. The fact remains that the market has already priced in the massive loss of $321 million and when the company announced to halt their cryptocurrency division, it provided investors with a signal that the losses from the hardware vision will be minimized in the first quarter of 2019.
As a result, the stock turned bullish and closed above the exponential moving average. Also, the Stochastics indicator shows a strong bullish momentum in the market. If GMO Internet Inc.’s stock closes above the next resistance level near $1.80 per share, it will confirm an uptrend and present long-term investors with an opportunity to increase their exposure to this Japanese IT company.
DataMetrex AI Ltd
DataMetrex AI Ltd. (DM) is a publicly traded blockchain stock that is working to develop Artificial Intelligence and Machine Learning technology through its wholly owned subsidiaries, Nexalogy and Canntop AI. Also, it is implementing Blockchain technology for secure Data Transfers via its investee company, Graph Blockchain.
Earlier last week, DataMetrex AI Ltd announced that it has successfully identified multiple sources of Fake News on social media surrounding the recent federal government equalization plans utilizing its new Fake News Detection Filter.
Subsequently, an equity research firm called Fundamental Research upgraded their rating for DataMetrex AI Ltd to “buy” and set a new price target of $0.28 per share.
Commenting on the new Fake News detection technology, President of Nexalogy, Claude G. Théoret, said that their “NexaIntelligence software has identified 2299 social media posts shared by 1284 known foreign disinformation sources on this subject alone.”
Since this new product will help open another revenue channel for the company, we believe the price target of $0.28 looks achievable in the short to medium term. Also, we see a divergence between the Stochastics and price of DataMetrex AI Ltd that signals a buildup of potential bullish momentum in the market. Hence, if we see the stock price remaining above $0.04, it will continue to offer investors an opportunity to increase their exposure.
With the sustained downturn in the cryptocurrency market, a lot of companies involved in the blockchain and cryptos are facing a new reality that they need to tighten their belts and increase operational efficiency to stay in business.
The closure of crypto division of GMO Internet Inc. is a perfect example of how the falling prices of cryptocurrencies are having a negative impact on some of the blockchain stocks. However, this week, we also learned how both private sector companies like Facebook and central banks like the NBK are pursuing blockchain technology, which keeps the industry optimistic about the long-term application of decentralized database technology.
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