Blockchain Stocks Weekly Update – November 16: Amazon Won Patent for Distributed Data Storage Solutions

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Square Inc (SQ) November 2018

The bitcoin price crashed this week, making a fresh low for the year, and reached $5,390. Analysts believe a combination of technical analysis that supported bears and the uncertainty surrounding the upcoming hard fork in bitcoin cash caused bitcoin to lose over 10% of its value within 24 hours.

However, the blockchain stocks continued to show resilience as a number of positive news regarding decentralized database applications kept investors motivated to invest in these companies.

We also learned that the diverse applications of blockchain can also help non-profit organizations as Oxfam launched blockchain based BlocRice in Cambodia. It will give farmers in the country collective bargaining power since agricultural cooperatives will be parties to the contracts.

Malaysian banking giant CIMB has partnered with Ripple’s cross-border payments to operate its SpeedSend remittance product. CIMB has a $53.5 billion market cap and considered to be one of the major banks in the country.

There was news about more banks joining the blockchain revolution as Bank of America (BoA) won a patent for a system for enterprises to store customers’ crypto deposits. There were more patents granted in the U.S. as online-retail giant Amazon won a patent for cryptography and distributed data storage solutions. Since Amazon Web Services (AWS) is one of the largest providers of cloud storage, we could soon see a distributed space solution from them.

Based on our research, we found that the following blockchain stocks demonstrated notable price movements based on shifts in their company fundamentals.

eXeBlock Technology Corp

eXeBlock Technology Corp (XBLK) is in the business of developing simple to use and self-contained decentralized applications that utilize blockchain technologies. While the company is currently working to develop a number of Dapps, they only have two functioning products, eXe 50/50 Labs and Freedom Ledger.

On November 12, 2018, The Brookville Times published a fundamental analysis of eXeBlock Technology Corp with a detailed valuation of the stock that could draw the attention of the institutional investors.

eXeBlock Technology Corp (XBLK) November 2018

In the valuation analysis, the Brookville Times mentioned that the eXeBlock Technology Corp has decent scores related to Return on Invested Capital, Return on Equity, and Shareholder Yield.

Prior to publication of the Brookville Times report, eXeBlock Technology Corp’s stock was trading downwards and fell to $0.05 per share. With the falling prices of cryptos, investors were bearish on most blockchain stocks as well.

However, if we look at the Stochastics indicator, it has crossed up with Volume bar turning green, signaling a potential reversal of the stock. While it could trigger a bullish retracement, conservative investors need to make sure that they wait for the price to break above the downtrend line as well as the resistance near $0.09 per share before considering increasing exposure to eXeBlock Technology Corp.

Square Inc

Square Inc (SQ) is a digital payment company and in Q3 2018, its transaction volume reached $22.5 billion. Square added bitcoin trading in its Cash App back in January of 2018 and within the last 9 months, it’s bitcoin trading revenue reached $43 million. Keep in mind that the transaction volume for bitcoin trading is much higher, the $43 million is the net revenue derived from bitcoin transactions.

Square Inc (SQ) November 2018

As a payment processor, the stock price of Square Inc depends on a range of variables and bitcoin trading volume currently represents a tiny portion of their overall revenue. However, since the publication of Q3 2018 earnings, blockchain investors are increasingly becoming interested in the company as it can attract a broader demographic of bitcoin users to its platform.

As a mainstream payment processor, Square Inc can create a “network effect” and encourage a new range of users to feel comfortable trading with bitcoin instead of fiat currencies. Hence, the long-term prospects of its decentralized payment transactions could prove to be a game changer.

We saw that after Square Inc’s stock broke below the uptrend line, it found a strong support near $69.40 per share. Over the last two weeks, the stock has traded above the support and the Commodity Channel Index (CCI) bounced after testing the -100 level, indicating bullish momentum in the market. Since the next major resistance is at $83.25 per share, increasing exposure at current market price offers a good chance to ride a short-term bullish move.

Bottom Line

The sudden drop in the price of bitcoin has invalidated the idea that it has already bottomed. If we analyze the past price action of cryptocurrencies, we can see that the key has always been volatility and the unpredictability of the directional movement. So, at least, the tight ranging market with low trading volume is over and there is no certainty that it will continue to go down in the coming weeks.

Meanwhile, the two blockchain stocks we have reviewed this week, Square Inc and eXeBlock Technology Corp, offers great value propositions and instead of looking at cryptos, we would argue that investors examine individual companies active in the industry as doing so will position part of their portfolio in a growing industry.

Disclaimer

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.