The last week of November delivered some great news for the blockchain industry as new developments from the private sector encouraged investors to evaluate the long-term prospects instead of focusing on the short-term price fluctuations of cryptocurrencies.
Chip-maker Intel surprised the cryptocurrency miners by filing a new patent with the U.S. Patent and Trademark Office (USPTO). According to the filing, Intel wants to develop computer CPUs that will support energy-efficient and high-performance bitcoin mining and reduce energy uses by 15%.
An alternative investment fund based in Germany called Xolaris Service KVAG is starting a private equity fund to fund bitcoin mining. They said in the press release that investors are not becoming shy to invest in bitcoin mining even though the price BTC/USD fell in recent weeks. On the contrary, professional investors are increasingly demanding regulated investment vehicles.
BHEX Exchange, a platform aimed at providing a custody and clearing product for crypto assets, has raised $15 million in a funding round with the support from major exchanges like Huobi and OKCoin. So, this news again proves that is no shortage of investors interested in supporting the development of decentralized applications.
Based on our research, we found that the following blockchain stocks demonstrated notable price movements based on shifts in their company fundamentals.
BTCS, Inc. (BTCS) is an early mover in the blockchain and digital currency ecosystems and they become one of the first publicly listed companies in the U.S. who was involved in the industry. Although the company received favorable reviews and initial funding, the performance of the company has not been impressive in recent years.
Villamayor Capital recently published an article citing some of the flaws in the BTCS, Inc.’s fundamentals that made investors nervous about the future of the company.
According to the research cited in the article, BTCS, Inc. has lost 94% of its total amount of assets and 99% of its total amount of cash since December 2017. Based on the pure book value of the company, the article cited that the value of the company’s stock should be $0.00007!
The interesting thing is, since the article was published, BTCS, Inc.’s stock price has actually gone up to test the resistance around $0.028 per share. We believe this bullish retracement will end up causing short-term investors to start taking profit due to the Villamayor Capital article and might push the price further down in the short-run. However, if we see the stock price breaking below the support near $0.020 per share, it can suddenly confirm the bearishness of the stock.
Digitalx Ltd (DCC) is a company involved in providing ICO advisory services, blockchain consulting services, and blockchain-related software development. On November 27, they announced to launch a joint venture with a US-based investment bank and broker-dealer Americas Executions (AmerX) to service the Security Token Offering (STO) marketplace.
The stock of Digitalx Ltd remained bearish over the last two months after it broke below the uptrend line in the first week of September. Over the last few weeks of November, it mostly ranged range bound and traded between $0.060 to $0.075 per share.
DigitalX managing director Leigh Travers said, “The STO market represents the next wave of blockchain-based asset adoption and with the secondary trading markets opening up in 2019, the timing for the new venture is right.”
We believe this new venture will give Digitalx Ltd the push it needed to open up new revenue channel and that might prompt investors to bid up the stock price in the short run. However, conservative investors need to wait for the stock price to break above the upper band of the range, $0.075 before considering increasing their exposure to the company.
The blockchain market is beginning to show the signs of maturity as blockchain stocks are mostly not mimicking the sharp drop in the price of the bitcoin and other cryptocurrencies. However, we are still in the preliminary stage and far away from seeing companies with a focus to develop products based on a decentralized database that are making economic profits. The situation with BTCS, Inc. illustrates how risky it could be to become an early stage investor in one of these blockchain stocks.
On the other hand, there are companies like Digitalx Ltd who are thriving and delivering a promise that blockchain companies are here to stay and will act as change agents for a new era of growth.
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