Blockchain Stocks Weekly Update – October 5: GMO’s Cryptknocker May Turnout to be a Cash Cow

GMO Internet Inc. (9449) October 2018

The cryptocurrency prices are stabilized across the board, but Ripple fell by around 4.59% so far this week. On October 4, the Head of Research at Fundstrat Global Advisors, Tom Lee, mentioned about a survey that revealed that 54% of the institutional investors think the bitcoin price has bottomed and it fueled bullish speculation. Moreover, there was plenty of positive development in the blockchain industry to give hope to investors that publicly traded companies involved in the sector will offer some great momentum play.

Bithumb, one of the largest Korean crypto exchanges, announced to start a global decentralized platform. Bithumb has partnered with One Root Network (RNT) and probably use its security and matching efficiency to offer users a more seamless trading experience. However, Komgo SA seems to have gained the first mover advantage by interlinking blockchain and commodities on its trading platform.

Meanwhile, the European Securities and Markets Authority (ESMA) has set aside 1 million Euro to supervise Fintech industry and they are especially interested in monitoring crypto assets, said the agency in a recently published document.

We have already written extensively about how Canadian blockchain startups have been helping the recently legalized cannabis industry. But, a report said the use of blockchain in agriculture and food supply chain markets, in general, will be worth over $400 million. So, investors looking into this sector are certainly looking at a growth market.

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) published a press release last Friday saying they are releasing a new crypto mining software called Cryptknocker that will enable graphics processing units (GPUs) to mine Equihash algorithm-based crypto coins, such as the Zcash.

While GMO Internet Inc. will provide the mining software for free, miners will have to pay a 2% commission once they have used the software to successfully mine any coins.

GMO Internet Inc. (9449) October 2018

Since May, GMO Internet Inc.’s stock price was pretty bearish and it formed a downtrend line. However, after the press release was published last Friday, the stock broke above the downtrend line this week. In fact, it went up to test the resistance around $18.50 per share.

As there is no upfront cost to using Cryptknocker, there will be a lot of new miners who will try it out. The question is, will any large-scale mining companies embrace it to professionally mine coins and pay GMO Internet Inc. the 2% fee.

Given this fee-based billing structure will help GMO Internet Inc. open up a new revenue channel and may help the company’s bottom line at the end, it can fundamentally change the future of this company. Hence, long-term investors might want to increase their exposure to GMO Internet Inc. once the price breaks above this pivot zone around $18.50 per share.

DMG Blockchain Solutions Inc

DMG Blockchain Solutions Inc (DMGGF) entered into an agreement with IBM Canada Ltd. to jointly develop and deploy blockchain-based global supply chain management solutions. DMG Blockchain Solutions Inc will mainly work with IBM technology and services to develop solutions that will enable complete provenance, regulatory compliance, inventory management and on-time payment of products. These solutions will make the entire supply chain more efficient for regulated products such as pharmaceuticals.

DMG Blockchain Solutions Inc (DMGGF) October 2018

DMG Blockchain Solutions Inc is set to spend up to $10 million CAD to hire managers and blockchain experts from IBM as its blockchain platform team offers a considerable experience that will likely make it a successful collaboration. Also, IBM Cloud will be used for hosting the solution and interfaces between the blockchain technology and legacy enterprise systems.

IBM Blockchain Platform and DMG’s deep experience will enable the new supply chain management solution a viable platform for regulated products and may bring new revenues for the company.

Given that DMG Blockchain Solutions Inc’s stock turned bullish and the RSI indicator reading broke above the previous high near 60, we are confident that this latest development will encourage bulls to bid up the price in the next few weeks. Hence, if DMG Blockchain Solutions Inc’s stock breaks above the resistance around $0.3250, there is a good possibility that it might turn into a sustained uptrend.

Bottom Line

Experts have been predicting an end to the downturn of bitcoin and other altcoins for the last several months. However, since the Fundstrat survey participants were institutional investors, we believe there is a certain weight to the outcome of this survey. With a bullish bitcoin, we should start to see publicly traded blockchain stocks of mining companies going up. However, the important thing to remember is that any momentum play requires careful examination of the stock and the long-term prospects.

The two companies we discussed have demonstrated solid fundamental and we believe they both offer some substantial upside potential in a growing market. Especially, the fee-based pricing model of GMO Internet Inc.’s mining software looks very promising.

Disclaimer has not been paid to mention any stock / company within this article nor do we own any stock in any company mentioned within this article. More information about our full disclosure can be found here – Full Disclaimer.