Over the last six months or so, we have covered a handful of bitcoin and cryptocurrency stocks in an attempt to highlight to our readers some of the potential exposure methods that serve as an alternative to buying and storing cryptocurrency.
Not everybody knows how or wants to buy bitcoin but the dramatic appreciation in value is, for most traders and investors, too hard to resist.
Luckily, some of the companies we have highlighted basically track the price of bitcoin and, in doing so, serve as a sort of index type allocation (but one that can be bought as a public stock through a standard brokerage) to the underlying asset.
Two of the most well-known stocks in the space, BTCS Inc (OTCMKTS:BTCS) and BITCOIN SERVICES I COM USD0.001 (OTCMKTS:BTSC), are ones we have covered on quite a few occasions.
The last time we mentioned these two companies was back on September 14 as part of this piece.
At the time, the bitcoin price was considerably subdued having been beaten down by external fundamental factors (specifically, the Chinese crackdown on bitcoin exchanges and ICO’s as well as the condemning of bitcoin as being a fraudulent asset by Jamie Dimon) and we suggested that it might be the right time to buy the dip in anticipation of a recovery. Buy the dip in bitcoin, that is, or for those wanting a public market exposure, buy the dip in BTCS or Bitcoin Services.
At the time, BTCS was trading at $0.079 a share. At its most recent close, the company went for $0.12 – a 52% appreciation in a close to 30-day period. On the same day, Bitcoin Services went for $0.60. During the week subsequent to that date the company ran to $0.85, a 41% appreciation, but has since fallen to current levels in around $0.58 a share.
Across the same period, bitcoin has run from almost bang on $3000 to current levels in around $4800 – a 60% run.
So BTCS is up and and looks set to continue to run. The underlying asset, bitcoin, is the same, and to almost the same degree (just a few percentage points higher). Bitcoin Services, however, is essentially flat on its September 14 lows.
This serves up a potential near-term trade opportunity.
The thing is, neither BTCS nor Bitcoin Services have made any real strides operationally across the period in question. We got a couple of press releases from each late August early September and things are chugging along, but what is really driving these companies right now is the price of bitcoin.
The same is true across pretty much the entire spectrum of publicly traded exposures to the cryptocurrency space.
The fact that Bitcoin Services hasn’t risen in line with bitcoin (as it has done throughout the entirety of 2017 so far) suggests nothing more than market oversight. Everybody is looking for a cheap exposure to bitcoin right now and it can only be a matter of time before markets settle on Bitcoin Services as a stock that still has some price-based leeway in terms of near-term movement to realign it with the action we have seen across the bitcoin space and, as represented by the bellwether of the sector, the price of bitcoin across the major exchanges.
This thesis is, of course, based on the assumption that bitcoin will continue to appreciate in value near term. We have seen price hit current levels once before and get rejected, subsequent to the aforementioned mid-September lows and that’s a risk here – if that happens again, Bitcoin Services is going to fall.
On that occasion, however, the above discussed fundamental development out of China initiated the decline. So long as we don’t get any surprises, and apart from the November SegWit situation there is nothing on the cards, we should see a break of $5000 BTCUSD and a subsequent run on the back of the breaking of said key technical level.
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Disclosure: We have no position in any of the securities mentioned and have not been compensated for this article.