Investors’ sentiments on Digatrade Financial Corp (OTCMKTS:DIGAF) are seriously weakening after the company officially announced that it will not proceed with the Digafund21 ICO.
While it is true that the decision will diminish the financing options of DIGAF, but some in the market are forgetting that there is still a promising business behind the stock. A clear example is the lack of market reaction when new features for the Digatrade Mobile Application for iOS & Android were released in January.
Before we provide more details, please check the value destruction in the following stock chart:
Digatrade Financial is currently trading at the $0.15 handle after breaking key support level of $0.20 handle. On the downside, the stock faces immediate resistance at the $0.10 handle. On the upside, it needs to close above the $0.30 mark in order to have any chance of making a push for the $0.6 mark.
We still believe that there are still catalysts on this name that could push the price higher. But, before we give our reasons to believe so, let’s review what DIGAF does.
Digatrade Financial Corp
Digatrade Financial Corp. was incorporated in the year 2000 and is headquartered in Vancouver, Canada. The company owns a global Digital Asset Exchange and provides blockchain development services. Digatrade offers an easy, secure, and affordable platform to buy and sell Bitcoin & Ethereum as well as other digital assets 24/7 online. It provides instant automated matching of orders between its registered members and strives to be your digital asset connection by making the experience as effortless as possible.
The company has recently released good and bad news. Despite this, the market only reacted to the less beneficial announcement, but we will review both. In our opinion, once the sell off stops, longs will be looking for good reasons to jump into the stock. We will show them here that the company is still running a promising business.
After exiting the market in September 2017 about a potential Digafund21 ICO, the company decided in February not to continue with the project. The reasons for such decision was the new regulatory framework of the Securities Exchange Commission regarding new ICOs. Read the following carefully:
“Upon completion of our regulatory compliance review, it is the determination of the Board and Digatrade legal counsel that the Digatrade Digafund21 ICO token would be considered a security as defined by the Securities Exchange Commission “SEC” and the British Columbia Securities Commission “BCSC”.” Source
What’s our take? We believe that the company could not foresee the economic costs of a new ICO. Now that the SEC is monitoring new ICOs, the process may be more expensive. Thus, the company decided not to continue. It is not fair for shareholders who acquired shares in September, but they need to understand how the business works. When regulators impose new rules, the companies need to readjust their plans and usually, shareholders lose money.
Digatrade Mobile Application for iOS & Android
DIGAF also released beneficial news that the market failed to assess. On January 3, 2018, we got to know that the collaboration with No Limits Consulting Limited (DBA: ANX International, ANXPRO, ANX Technologies) to develop the Digatrade Mobile Application for iOS & Android “is progressing as planned.” The company is adding new features, which were unknown for the market to date:
- Digatrade home page
- Portfolio page with account
- Balance display, activities page with transaction records, funding including deposit / withdraw
- Function, trading page with instant liquidity access to Digatrade multi-currency order-book
- Standalone APK for Android users in China.
With the company already offering the most relevant cryptocurrencies, it continues to improve its software to develop an easy-to-use platform to build and invest in a diverse cryptocurrency portfolio. The most significant point in favor of this name is that DIGAF is an old player in this young industry. Undoubtedly, it is its most valuable asset. The know-how accumulated by the company during these years give it an advantage over new entrants to the industry.
Additionally, it is remarkable that this is a growing company in an industry that is already growing. In our experience, if DIGAF is able to capitalize on this tremendous growth pace, the shareholders will benefit. Check the following video, wherein CEO Mr. Baillargeon explains the history of DIGAF:
How do we explain the bad stock performance?
First of all, it is worth mentioning that short sellers have been operating on the stock. The short interest has increased by 1,700% from 2017. It is spectacular, and it is not the only reason, but a very good reason to explain the bad performance of the stock:
Additionally, the share price is following the trend of the industry. The retracement seen in January and February in all the cryptocurrencies is affecting DIGAF. Experts in the field are telling that price has found the bottom, thus we do not really worry about the future of this market. Read carefully the following text from a major author specialized in cryptocurrencies:
“Bitcoin, Ethereum, and Litecoin are showing signs of price stability. After a strong retracement that commenced in mid-December following the strong run-up of the entire cryptocurrency market which saw Bitcoin hit its all-time high near $20,000 on December 17, 2017, the market seems to have finally found its bottom. The retracement has resulted in the entire market giving back most of the of the gains made during the run-up. Bitcoin, Ethereum, and Litecoin have been trading similarly up over the last 10-days, and the technical on all three are beginning to look promising for a reversal to the upside.” Global Coin Report
Currently trading with a market cap of $7.4 million, DIGAF is an exciting story among small caps. With $0.08 million in cash, the market is expecting new financing agreements to be announced in 2018. Everybody remembers the $0.4 million received in 2017, which we expect to see in the next quarterly release. However, we believe that more cash will be necessary to keep the innovations coming. Keep in mind that the more money they raise, the longer the future of DIGAF.
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Disclosure: We have no position in DIGAF and have not been compensated for this article.