Bitcoin volatility has picked up over the past few weeks, possibly driven by volatility in speculative assets, including traditionally overvalued speculative technology stocks heavily owned by smaller retail market participants. As the speculative plays take a hit, people with cross-asset exposure in crypto who have leveraged their base capital are forced to raise cash from somewhere.
In this case, it appears that cash has been raised by selling bitcoin for many.
The big question now is this: is the dip another tremendous opportunity for new money to flow in and profit on the next wave higher in cryptocurrencies and related stocks? The answer to that question hinges on another question: where is the ceiling on this thing, ultimately?
One market maven with strong views on this point is hot-shot fund manager, Cathie Wood, who runs the already-legendary Ark Invest. In a recent Barron’s piece, Wood opined on the upside potential for Bitcoin, noting that if “institutional investors move into Bitcoin and allocate 5% of their portfolios,” the price of the cryptocurrency could soar to $560,000 by 2026.
That would be nearly 1,000% from here. While it seems like a wild figure, bull markets have a way of making wild estimates mundane over the course of time so long as the trend remains viable. Apple Inc (NASDAQ:AAPL) is now knocking on the door of a $3 trillion market cap. Just a few years ago, most analysts thought the $1 trillion price targets from a few maverick firms were pipedream calls.
Cathie Wood has been very good in this regard, calling Tesla Inc (NASDAQ:TSLA) a trillion dollar company when it was under $100 in 2019. That was a “crazier” call than her recent Bitcoin prognostication.
However, we would point out that the corollary of this prediction might be even more remarkable in terms of potential payoff: Stocks tethered to Bitcoin could move even more dramatically if Wood’s Bitcoin call turns out to be right because many of them move like leveraged Bitcoin markets – when Bitcoin goes up 5% in a day, Bitcoin related stocks tend to move several times as much in response.
With that in mind, we take a look below at some of the most compelling stocks in the Bitcoin space.
Square Inc. (NYSE:SQ) Square, Inc. engages in the provision of credit card payment processing solutions. It is a cohesive commerce ecosystem that helps sellers start, run, and grow their businesses. Sellers download the Square Point of Sale mobile app so that they can quickly and easily take their first payment, typically within minutes.
SQ is also a major player in the crypto space.
Square Inc. (NYSE:SQ), as a case in point, recently announced that it is changing its name to Block, with obvious implications. Block will be the name for the company as a corporate entity. The Square name has become synonymous with the company’s Seller business, which provides an integrated ecosystem of commerce solutions, business software, and banking services for sellers, and this move allows the Seller business to own the Square brand it was built for.
“We built the Square brand for our Seller business, which is where it belongs,” said Jack Dorsey, cofounder and CEO of Block. “Block is a new name, but our purpose of economic empowerment remains the same. No matter how we grow or change, we will continue to build tools to help increase access to the economy.”
Even in light of this news, SQ hasn’t really done much of anything over the past week, with shares logging no net movement over that period. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly 16%.
Square Inc. (NYSE:SQ) managed to rope in revenues totaling $3.8B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 26.7%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($5.4B against $5.5B, respectively).
ISW Holdings (OTC US:ISWH) has been one of the most interesting new players to emerge onto the crypto scene. It’s still an OTC stock, but has hinted recently that it is getting ready to make a move up onto the Nasdaq following its landmark partnership with Bitmain Technologies and the establishment of its project to pair 56,000 mining rigs with 200 megawatts of power, which is reportedly about to go live, activating the first 20 MW of power deployed to self-contained cryptocurrency mining Pods.
The stock has pulled back recently, but still remains up over 3,000% over the past year. Is it too rich to chase? We would point out that ISWH shares have pulled back over 50% in the past couple months, suggesting it might now be on sale given that it appears on the precipice of monetizing its central strategy.
ISW Holdings (OTC US:ISWH) is establishing a mining and hosting model at large scale that’s just getting off the ground. According to the company’s corporate update out this morning, that process is moving toward fruition as its own mining operations begin to pay off — according to its release, the revenue run rate from its own cryptocurrency mining operations has begun to exceed internal and publicly stated expectations.
The company noted this morning that it is also working to expand its ceiling further: Following the full deployment and activation of all 200 MW of power at the Company’s Southeastern U.S. project, ISW will have the opportunity to increase its facility to 500 MW of power, allowing for a significant expansion in hosting and mining potential. This opportunity ties into the Company’s S-1 Filing process.
“Filing the S-1 was an integral step as we continue to work toward an uplisting to the Nasdaq exchange,” stated Alonzo Pierce, President and Chair of ISW Holdings. “We are on the verge of activating our Phase One hosting operations, and we expect Phase Two to move rapidly on the heels of that transition. Once we have the entire 200 MW fully deployed, we will have the opportunity to push the ceiling considerably higher. We are also very pleased at the results coming in from Pennsylvania, where our mining efficiency has exceeded expectations.”
ISW Holdings (OTC US:ISWH) has been performing even ahead of its big switch-on in the Bitmain deal according to its most recent financial update: Total Revenues up over 2,400%, Assets up over 5,000%, and Liabilities down over 70%. The company also recently filed for a name and ticker change to “BlockQuarry”, which further helps to bolster the story given the increasingly retail-investor-oriented nature of this equity bull market.
Mastercard Inc. (NYSE:MA) operates as a technology company that engages in the payments industry to connect consumers, financial institutions, merchants, governments and business.
The company offers payment solutions for the development and implementation of credit, debit, prepaid, commercial and payment programs. It has also gotten increasingly involved in cryptocurrency solutions, helping to juice the Bitcoin market by acting as a key conduit toward mainstreaming bitcoin utility in everyday commerce.
Mastercard Inc. (NYSE:MA) recently announced, along with Bakkt (NYSE:BKKT), a multifaceted partnership to make it easier for merchants, banks and fintechs in the U.S. to embrace and offer a broad set of cryptocurrency solutions and services. Consumers, in turn, will experience expanded access to the digital asset ecosystem.
“Mastercard is committed to offering a wide range of payment solutions that deliver more choice, value and impact every day,” said Sherri Haymond, executive vice president, Digital Partnerships at Mastercard. “Together with Bakkt and grounded by our principled approach to innovation, we’ll not only empower our partners to offer a dynamic mix of digital assets options, but also deliver differentiated and relevant consumer experiences.”
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 12% in that timeframe. MA shares have been relatively flat over the past month of action, with very little net movement during that period.
Mastercard Inc. (NYSE:MA) managed to rope in revenues totaling $5B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 29.9%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($7.5B against $11.6B, respectively).
Other core plays tethered to the Bitcoin marketplace include Silvergate Capital Corp. (NYSE:SI), Overstock.com Inc. (Nasdaq:OSTK), MicroStrategy Inc. (Nasdaq:MSTR), Hive Blockchain Technologies Ltd. (Nasdaq:HIVE), and ProShares Bitcoin Strategy ETF (NYSEARCA:BITO).
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