The Big Picture Take on Bitcoin and Bitcoin Stocks (RIOT, SQ, HIVE, PYPL, OSTK, MSTR, ISWH, MARA)

With Bitcoin seemingly clearly in the middling stages of a lateral triangle consolidation, it’s time to assess the big picture potential of the cryptocurrency investment thesis.

First off, lateral symmetric triangle consolidations, to market technicians, are encouraging. They are almost never indicative of a major top. Just a stall, or a pause, as a market churns through profit-takers, over-eager momentum players in at the prior high, and new strong hands coming in on dips. It’s a hand-off where the major control of the market is shifting from one set of participants to another without losing much ground in pattern terms.

And this pattern has been in development now for nearly 6 months. Given how it has played out, it may well be maturing toward an eventual resumption of trend, which would be to the upside in this case – it is a pause of the trend that ripped higher from September 2020 to April 2021. 

As far as the big picture, during the consolidation process, we have seen the strong continuation of “mainstreaming” that represents the lifeblood of this boom. It’s a network effect dynamic: the more people and merchants come to accept and rely on something like Bitcoin, the more other people and merchants will make the same choice because each step of the way in this process increases the marginal value for the next adopter.

The list of what you can buy and who accepts Bitcoin has gotten too long to quote here. But you can check it out at this handy site. When you do, note that the list was easy to type out in a couple minutes just 6 months ago. Now, due to various new factors, you can buy almost anything with Bitcoin today. 

It’s easy to take your eye off the ball and miss the point. But we are here right now to remind you that this is the point. Bitcoin’s value is determined by its utility, which is a self-reinforcing feedback loop. That value is only being augmented by inflationary forces and turmoil among established central banks as they erode confidence in fiat currency systems.

With that in mind, we take a look at a handful of interesting crypto stocks with compelling recent catalysts.

HIVE Blockchain Technologies Ltd (NASDAQ:HIVE) recently moved up onto the Nasdaq as an emerging leader in the crypto mining space, so it represents an interesting barometer for investor enthusiasm for stocks in the space, generically.

According to its own materials, the company engages in building a bridge from the blockchain sector to traditional capital markets. It also involves the production of mined cryptocurrency assets such as Ethereum. Its projects include Iceland-based Cryptocurrency Mining.

HIVE Blockchain Technologies Ltd (NASDAQ:HIVE) recently announced its results for the full year ended March 31, including news that its income from digital currency mining was $66.7 million this fiscal year, a 174% increase from the prior year. In addition, the company saw record net income of $42.5 million, up significantly from a loss of $1.9 million a year earlier, and $2.9 million lower than the previous quarter. Gross mining margin expanded to $50.1 million, from $8.5 million last year, and is $17.1 million higher than that experienced in the prior quarter of $10.6 million. Net income per share grew to $0.12 from a loss of $0.01 during the prior year and is $0.01 lower than the previous quarter of December 31, 2020.

“Fiscal 2021 was an incredible year for HIVE. Despite the effects of COVID-19 we have achieved record results and continued to increase our Ethereum and Bitcoin mining capacity,” said Frank Holmes, Interim Executive Chairman of HIVE.

Even in light of this news, HIVE has had a rough past week of trading action, with shares sinking something like -9% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -20%. 

HIVE Blockchain Technologies Ltd (NASDAQ:HIVE) managed to rope in revenues totaling $17.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 170.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($20.8M against $15.4M).

ISW Holdings (OTC US:ISWH) is truly one of the most interesting growth names in the crypto space in 2021. Even on days when many of the stocks in the space have struggled over recent weeks, ISWH has continued to find new catalysts and growing support among market participants, which has led to sustained new leadership momentum in the space. Overall, shares have more than tripled in the past month as the company nails down huge growth-positive partnerships including its landmark deal with Bitmain announced in July.

This morning provides a good example as the company just announced that it surpassed agreed upon milestones related to the performance of its common stock price and will therefore receive an additional 150 Bitmain S19 95TH/s miners from Minerset, a Delaware LLC, due to negotiated milestone clauses included in the asset purchase agreement reached between the two companies in August. As noted in the release, these 150 miners are supplemental to the 400 miners already paid for and received as part of the original Agreement.

ISW Holdings (OTC US:ISWH), according to the release, leveraged its shares of Preferred B stock to purchase its initial tranche of 400 miners. As a part of the contract, ISW Holdings President and Chair, Alonzo Pierce, and Minerset Managing Member, Elias Fernandez Sanchez, negotiated a graduated milestone provision deeming that ISW Holdings would earn 75, 150, or 225 additional Bitmain S19 95TH/s miners based on the performance of the Company’s common stock at or above $2, $3, or $4, respectively.

The Company has now triggered two of those milestones and looks forward to the opportunity to reach the next – the stock price for common shares of ISWH closed at $3.44 on Monday after hitting a 52-week intraday high of $3.78 during the session. “This contract was a win for both companies: We didn’t have to part with $3.8 million in cash and Minerset was able to quickly move its inventory,” noted Pierce. “With the appreciation of our stock price, both companies have already been amply rewarded for this partnership.”

Upon delivery, the miners will be prepped and deployed in POD5 units at the Company’s Pennsylvania mining project.

ISW Holdings (OTC US:ISWH) Pierce further added, “In addition to being a surprise reward for our shareholders on the asset side, this new tranche of miners will drive significant further bottom line performance gains over coming quarters. We also continue to work with FINRA on our name and symbol change, which is our first step of many on our way toward a NASDAQ listing.”

Paypal Holdings Inc (NASDAQ:PYPL) was perhaps the most important stock in the narrative defining the Bitcoin uptrend that broke out to the upside last fall. The company announced it would start to deal in BTC and allow customers to convert and purchase, and that step unleashed the monster, taking BTC from under $12k in October 2020 to over $40k less than three months later. It was perhaps “the” game changer.

According to company materials, PYPL engages in the development of technology platform for digital payments. Its solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and Paydiant products. The firm manages a two-sided proprietary global technology platform that links customers, which consist of both merchants and consumers, to facilitate the processing of payment transactions. It allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. The firm also enables consumers to exchange funds with merchants using funding sources, which include bank account, PayPal account balance, PayPal Credit account, credit and debit card or other stored value products. It offers consumers person-to-person payment solutions through its PayPal Website and mobile application, Venmo and Xoom.

Paypal Holdings Inc (NASDAQ:PYPL) recently announced that it has agreed to acquire Paidy, a leading two-sided payments platform and provider of buy now, pay later solutions in Japan, for ¥300 billion or approximately US$2.7 billion, principally in cash. The acquisition will expand PayPal’s capabilities, distribution and relevance in the domestic payments market in Japan, the third largest ecommerce market in the world, complementing the company’s existing cross-border ecommerce business in the country.

“Paidy pioneered buy now, pay later solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizable two-sided platform of consumers and merchants,” said Peter Kenevan, vice president, head of Japan at PayPal. “Combining Paidy’s brand, capabilities and talented team with PayPal’s expertise, resources and global scale will create a strong foundation to accelerate our momentum in this strategically important market.”

Even in light of this news, PYPL has had a rough past week of trading action, with shares sinking something like -5% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -10%. 

Paypal Holdings Inc (NASDAQ:PYPL) managed to rope in revenues totaling $6.3B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 21%, 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 ($12.4B against $41.3B, respectively).

Other interesting names in the Crypto Stocks space include Riot Blockchain Inc (NASDAQ:RIOT), Square Inc (NYSE:SQ), Overstock.com Inc (NASDAQ:OSTK), MicroStrategy Incorporated (NASDAQ:MSTR), and Marathon Digital Holdings Inc (NASDAQ:MARA).

Please make sure to read and completely understand our disclaimer at https://www.wallstreetpr.com/disclaimer. We may be compensated for posting this content on our website by EDM Media LLC. For questions, comments or suggestions please contact ir@edm.media.

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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