Cryptocurrency Rally Holds Strong
Rallies are important, but holding a rally is even more important.
Thankfully, that’s what cryptocurrencies have done over the last two weeks. Our favorites either stuck close to their previous levels or they exploded to the upside.
Siacoin (SC), for example, rose more than 24% in a single trading session, leading to a cumulative gain of 108% since we first recommended it last month.
Not bad, right? There aren’t too many investments that can boast of triple-digit gains in one month.
Speaking of triple-digit winners, Ethereum (ETH) rose above 100% for the first time in six weeks. It almost erased its gains in early April, but the market rebounded with force, giving investors a chance to unclench their jaws for a minute.
Cardano (ADA) is also climbing steadily. It accrued nearly 50% returns in the last month, adding momentum that we hope will continue through the second quarter. If we’re right, and our record suggests we will be, ADA could join the ranks of our triple-digit winners before this bull market is over.
Blockchain Law, Regulations, and Business
We haven’t heard much from crypto bears this week, but I don’t think their silence will last. It’ll come when you least expect it.
Not that it matters though, because the newfound resilience of digital assets means they could hold up better against market pessimism.
Take last week, for example. We learned that:
- Iran banned cryptocurrencies. (Source: “CBI bans Bitcoin in Iran,” Islamic Republic News Agency, April 22, 2018.)
- Russia’s Supreme Court blocked a crypto web site. (Source: “Russian Supreme Court rules to review appeal over bitcoin website blocking,” Russian Legal Information Agency, April 20, 2018.)
- Two major Chinese cities are centralizing blockchain efforts. (Source: “Another Chinese City Is Backing a Big Blockchain Investment Fund,” CoinDesk, April 23, 2018.)
- A giant mutual fund barred employees from initial coin offering (ICO) investing. (Source: “Capital Group Code of Ethics,” U.S. Securities & Exchange Commission, last accessed April 30, 2018.)
None of it mattered. Crypto prices held steady against this barrage of bad news, proving that confidence was the missing ingredient from the first quarter. Now that the market has a spine again, investors are more likely to see the progress being made at ground level.
Below are three of the developments that caught my eye for this week:
For the first time, a major rating agency issued a report on blockchain. One of the “big three” rating agencies, Fitch Ratings, Inc., became the first such agency to release a report on blockchain technology. (Source: “Fitch: Does Blockchain Represent a Paradigm Shift for Insurance?” Fitch Ratings, Inc., April 25, 2018.)
So far, none of the big agencies have issued reports on cryptocurrencies, but Fitch publishing a review of blockchain’s potential for insurance companies brings that possibility closer.
The Nasdaq is considering building a cryptocurrency exchange. Without making any promises, Nasdaq’s CEO, Adena Friedman, said the company “would consider becoming a crypto exchange over time.” That’s a big sign of credibility for cryptocurrencies. (Source: “Nasdaq is open to becoming cryptocurrency exchange, CEO says,” CNBC, April 25, 2018.)
A Spanish bank made a €75.0-million ($90.5-million) loan over blockchain. The Spain-based Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA) ran a test loan across a blockchain to identify the costs and benefits involved. (Source: “BBVA issues corporate loan using blockchain,” Financial Times, April 25, 2018.)
You might notice that American news outlets barely covered the BBVA story. This may stem from an anti-international news slant or a perceived unimportance, but I think it’s a big announcement that investors should know about. After all, it speaks to the relevance of blockchain technology in back-office finance, which is an underrated use case for the technology.
It would be redundant to list the other happenings from the past week. Suffice it to say, corporations and even governments are grappling with the idea of blockchain as a permanent fixture in their worlds. The more this happens, the more substance there is to prop up crypto prices.
I continue to believe there is fundamental value in the cryptocurrency market. I realize it’s hard to see, no question about it. Everywhere you look, snake oil salesmen claim that their pet ICO is a “sure thing.” Those don’t exist.
However, companies in the insurance, banking, and energy fields are pouring money into blockchain technology, building applications over protocol layers that register at least some of those gains.
Keep an eye out for those enterprise opportunities, because they are some of the most promising investment opportunities in the cryptocurrency sector.