With Bitcoin regaining momentum, it’s time to buy oversold Bitcoin stocks again.
Even as the broader market drops, Bitcoin tacked on another $2,275 on Friday, bringing the digital currency to $89,543. Analysts now argue it could see $100,000 by Thanksgiving. Others are now arguing Bitcoin could rally to $200,000.
“After its recent surge, premised on the more ‘bitcoin friendly’ candidate winning the U.S. presidency, we can expect some near-term retracement – as was the case in April this year,” said BCA Research, as quoted by CNBC. “On a multiyear horizon though, bitcoin’s structural uptrend is intact and will ultimately take it to $200,000+.”
That’s due to the belief that, like gold, bitcoin is a “non-confiscatable asset” – an asset that can’t be taken from holders in the event of hyperinflation, banking system failure, or state expropriation, and therefore acts as insurance against such events, added CNBC.
If we eventually see $200,000 Bitcoin, stocks including these two could easily rocket higher.
MicroStrategy (MSTR)
With more than 1% pf all Bitcoin on hand, MicroStrategy (MSTR) rallies when BTC rallies.
Helping, Barclays just initiated an overweight rating on MSTR.
The firm added that, "In essence, MSTR feels like a BTC index fund that is also capable of generating its own investment capital, such that investors not only gain exposure to the underlying BTC asset price, but also benefit from future self-funded accumulation,” as quoted by Seeking Alpha.
Once a stock is listed on an exchange or added to an index, the potential for additional interest is enhanced considerably. Index funds are required to include in their portfolios all components in various indexes, and margin requirements are often more attractive once an exchange listing is accomplished. For these reasons, the potential audience is often increased significantly. It is not uncommon to witness a price advance even prior to listing, in anticipation of this tendency. Furthermore, many committees of large investment companies restrict investment to only listed stocks – and then only stocks priced in excess of $10. Because of the criteria required for listing approval, these large investors use the listing process and the active requirements to remain listed as additional safeguards to ensure that they are investing prudently. The reverse of the phenomenon occurs when a stock is de-listed. Heavy liquidation of de-listed stocks, together with prospects of the company itself failing are legitimate concerns that are to be respected and expected.
I noticed the same tendency back in the early 1970s, when exchange-listed stock calls were first introduced. It was almost a foregone conclusion that as soon as a call was listed, the underlying security would advance. This pattern was dominant for an extended period of time until the exchange-listed puts were introduced and prices for the underlying stock declined for a short period of time. Unfortunately, this tendency was short-lived. In any case, I remain vigilant to observe the vagaries associated with the introduction of any new product in order to identify any inclination for the pattern to repeat itself.
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