Surging Bitcoin Alert!

RoboStreet – April 25, 2019

All But Forgotten Bitcoin Suddenly Makes a Move

Investors are currently super focused on first-quarter earnings results, and rightly so…the numbers are looking pretty good. Two of three companies reporting are beating Wall Street estimates on either the top or bottom line or both. More importantly, though, forward guidance into the current quarter and for the full year are also pretty upbeat and laying the foundation for the year-to-date rally to be sustained.

Wall Street lowered the earnings bar to a level that, while year-over-year earnings growth is a net negative, the results coming in are still better-than-expected. According to the most recent FactSet Earnings Insight report dated April 18, “For Q1 2019 (with 15% of the companies in the S&P 500 reporting actual results for the quarter), 78% of S&P 500 companies have reported a positive EPS surprise and 53% have reported a positive revenue surprise.”

Market participants are buying more into the notion that Q1 earnings represent a trough and that from the second quarter on, revenue and profits will gradually improve. And why not? America is the hope of the global capitalist system, where ingenuity, hard work, and risk capital produce the most exceptional return on equity in the world. Regardless of the gains in international markets, U.S. markets are leading global investor confidence, and that can’t be understated.

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And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

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As the forward PE for the S&P 500 is about 17X, from a historical standpoint, this would represent a high valuation and at least an overbought condition for the hear term. Once the biggest tech components report their Q1 results, I wouldn’t be surprised to see the market consolidate by 2%-3%. The rising 50-day moving average for the SPDR S&P 500 ETF (SPY) comes into play right around $284, where buyers would likely step in.

In lieu of trying to find attractive value in an overbought stock market, investors might consider a trade or investment in bitcoin at current levels. Hailed as the world’s first cryptocurrency, Bitcoin still reigns as the most prominent of cryptos that are exchanged through digital ledgers known a blockchain. Thousands of early investors become overnight millionaires when the price of a single Bitcoin of $20 back in January 2013 soared to $19,783 on December 20, 2017.

The send-up had everyone from the most experienced Wall Street traders to taxi drivers and waitresses clamoring to get into Bitcoin when supposed crypto gurus were putting price targets of $50,000-$100,000 out for public consumption. People took second mortgages out on their homes and college students used student loan money to invest in Bitcoin at the high, which ultimately defined a top in the cryptocurrency.

Source: Getty Images

From December 2017, the price of Bitcoin steadily fell for a full year, bottoming out in mid-December 2018 at around $3,100 on fears that this was nothing more than a modern-day tulip rally which would fizzle out completing, leaving tens of thousands of people financially crushed. And for sure, there is plenty of carnage from the sell-off with the bloom and promise of riches having faded from occupying major portions of financial media and cocktail parties. It was a boom-bust cycle that almost came to an end.

But true to form, as is with many market crashes, just when it seems there is no good reason to even bring up the subject of Bitcoin, the cyber currency quietly put in a four-month basing pattern that suddenly broke higher right at the end of March with no major headline or catalysts that could account for the spike. Three weeks into April and the price of Bitcoin has breached key overhead technical resistance at $5,000 and above its 200-day moving average, which has some cryptocurrency researchers calling it a rebound.

“Based on bitcoin’s trading history, a move above the 200-day moving average for bitcoin is meaningful statistically,” Fundstrat Global Advisors researchers wrote in a note to clients. “When bitcoin is above its 200-day moving average its win-ratio is 80% compared to a mere 36% when it is below its 200-day.” Fundstrat has gone on record saying that this recent move is just the beginning of a rally that could take Bitcoin prices back up to $13,500 – a level not seen since January 2018.

For stock investors that don’t want to open a cryptocurrency account, they can play the price momentum in Bitcoin through purchasing shares of Grayscale Bitcoin Trust (GBTC). This trust enables investors to gain almost dollar-for-dollar exposure to the price movement of Bitcoin in a traditional trading vehicle listed on the OTC. Total market capitalization is around $1.2 billion with an average daily volume of 2.7 million shares making GBTC a very liquid proxy for Bitcoin.

Shares of GBTC are rising off a recent low of $3.66 seen back in early February to today’s price of $6.70 on a jump in the average daily volume of 3.9 million shares. So, the increase in price is being accompanied by a better than a 44% rise in trading volume. The one-year chart below clearly shows the downtrend having been broken on high volume.

As to whether this is a legitimate breakout for Bitcoin is anyone’s guess, but having a scientific model built on a market-proven artificial intelligence can take a lot of guesswork out of trading volatile assets like GBTC and other exotic vehicles. My Tradespoon AI-driven tools provide the necessary backbone data crunching to determine whether certain trades have sustainable strength or are simply a short-term head-fake.  

I take a lot of pride in having developed an AI model that delivers consistent profits in both up and down markets. Our RoboInvestor advisory service has been in operation for just over one year and I’m pleased to report that for all closed trades to date, our winning trades percentage is 92.98% with the average return per trade being 4.86%, resulting in a 31.69% return versus 11.95% for the S&P for the trailing 12-months.

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I only work with the best-of-breed stocks and ETFs. After all, my hard-earned money is involved in each and every trade along with our subscribers. We are not paper tigers and thus our attention to detail with all recommendations is taken very seriously. I invite all readers of today’s column to join RoboInvetsor and let’s make some money, a lot of money, together.  

 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

Click Here – To See Where I Put My RoboInvestor Money

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