7 Stocks To Ride The Bitcoin Wave: Fundstrat’s Lee

In the area of cryptocurrency trading, Lee names Goldman Sachs Group Inc. (GS), CME Group Inc. (CME), and CBOE Global Markets Inc. (CBOE). His picks among semiconductor manufacturers whose products are critical for mining it include Nvidia Corp. (NVDA) and Advanced Micro Devices Inc.

As bitcoin mania propels the digital currency to stratospheric values, many investors are looking for stocks that might ride bitcoin’s coattails to higher valuations. Veteran market strategist Tom Lee, currently head of research at Fundstrat Global Advisors LLC, has identified seven such stocks, CNBC reports. In the area of cryptocurrency trading, Lee names Goldman Sachs Group Inc. (GS), CME Group Inc. (CME), and CBOE Global Markets Inc. (CBOE). His picks among semiconductor manufacturers whose products are critical for mining it include Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD). Finally, Lee also names Overstock.com Inc. (OSTK) and Square Inc. (SQ) as companies with key supporting roles.

The rapid escalation in the value of digital currencies leads skeptics to conclude that this is a speculative bubble. If so, any gains in these stocks fueled by expectations about further gains in digital currency prices is bound to unravel. Meanwhile, Lee has a year-end price target of $25,000 for bitcoin, per CNBC’s December 8 story. Its price as of 11:00 AM Tuesday was over $17,000, per CoinDesk.com. (For more, see also: Is Bitcoin In Bubble Territory?)

The Traders

This is where Goldman, CME (the parent of the Chicago Mercantile Exchange) and CBOE (the parent of the Chicago Board Options Exchange) fit in. The CBOE has begun trading bitcoin futures, the CME has announced intentions to do the same, and Lee anticipates that Goldman will be “the first investment bank to be involved in bitcoin trading,” as quoted by CNBC. The central involvement of these mainstream players in the bitcoin market could boost the credibility of digital currencies in general, and perhaps reduce their volatility. However, it is not immediately obvious that trading in cryptocurrencies will be a significant source of revenue for any of these players in the foreseeable future.

The YTD price moves through December 11 and P/E ratios for these stocks are, per CNBC: Goldman, +6%, 13x; CME, +33%, 35x; CBOE, +73%, 69x. The earnings multiples on the CME and CBOE are quite rich, given that the S&P 500 has a recent P/E of 25x, per Birinyi Associates as reported by The Wall Street Journal.

The Miners

The mining of various digital currencies requires specialized high performance semiconductors known as graphics processing units (GPUs). Nvidia and AMD are among the leading producers of these chips. “As blockchain grows, and as transactions grow, mining will grow and therefore require more GPUs,” Lee told CNBC. Nvidia is up 79% YTD and has a P/E of 48x, while the figures for AMD are -12% and -142x. per CNBC.

The Others

Overstock is best known as an online discount retailer, and became the first major retailer to accept bitcoin as payment back in 2014, per CNBC. The company also is an incubator of the blockchain technology that underpins key digital currencies, and through a subsidiary it has begun trading in digital coins, CNBC adds. Overtock’s shares are up 225% YTD, and its P/E is -132x, per CNBC. Overstock’s shares recently surged after the investment management division of Morgan Stanley (MS) reported taking an 11.4% position in the company, according to another CNBC report.

Square focuses on developing point-of-sale solutions for merchants, facilitating transactions in which the customer pays via his or her mobile device. The company has announced that it will develop the means for customers to buy and sell digital currencies through its app, but not in the manner of a full cryptocurrency exchange, CNBC says. Square’s stock is up 187% YTD, and its P/E is -234x, per CNBC.

Risky Business

Many of Lee’s seven picks already are richly-priced, including three that have multiples greater than the S&P 500 average. Three others have negative earnings.

This suggests that big expectations already are built into these stocks.

Related Posts:

Bitfinex DDoS-ed as Attacks on Digital Currency Exchanges Continue

The world’s largest cryptocurrency exchange, Bitfinex, has reported being a victim of a distributed denial of service (DDoS) attack. The attack resulted in the service being unavailable temporarily, frustrating traders as they try to make profits from the volatile price surges and dips experienced by bitcoin …

The world’s largest cryptocurrency exchange, Bitfinex, has reported being a victim of a distributed denial of service (DDoS) attack. The attack resulted in the service being unavailable temporarily, frustrating traders as they try to make profits from the volatile price surges and dips experienced by bitcoin and other cryptocurrencies.

The company tweeted earlier today it was under heavy DDoS attack and reported that its application programming interface was also down.

We are currently under heavy DDOS. API is also down. We are working on further mitigation.

— Bitfinex (@bitfinex) December 12, 2017

This the second time in a week that the exchange has reported a DDoS attack. Last week, the company had said that it “has been under significant denial-of-service attack for the past several days,” and the attack worsened on December 7. Today, the company said it started experiencing the DDoS attack around 9:45 am ET.

In previous reports, security researchers had revealed that it’s not only the criminals who are trying to leverage the newfound popularity of cryptocurrency, but the industry itself is using these attacks to take down competition or manipulate prices.

Considering its volume and popularity, Bitfinex has remained at the center of controversies with some accusing it of shady business practices. Only last month, when cryptocurrency startup Tether (which reportedly shares common ownership with Bitfinex) alleged that hackers stole $31 million from the startup, reports had once again pointed to the “long-standing allegations the exchange has been using the asset to engage in fraud and market manipulation.” The $72 million hack of Bitfinex last year was also accused of being an inside job.

With so many controversies floating around, the company could have easily attracted attention of criminals or affected victims. And then, there are always those rumors that these DDoS attacks are launched by the company itself or its competitors to manipulate coin prices since traders are essentially at a standstill and can’t buy or sell their cryptocurrency. While many point to these attacks as inside jobs, it should be noted that bitcoin exchanges have a long history of being attacked. As the value and popularity grows, they will become even more vulnerable to targeted attacks.

Coinbase service was also down earlier today. However, the company said it was due to site maintenance.

Related Posts:

Bitcoin Bulls Face ‘Alt’ Competition in Push to $20k

As per CoinDesk’s Bitcoin Price Index (BPI), the cryptocurrency is trading at $17,539, having appreciated 4.48 percent in the last 24 hours to a new all-time high. But while that’s a modest, even impressive gain, it’s worth noting that alternative currencies like litecoin and ether have strengthened by even …

Bitcoin may still be in the hunt for $20,000, but the bulls need progress soon else a minor pullback could be in the offing.

As per CoinDesk’s Bitcoin Price Index (BPI), the cryptocurrency is trading at $17,539, having appreciated 4.48 percent in the last 24 hours to a new all-time high.

But while that’s a modest, even impressive gain, it’s worth noting that alternative currencies like litecoin and ether have strengthened by even more impressive rallies.

On the day’s trading, the cryptocurrencies, the second and fourth by market volume, have seen 71.8 percent and 30 percent gains, respectively. Coinbase’s GDAX exchange and South Korea’s Bithumb have emerged as the primary drivers.

All told, though the stellar performance of litecoin and ether could be indicative of their availability and appeal to new buyers. Hence, a minor correction in bitcoin (BTC) cannot be ruled out as other assets garner attention.

1-hour chart

The above chart shows:

  • Bull flag breakout followed by a nice rising lows pattern as represented by the ascending trend line.
  • The relative strength index is above 50.00 (in the bullish territory) and is trending.
  • The 1-hour 50-MA is curled up in favor of the bulls.

View

  • BTC could cut through the resistance at $17,500 and make a move towards the $18,300-$18,500 level over the next 12-24 hours.
  • Overall, the cryptocurrency looks set to test the major psychological level of $20,000. As noted earlier today, only two end-of-day closes below the $14,000 would abort the bullish view on the charts.

Toy car image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Related Posts:

Winklevoss predicts bitcoin value to increase by 20x current size

The new future contracts launched on platforms like CME will make it easy to make the bet and slowly easing the currency into the world of mainstream finance. The exchange platform operated by the twins Gemini exchange are hopeful that they would get approval like the rest, Winklevoss added that …

Billionaire bitcoin investor Cameron Winklevoss is of the opinion that the gains made by the cryptocurrency this year are just the beginning, predicting that the price will rise as much as 20-fold with investors viewing it now as an upgrade to Gold.

Bitcoin futures contracts have been launched on the Cboe platform while the CME exchange platform will launch theirs on the 17th of this month, making it easier for traders and investors to bet against the rally of bitcoin over the next few months. That seems to be making some investors nervous but Winklevoss isn’t one of them. He was one of the early investors in Bitcoin before pulling his fortune and dedicating it to cryptocurrency.

According to Winklevoss, he builds his price projection for bitcoin looking at the value of gold, which he believes has a current market value of $6 trillion even though the real figure is $7.5 trillion. He further added that investors are now accepting the fact that bitcoin, “mined” by computers performing complex calculations is to a certain extent more portable and divisible than gold.

In a telephone interview, Winklevoss added that “We think that bitcoin is a gold disruptor,” predicting the value would increase by 10 0r 20 times the current value, “We think it’s just the beginning. We are definitely holders.”

Winklevoss and his twin brother Tyler back in 2013 owned almost $11 million worth of bitcoins. If the duo retained their bitcoin, then they would be worth over $1.7 billion today. When asked about his current bitcoin holdings, Winklevoss declined to comment on the question.

As more people across the world are getting into the bitcoin frenzy, the price of the currency reached an all-time high of over $16,000 last week before settling above $15,600 on Friday. With the rise of bitcoin, over a 100 hedge funds have surfaced to bet on its swings. The new future contracts launched on platforms like CME will make it easy to make the bet and slowly easing the currency into the world of mainstream finance.

The exchange platform operated by the twins Gemini exchange are hopeful that they would get approval like the rest, Winklevoss added that “We think we are in a good spot and ready for game time.”

Related Posts:

Threat of Phishing Attacks Increases With Bitcoin Price Hike

Almost $64 million in bitcoin was stolen late last week by cybercriminals who broke into the bitcoin mining marketplace NiceHash, according to The Guardian. NiceHash announced that it was working with authorities and had suspended operations while it analyzed the sophisticated attack that led to the …

A surge in the value of bitcoin has been accompanied by a rise in the risk of phishing attacks against the infrastructure that supports the cryptocurrency ecosystem.

The price of bitcoin has increased sharply in recent weeks and currently stands at about $17,000, up from $12,000 a week ago and $6,000 a month ago. Cybercriminals have seen this increase in value as an opportunity for ill-gotten gains, and experts reported that attackers have targeted bitcoin and other cryptocurrencies at an alarming rate.

Bitcoin owners should see the rise in attacks as a warning of potential threats to come. They should also investigate techniques, both online and offline, to help keep their investments secure.

Bitcoin Surge Driving the Rise in Phishing Attacks

CheckPhish, an online resource that tracks recent phishing attempts against big-name brands, noted five domains targeting the Blockchain wallet service. According to Bleeping Computer, attackers have also targeted another popular exchange known as LocalBitcoins.

In addition, Fortinet identified a potential phishing attack based around a trading bot application. These bots automatically trade bitcoins within set parameters to secure profits for investors. The phishing email encourages recipients to download a new trading bot called Gunbot, but the attachment in the email actually contains an executable that delivers Orcus RAT malware, which could lead to remote administration capabilities and the loss of investments.

The Threat to Cryptocurrency Integrity

The latest reports of phishing attacks follow a familiar pattern in which a rise in the value of bitcoin is accompanied by an increase in errant activity. As prices began their upward climb last year, experts warned of more phishing attacks.

Last year, Bleeping Computer reported that attackers were focusing on bitcoin wallet services to collect sensitive data. In particular, the Cisco OpenDNS team observed bitcoin phishing sites and associated domains that were used to harvest credentials for other online services, including Google, Dropbox, Apple and Amazon.

Phishing is not the only threat to cryptocurrency integrity. Almost $64 million in bitcoin was stolen late last week by cybercriminals who broke into the bitcoin mining marketplace NiceHash, according to The Guardian. NiceHash announced that it was working with authorities and had suspended operations while it analyzed the sophisticated attack that led to the theft of 4,700 bitcoins.

Protecting Cryptocurrency Investments

The Guardian noted that online security is a key concern for cryptocurrency marketplaces and exchanges, and suggested that attacks on the supporting technical ecosystem have increased as the value of bitcoin has skyrocketed.

The threat of phishing and other attacks is unlikely to decrease any time soon. In fact, Kaspersky Lab recently detected a new attack strain called CryptoShuffler. The technique uses simple copy-and-paste tactics to steal valuable bitcoins from unsuspecting users.

While a digital wallet is the easiest way to store cryptocurrency, some experts have suggested that leaving bitcoin online and in public view puts individuals at increased risk, LifeHacker reported. Instead, hardware wallets, which look like USB drives, provide the best means to store cryptocurrencies offline.

Related Posts: