Tag Archives: GS

Look for Bitcoin Prices to Rebound After the Consensus Conference

Bitcoin prices fell to around $8,600 Friday on reports that a Mt. Gox trustee sold 8,000 coins, and there was also news that police raided the headquarters of UPbit, a South Korean exchange.

Seoul police joined the Korean Financial Intelligence Unit and the nation’s Financial Services Commission (FSC) in an investigation into fraud and illicit transfers of customer funds by the nation’s largest crypto exchange.

Bitcoin prices

However, markets are hoping that Bitcoin will rally ahead of the upcoming Consensus Conference.

CoinDesk’s conference will take place in New York next week, and it could draw at least 7,000 people. That would more than double the attendance from a year ago, at 2,750.

There will be over 250 speakers and industry leaders discussing crypto.

A month after the conference last year, the price of Bitcoin rallied 31.70%.

Here is a recap of the top five cryptocurrencies by market cap as of 9:00 a.m. EDT.

Cryptocurrency Market Cap Price Change (24h)
Bitcoin (BTC) $8,611.25 $8,635,680,000 -6.50%
Ethereum (ETH) $685.24 $3,378,150,000 -8.46%
Ripple (XRP) $0.70 $1,010,530,000 -11.77%
Bitcoin Cash (BCH) $1,409.38 $1,554,870,000 -11.95%
EOS (EOS) $15.14 $2,869,090,000 -16.26%

Now here’s a closer look at today’sMoney Morningcryptocurrency insight, as well as themost important cryptocurrency updates you need to know…

Money Morning CryptocurrencyInsight of the Day

If you’re new to Bitcoin, you might think that you’ve missed out on the big profits. After all, Bitcoin surged as high as $20,000 before pulling back.

But there are onlythree wordsthat you need to know if you want to cash in on the next wave: Bitcoin Lightning Network.

Stunning: New Innovation Will Be Like “Adding Twin Turbos to the Bitcoin Engine” – and Could Send Its Price to $100,000. Learn More…

Money MorningCryptocurrency Expert David Zeiler takes you behind the curtainof this once-in-a-generation development and shows you how to make big gains from Bitcoin in 2018.

The Top Cryptocurrency Stories for May 11
Facebook Inc. (Nasdaq: FB) is generating buzz, because it might launch its own cryptocurrency in the future. Financial outlet Cheddar reported today that the company is holding high-level discussions about how to implement blockchain technology into its platform. It’s also considering launching its own cryptocurrency. The team leader of Facebook’s blockchain research group is also a board member of cryptocurrency exchange Coinbase.
Some people aren’t too thrilled about Goldman Sachs Group’s (NYSE: GS) decision to launch a Bitcoin desk. A professor at Warwick Business School in England said that Goldman’s decision will “open the box” for pure speculation in the global cryptocurrency markets. Of course, many speculate Goldman just wants to manipulate the market.
Despite today’s downturn in the broader cryptocurrency market, there was a bright spot. Augur popped more than 10% after the coin was listed on Binance. Augur was the only coin in the top 100 by market capitalization to show a gain north of 10% on the day. Augur describes itself as “a decentralized oracle and prediction market platform.”
The Shocking Reason Why We Think Bitcoin Could Hit $100,000 (and How You Could Make Millions)

Money Morning Defense and Tech Specialist – and cryptocurrency legend – Michael Robinson just revealed the little-known details regarding the future of Bitcoin… and why, at any moment, it could be poised for a record-breaking rebound far beyond anything we’ve witnessed already.

Michael made a prediction about Bitcoin way back in 2013 – and folks who followed his advice stood to become 253 times richer. We’d venture to say not one in 10,000 people is aware of the massive profit potential unfolding right now.

Before the mainstream public gets any wiser, you need to see this now.

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The Surprising Catalyst Behind the Sudden Resurgence in Cryptocurrencies

Last year, cryptocurrencies dominated in a way that Wall Street had never seen before. In just a span of 12 months, the aggregate market cap of all virtual currencies soared by more than 3,300%, or almost $600 billion on a nominal basis. At no point in history can I recall an asset class gaining more than 3,300% in value in just 12 months, and I doubt we’ll ever witness it again.

Of course, this year has also been a wake-up call for digital-currency investors, who’ve learned that investments, including cryptocurrency tokens, can move in both directions. Following a brief move to an all-time-high market cap of $835 billion on Jan. 7, the combined value of the more than 1,600 investable cryptocurrencies fell to just $247 billion on April 6, 2018, per CoinMarketCap.com.

A rising green chart overlaid on the digital price of Litecoin, bitcoin, and Ripple.

Image source: Getty Images.

Cryptocurrencies are surging, once again

But something interesting has happened over the past month. After this roughly 70% tumble in cryptocurrency market cap, virtual currency bulls have returned with a vengeance. As of early morning on May 5, the combined crypto market cap was back up to $471 billion. That’s a trough-to-peak gain of about 91% in roughly one month.

“What gives?” you ask. Part of this renewed optimism can likely be pegged on a few of the usual suspects. For example, there’s the rise of blockchain technology. Blockchain is the digital, distributed, and decentralized ledger that underlies most cryptocurrencies and is responsible for logging transactions in a transparent and unalterable manner. Blockchain has been stuck in the proof-of-concept stage for years, but we’re finally starting to see a few brand-name businesses taking the reins off of it to see what it can do in a real-world scenario.

To build on this point, we’re also seeing a pretty steady stream of partnership announcements involving proprietary crypto-blockchain projects and brand-name organizations. The Enterprise Ethereum Alliance, which is the largest open-source blockchain initiative in the world, now has more than 500 members.For context, it only had around 50 when it was first established in February 2017. Meanwhile, Ripple, the financial-institution-focused crypto company, continues to add new financial institutions to RippleNet in an effort to expedite the validation and settlement of cross-border money flows.

A smirking businessman reading the financial section of the newspaper.

Image source: Getty Images.

This isn’t your typical catalyst this time around

However, the impetus for this most recent rally appears to extend far beyond these typical factors. It would appear that the bulk of this rally is tied to the expectation that institutional investors are finally ready to enter the cryptocurrency space.

Until recently, virtual-currency investing had pretty much been all about the retail investor. That’s because nearly all digital-currency trading occurs on decentralized cryptocurrency exchanges. As the Securities and Exchange Commission (SEC) has previously cautioned, this trading often can occur outside the confines of the United States, leaving the SEC with little recourse to recover funds should there be instances of fraud or wrongdoing. This concern, along with the unregulated nature of the virtual-currency marketplace and unreliable liquidity, didn’t exactly incentivize institutional investors to make the leap into digital tokens.

But times have changed, the virtual-currency market has matured a bit, and institutional investors have had a means to bet on the crypto market in a more traditional sense over the past couple of months. By this, I mean that both the CME Groupand CBOE Global Markets (NASDAQ:CBOE) have offered bitcoin futures on their trading platforms since December, providing a more traditional avenue for Wall Street to place its bets.

Now it appears the stage is set for Wall Street to meet Main Street in the cryptocurrency arena.

Institutional investors actively trading at their desks.

Image source: Getty Images.

Here’s how we know institutional activity is picking up in the cryptocurrency space

How do we know institutional investors are behind this latest resurgence? While nothing is concrete, there are three major clues that Wall Street is ready to get involved.

First, bitcoin futures contract trading volume has really begun to pick up. According to a Bitcoin.com report on April 28, daily bitcoin futures trading volume on the CBOE recently hit a 24-hour record of nearly 19,000 contracts traded. That’s roughly three times the CBOE Global Markets’ daily average for bitcoin futures, and it’s pretty indicative that Wall Street is getting involved.

The thing to understand here is that these futures contracts require the buyer to cover one or five bitcoin per contract. With bitcoin valued at $9,800 per token, each contract runs $9,800 or $49,000, depending on the platform. That’s often a bit pricy for retail investors, but well within the wheelhouse of institutional investors.

Secondly, popular cryptocurrency-exchange Coinbase announced in a letter last week that it was investing heavily in the tools needed to expand its capacity to execute trades. Since the third quarter of 2017, Coinbase has doubled the size of its full-time engineering staff, rewritten most of the platform’s code, and increased its transaction capacity by 1,000%.

What’s more, it expects to double its transaction capacity again within the months to come. Coinbase also noted in the letter that $150 billion in assets have been traded on its crypto platform. In short, it seems unlikely that Coinbase would make these investments in capacity expansion if the interest from institutional investors wasn’t there.

The final piece of the puzzle also came last week when the New York Times reported that investment-banking giant Goldman Sachs (NYSE:GS) plans to set up a bitcoin trading operation. Initially, Goldman Sachs plans to use its money to trade in futures contracts linked to the price of bitcoin. However, if it can gain regulatory approval and minimize the risks associated with trading in bitcoin, Goldman Sachs might actually get involved with directly buying and selling the world’s most popular cryptocurrency.

A physical gold bitcoin in a mouse trap.

Image source: Getty Images.

Before you get too excited…

Understand, though, that the entrance of Wall Street into the cryptocurrency space isn’t necessarily a positive thing. Yes, it will improve liquidity and perhaps reduce the wildly volatile swings we’ve witnessed in virtual currencies at times. But having skeptical investment bankers enter the virtual-currency arena may also put pressure on a space that was once dominated by optimistic retail investors who often lacked the means to bet against — i.e., short sell– cryptocurrencies. Wall Street certainly has the funds — and now may have the means — to bet against cryptocurrencies in the near future.

I’d suggest avoiding virtual currencies, as has been my stance for some time.

Buy Bank of America Corp Stock on Strong Earnings Results

On Monday, Bank of America Corp (NYSE:BAC) reported fiscal first-quarter results. The banking giant beat on both earnings per share and revenue expectations. Despite the good results, BAC stock was down in early Monday trading before rallying about 1% in the afternoon.

So what gives?

Unfortunately for bullish investors, the reaction by Bank of America stock isn’t much of a surprise. It follows the same pattern — top- and bottom-line beat, followed by a stock-price decline — as JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C) and Wells Fargo & Co (NYSE:WFC).

The price action creates a quandary to many investors, given the fundamental backdrop the banks are operating within. Interest rates are on the rise, allowing the banks to pocket billions more in profit on an annual basis. The economy is good, growth is strong and the valuations are downright cheap.

The lack of enthusiasm following the results is surprising. One reason could be the fear of an inverting bond spread. I touched on this fear recently with JPMorgan. Despite JPM’s great earnings results, shares turned lower too.

As the yield spread between between long-term Treasuries and short-term Treasuries continues to shrink, many fear what this could be trying to tell us. Bears will say that it means we could be approaching a recession. The 10-year and 2-year Treasury yield spreads and the 30-year and 5-year yield spreads are at their lowest levels since 2007, the time of the financial crisis. Coupled with the Federal Reserve decreasing its balance sheet, the economy could be on shaky ground.

Bulls, on the other hand, have a simple explanation. Following the Great Recession, the Fed was forced to cut interest rates down to zero in hopes of spurring economic growth. Now that the economy is chugging along with encouragement, we need to “normalize” these interest rates and raise them. That — the bulls say — is inflating the yield on short-term bonds while having less of an effect on long-term Treasuries.

The Quarter and Year for BAC

That all seems complicated and under the radar to many investors. But it’s a serious concern being talked about on Wall Street. How it relates to BAC stock specifically is outside of my scope, though. Meaning that, if a recession were looming on the horizon, which I don’t believe to be the case for 2018, then why wouldn’t more stocks be under pressure? Why just the banks? Any cyclical business would be at risk, as would the market as a whole.

When I look at BAC stock, it doesn’t scream “sell!” If anything, I want to find a spot to buy the bank.

In the quarter, revenue grew 3.8% year over year (YoY), while earnings per share of 62 cents came in 3 cents per share ahead of expectations. While revenue growth was just okay, earnings jumped almost 40% YoY. That’s tremendous growth and not just a one-time boost.

Analysts see the company’s fiscal first quarter playing out for the whole year. Meaning that they expect 3.8% revenue growth in 2018 and full-year earnings growth of 36%. That’s darn impressive; and 2019 shouldn’t be weak either. Short of a recession, analysts are looking for sales growth to accelerate to 4.1% and for earnings to grow another 14%.

It leaves BAC stock trading at a paltry 11.8 times 2018 earnings and at just 10.4 times 2019 estimates. While not massive, it’s also worth noting that Bank of America stock has a 1.6% dividend yield too. How can shares sell at such a discount given this growth rate and strong backdrop?

That’s one reason why, like JPM, I think shares should be heading higher, not lower, on earnings.

Trading Bank of America Stock

Support at $29 has been quite strong, despite there being no obvious reason as to why — at least when looking at the charts that is. Still, though, this level held up during panic selling in the S&P 500 in February, as well as further trade-war selling in March. It’s still holding above this level post-earnings.

trading BAC stock price
Click to Enlarge

This leads me to believe that BAC stock will stay above these levels. Below $29 and I would become much more concerned. It would also be more encouraging to see Bank of America back above its 50-day and 100-day moving averages. If so, it puts a retest of the $32.50 breakout we were watching last month back in play.

Keep in mind Goldman Sachs Group Inc (NYSE:GS) reports earnings on Tuesday, while Morgan Stanley (NYSE:MS) reports earnings on Wednesday.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell held a position in JPM. 

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