The price of bitcoin has exploded by more than 1,500 percent over 2017, capturing the attention of investors, analysts, regulators and even the general public. The jury is out as to whether the exuberance surrounding bitcoin and other cryptocurrencies is justified or of it’s a classic financial market bubble. Regardless, there are some under-the-radar stocks that have made huge moves by riding the cryptocurrency craze.
As the price of bitcoin has skyrocketed, the prices of stocks that are even loosely tied to cryptocurrency have spiked. In the past three months, Social Reality Inc (NASDAQ: SRAX) stock is up 150 percent after the company announced in October that it is launching its own cryptocurrency that customers can earn by sharing data.
Overstock.com Inc (NASDAQ: OSTK) stock has surged 189 percent in the past three months. The company was one of the first e-commerce leaders to accept bitcoin. Overstock announced back in August that it would be keeping half of the bitcoins it receives as an investment.
Some companies are taking the opportunity to capitalize on cryptocurrency enthusiasm by completely pivoting their businesses.
Shares of Future Fintech Group Inc (NASDAQ: FTFT) are up 168 percent on rumors that the company could be making a move into cryptocurrency and/or blockchain technology. Future Fintech, a former fruit juice company, changed its name from SkyPeople Fruit Juice back in June and has made no mention of “blockchain,” “bitcoin,” or anything else related to cryptocurrency in press releases or filings. The company simply mentioned that it was shifting its focus from fruit juice to financial technology.
Riot Blockchain Inc (NASDAQ: RIOT), which owns 1,200 cryptocurrency mining machines and a stake in cryptocurrency exchange Coinsquare, has skyrocketed 593 percent in the past three months. Riot is a failed biotech company who has turned to the red-hot cryptocurrency business in hopes of a fresh start.
The massive buying volume in these tiny stocks likely has as much to do with how difficult it currently is to invest in bitcoin as it does with how investors value these companies. Most traders and investors can’t buy and sell bitcoin directly via their trading accounts. There are currently no bitcoin ETFs listed on major U.S. exchanges due to the SEC’s concerns over lack of regulation in the bitcoin market. The Bitcoin Investment Trust (OTC: GBTC) currently trades on the OTC Market, but demand for the fund has led to it consistently trading at around a 50 percent premium to its net asset value per share.
For traders looking to capitalize on the wild swings in the price of bitcoin, the GBTC trust and the handful of crypto-related stocks mentioned above are among the few options available for the time being. These stocks can be excellent trading tools for short-term traders, but they may make dangerous long-term investments if bitcoin trading becomes easier and/or if enthusiasm for bitcoin investing dies down.
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