Bitcoin’s whopping 260 percent surge this year is setting the stage for a potentially even bigger upswing. Some analysts are predicting that Bitcoin, the most widely traded cryptocurrency, will trade at $21,000 levels by the end of 2019, meaning that the party may not be over yet. And one easy way to get a piece of the action is to invest in blockchain penny stocks. Here are my top picks:
Grayscale Bitcoin Trust (GBTC:OTCQX)
It reportedly holds about 1.2 percent of Bitcoin in existence. As Bitcoin prices rise, expect Grayscale to follow suit. The trust, whose assets under management were hovering near the $3 billion mark at the end of June, only owns Bitcoin, meaning that any continuation in the current trends seen with Bitcoin will surely benefit Grayscale as well. Oh, and did I mention it was trading at roughly $4 in January?
Riot Blockchain Inc. (RIOT:NASDAQ)
It utilizes about 8,000 specialized computers to run its own Bitcoin mining operation. The upside looks good. But there’s also that SEC investigation regarding public disclosures and ownership that’s still ongoing, and it could put impact the stock price as and when we hear updates on this front. Riot Blockchain is also planning to launch a cryptocurrency exchange, RiotX, later this year, which will give customers the ability to trade in Bitcoin, Ether, Litecoin, etc.
MGT Capital Investments Inc. (MGTI:OTCQB)
The only reason this cryptocurrency mining firm made my list is because I believe it will ride the expected Bitcoin wave in the foreseeable future. The company had briefly stopped mining Bitcoin citing difficult economic conditions but said in May that the recent increase in the price of Bitcoin allowed it to resume its mining operations. There is also plenty of volatility in the share price to capitalize on. Proceed with caution, as its fundamentals are not appealing.
Marathon Patent Group Inc. (MARA:NASDAQ)
The company boasts of being one of the first Nasdaq-listed cryptocurrency mining companies. But that’s about all it can boast about. It currently operates only one mining facility (though it hopes to open more at some point). However, the technicals on its share price look promising. Another company whose stock price volatility is worth tracking.
These blockchain companies tend to mirror Bitcoin’s price moves, or at the very least get caught up with the hype of Bitcoin’s price fluctuations and rallies. While the Bitcoin rally party is already underway, jump in now with blockchain penny stocks and your party could be just about starting.
If analysts are to be believed, then we could see a return to Bitcoin prices charging on to new records, even beyond the all-time highs that we last saw in December 2017. However, it is bound to be a bumpy ride to get there. We’ve already seen the cryptocurrency darling lose some steam in the past week, losing nearly a fourth of its value since touching a 2019 high at the end of June. Further correction is expected in the near-term as traders book profits. And surprise, surprise. The companies listed above rose and fell with Bitcoin, with the price charts of Grayscale Bitcoin Trust and Riot Blockchain fluctuating along similar lines as that of Bitcoin.
To maximize gains, a combination of a conventional buying-and-selling approach, coupled with building periodic short positions, would be an optimal investment strategy for trading in blockchain penny stocks. We can expect to see more volatility ahead as momentum builds up for Bitcoin, and by extension, for these related stocks. At the same time, there is bound to be a healthy mix of upswings and corrections that also occur along the way as technical thresholds are breached. These blockchain penny stocks provide a useful entry point to benefit from the anticipated Bitcoin bull-run forecast for the coming months, especially for those who are unable to mine Bitcoin itself.
Eastman Kodak Co (KODK:NYSE)
If however, the Bitcoin euphoria isn’t for you, you could look at Eastman Kodak Co (KODK:NYSE) as an investment opportunity. The company that was once synonymous with photography, recently launched a blockchain-based document management platform for businesses, which Kodak claims will offer significant cost savings to its users. KodakCoin, a cryptocurrency being developed under Kodak’s brand, in partnership with some other firms, is also due to be launched soon. Of course, this could also be the company’s attempts to reap the benefits of the excitement surrounding all things related to blockchain and cryptocurrency. But if you’re a believer, buying Kodak’s shares now could mean getting in on the ground floor. If you’re skeptical and smell some blood in the water, you could also join the investors shorting Kodak, who as of last month had positions on roughly 14.5 percent of its outstanding shares.