Cryptocurrencies have been on a quiet (relatively speaking) tear of late. But is that trend too far gone to invest in? That’s a complicated question.
Bitcoin. It’s the Tesla (NASDAQ:TSLA) of cryptocurrencies, with tons of lesser competitors chasing its unmatched, though still underdeveloped, acceptance from businesses and forward-looking, tech-savvy consumers. And the crypto giant’s underlings are of course also trying to match Bitcoin’s stock chart performance.
Amid Wall Street’s EV feeding frenzy this year and names like Nikola (NASDAQ:NKLA) or maybe Quantumscape (NYSE:QS) turning into problematic bubbles similar to cryptocurrencies a couple years back, it might be a surprise Bitcoin is back trading near marginal new all-time-highs. But it is.
Late last month Bitcoin set a new record high of $19,864. The feat was nearly two years in-the-making as shares climbed more than 500% to eclipse December 2017’s highwater mark of $19,666. And earlier this month the cryptocurrency inched its way a tiny bit closer to clearing $20,000 with a high of $19,918.
That could be enough for investors to think Bitcoin has come to far too fast, despite being in the backseat to this year’s heart-stopping rallies and massive media attraction in EV stocks. But that would be a mistake. And it’s a belief many of my colleagues at InvestorPlace share given the digital currency market’s long-term potential.
The distributed ledger blockchain technology underpinning cryptocurrencies also has wide-ranging applications to improve industries from banking to healthcare. What’s more, it’s already seeing payoffs in terms of transactional speed and security for areas outside of cryptocurrencies. And right now three well-known stocks involved with blockchain are offering exposure to stronger price charts for out-the-gate success and options contracts to ensure unparalleled investment guarantees.
Here are 3 blockchain stocks to buy now for technical strength:
I get it. Chasing a market that’s already made great gains can be scary despite the long-term opportunity. The thing is, as I’ve often expressed, all stocks and markets correct. And declines of 30% aren’t uncommon. But cryptocurrency isn’t all about Bitcoin. And investing in blockchain now just makes sense.
Blockchain Stocks to Buy : International Business Machines (IBM)
Source: Charts by TradingView
The first of our blockchain stocks to buy are shares of International Business Machines. With a stake in IBM stock, investors have a blue-chip with more than 500 blockchain projects across a variety of industries aimed at increasing business efficiency. They’ll also receive a dividend in excess of 5% and below-the-market price multiple of just 11x forward earnings.
On today’s price chart, investors have a well-positioned, longer-term entry point for buying into blockchain. As the extended monthly view reflects, there’s no need to chase IBM stock’s multi-decade uptrend.
Shares completed a volatile triple-bottoming pattern during March’s Covid-19 market panic. But while gains have been made over the last several months, the stock remains just beneath the monthly candle’s high with a supportive stochastics framework to back up the purchase.
Favored Strategy: Feb ($115/$105) put spread / short $140 call Modified IBM Stock Collar
Source: Charts by TradingView
Intel is the next of our blockchain stocks to buy. Another Dow Jones blue-chip, the semiconductor giant’s hand in blockchain is tied to the outfit’s new Software Guard Extensions (SGX) technology. In a nutshell, the product offers hardware-based memory encryption which benefits blockchain transactions and can be used in other markets such as AI and autonomous driving.
Right now INTC stock offers investors income of around 2.55% and a similar value to IBM based on its forward P/E of 11. As well and on the price chart, Intel is looking every bit the part of a value proposition.
Technically, shares have just confirmed an inside candlestick bottoming pattern this month after finding support from an uptrend dating back to 2015. With the price action also reversing a modest breach of this blockchain stock’s former all-time-high from 2000 plus enjoying a bullish oversold stochastics crossover signal, there’s no time like the present to buy shares of Intel.
Favored Strategy: Feb ($47.50/$40) put spread / short $57.50 call Modified INTC Stock Collar
Intercontinental Exchange (ICE)
Source: Charts by TradingView
Intercontinental Exchange is the last of our blockchain stocks to buy. Known for its diversified exchanges and markets in physical energy, fixed income, equity options, currencies and more, ICE has also put its stamp on digital assets. It’s Bakkt platform is an open and globally regulated ecosystem for bitcoin futures and options and other digital assets. Moreover, Bakkt’s institutional infrastructure is critical towards wider adoption of blockchain.
What investors receive today for ICE stock is a bit less in some ways and a bit more in others. Shareholders only capture income of about 1%. This blockchain stock is also a bit more expensive than IBM and INTC. Currently, ICE stock fetches about 23x next year’s earnings.
On a more positive note, ICE is the smallest of our three companies, with shares valued near $60 billion. Unlike the others, ICE has also shown modest year-over-year sales growth in a particularly challenging year. Lastly, for trend-following investors, this blockchain stock has proven a bit sturdier. Shares are sitting near all-time-highs after a recent breakout from a flawed or irregular “W” base formed from September into November.
Favored Strategy: March $110/$120 Bull Call Spread
Stocks Owned: On the date of publication, Chris Tyler holds, directly or indirectly, positions in Grayscale Bitcoin Trust (GBTC), but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.