Bitcoin appears to be tracking 2017’s growth curve … Tesla is the undisputed EV leader, but its dominance won’t last … travel-related stocks offer a reason for optimism

 

There’s plenty happening in the news, so today, let’s bounce around to a few stories impacting your portfolio.

***One week ago today, bitcoin surged to a new all-time high of $66,930

Yet, as I write Wednesday morning, it’s pulled back substantially from that high and is trading around $58,870.

Will this latest all-time high be a floor that supports a new surge higher? Or have the bulls exhausted themselves and we’re in for a period of consolidation, or worse?

Let’s turn to our crypto specialist, Luke Lango, the editor of Crypto Investor Network:

Bitcoin has since retreated from those all-time highs. But that’s totally expected.

More importantly, all the fundamentals, optics, and technicals point to another leg higher in the crypto markets after this brief “reset” period.

As to those fundamentals, Luke points toward a handful of developments…

• Coinbase is launching direct deposit for its crypto accounts, meaning clients can receive their paycheck in crypto
• Coinbase also agreed to a multiyear partnership with the NBA – a huge step for crypto awareness
• Crypto sponsorships are also making their way into Formula E racing, which points towards the adoption of crypto on a global scale
• There’s last week’s launch of the Bitcoin Futures ETF (BITO)
• And marquee hedge fund investors continue to allocate into bitcoin. George Soros “the man who broke the bank of England” is the most recent big name in the news

So, where does bitcoin go from here?

Back to Luke:

Bitcoin just made a new all-time high. Historically speaking, whenever Bitcoin does this, it proceeds to at least double over the next few months.

Meanwhile, Bitcoin also successfully executed a “golden cross” technical pattern (last) week, wherein the 100-day moving average pushed above the 200-day moving average. Such golden cross patterns have historically been leading indicators of huge moves higher in Bitcoin.

Overall, we remain as bullish as ever on the outlook for Bitcoin and cryptocurrencies.

We expect some interim weakness as the all-time high excitement fades. But after this interim weakness, we fully expect improving fundamental trends to keep pushing crypto prices higher.

Luke isn’t the only one who feels this way.

The crypto analyst, TechDev, recently compared bitcoin’s chart today to its chart in 2017, which you’ll recall was a monster year.

You can see this comparison below. The curves are strikingly similar.

There are other bullish signals too.

From Cointelegraph:

The relative strength index, which traders use to identify overbought and oversold markets, is tracing the same path as 2017. In 2013 and 2017, each cycle displayed two peaks, so if events follow course, then we’re still due a second rally…

On-chain analytics firm Glassnode recently published a review of long-term holding patterns, which provides further credence to the argument for another rally to come.

The results demonstrate that coins held longer than a statistically significant period of 155 days only begin to enter the markets once prices break the previous all-time high.

On-chain patterns also currently show a trend toward accumulation.

***But what about today’s selloff? We’re seeing significant weakness across the entire crypto sector

That’s simply how this volatile asset works, especially with long-term holders taking some profits off the table.

From The Independent:

Blockchain data suggests today’s price crash is partly fueled by long-term holders taking some profits, which typically happens after bitcoin hits a new all-time high.

The earnings-miss from crypto broker, Robinhood, is likely impacting the sector too. The company missed revenues badly, citing decreased trading in crypto.

Despite all this, we’re looking for the entire crypto sector to end the year much higher than today – though it will be a bumpy ride.

***Meanwhile, though Tesla has been dominating the electric vehicle (EV) sector, don’t expect that to last – which is great news for EV investors

Earlier this week, electric vehicle giant, Tesla, hit a valuation of $1 trillion.

The stock surged after the announcement that Hertz will buy 100,000 Tesla Model 3 cars for its rental fleet.

Luke recommended his Innovation Investor subscribers take a portion of their Tesla profits on the move. They locked in 75% gains, while holding a remaining portion of their position because, as Luke writes, “well… because this is Tesla.”

On that note, look at Tesla’s chart below. It’s up more than 2,100% over the last two-and-a-half years.

Tesla’s market cap now exceeds that of the next nine largest auto makers combined. But don’t expect this to last.

From CNBC:

The influx of EVs — from a couple dozen today to estimates of hundreds of new models by 2025 — are expected to eat away at Tesla’s market share in the coming years.

The new EVs are planned as larger automakers, such as General Motors and Volkswagen, transition to build electric vehicles almost exclusively over the next decade or so.

In 2020, Tesla sold 79% of EVs in the U.S. That number is already expected to fall to 56% by the end of this year, based on the sales of rival EVs including the Ford Mustang Mach-E and the Volkswagen ID.4.

But for EV investors, the bigger story isn’t this market-share infighting, it’s the growth of the overall sector.

Back to CNBC:

Sales of electric vehicles, including plug-in hybrids, are projected to be less than 4% of U.S. sales this year, according to industry forecasters. Of those, all-electric models — such as Teslas — are only at 2.6% of the market, or about 394,000 vehicles, according to LMC…

“As you progress forward, it doesn’t take long to get some pretty big volume and share growth,” LMC president of the Americas Jeff Schuster said. “For the auto industry, this is a massive pivot and growth.”

LMC expects electric vehicles to make up 34.2% of new U.S. vehicle sales by 2030, with all-electric at 30.1% and plug-in hybrids at 4.1%.

Luke has been all over the growth of this EV sector. In fact, in Innovation Investor, he has a sub-portfolio called “Next-Gen Mobility” that offers investors exposure to leading EV plays and beyond.

There’s one company in particular that Luke is wildly bullish on (not Tesla).

From Luke:

Indeed, we believe that by 2030, roughly 4% of every new commercial and passenger vehicle sold globally will be outfitted with (this company’s technology), leading to a revenue opportunity of over $5 billion, and an EBITDA (earnings before interest, taxes, depreciation, and amortization) opportunity of over $2.5 billion (based on management’s assessment of its margin profile, which we see as reasonable).

On those assumptions, we see (this company) netting about $2 billion in net profit in 2030 – which, based on a 20X multiple, implies a potential future valuation target of $40 BILLION…we’re talking nearly 7X upside potential.

The EV growth story is just getting started. This a megatrend that deserves exposure in your portfolio.

***Finally, despite headwinds, air travel is beginning to show signs of life

For months, our macro specialist, Eric Fry, has been tracking opportunities in the beaten-down travel sector. And in yesterday’s Speculator Trade Alert, he offered some good news…along with some challenging news.

From Eric:

Halloween is still a few days away, but the chart below is already frightening would-be investors in travel-related stocks.

It shows that jet fuel prices have soared to the highest level in three years.

This trend is squeezing airline company profits, just when these companies were beginning to see the first major surge in traffic since the COVID pandemic struck last year.

But this chart also shows a bit of good news; U.S. airline traffic has recovered to pre-pandemic levels.

This brisk recovery is the primary cause of rising jet fuel prices.

Clearly, rising fuel costs aren’t good for the industry’s bottom-line. However, Eric notes that when fuel prices last hit their current levels around $2.35 a gallon in 2018, Delta Airlines Co. (DAL), American Airlines Group Inc. (AAL), and United Airlines Holding Inc. (UAL) still managed to produce combined annual profits of more than $8 billion.

Back to Eric:

These three companies will not likely achieve that level of profitability next year, but I expect most major airlines to resume booking some level of profits – especially those that operate the major international route networks that are just beginning to reopen.

Thanks to recently relaxed COVID restrictions in the U.S. and Europe, trans-Atlantic travel bookings are surging. Trans-Pacific travel is also starting to recover, albeit at a slower pace.

Eric’s Speculator subscribers have an open trade on a travel-related stock. It’s gotten caught up in the airline sector weakness, but Eric sees that reversing as the rebound gains steam.

From his Speculator update:

But the worst of the COVID-driven crisis seems to have passed; that means the stock should begin looking forward, rather than backward. It should begin pricing the recovery that is to come.

As it does so, the stock could certainly double or triple from its current price during the next 15 months.

To learn more as a Speculator subscriber, click here.

We’ll keep you updated on all of these stories as they continue to play out.

Have a good evening,

Jeff Remsburg