The blockchain (also read: crypto) space can be divided into two areas. Bitcoin and all others. The ‘others’ are projects using Bitcoin’s base blockchain technology to create new crypto networks that will replace the old internet and create new as yet unimagined services. These ‘others’ are also called cryptocurrencies or ‘Altcoins’. Bitcoin is the frontrunner for all blockchain and crypto projects. ‘Cryptocurrencies’ are also a misnomer as most of these crypto projects are not actual currencies in the normal sense of the word. They are crypto assets which are the underlying mechanism on how these new networks work, and how value is exchanged and stored in them. ‘Altcoins’ infer they are an alternative to Bitcoin. This again is incorrect as many of these blockchain or crypto projects are not trying to compete with Bitcoin but merely using the technology that underpins Bitcoin, namely the blockchain. Now we have got the terminology out of the way we can start to try and understand what we are trying to invest in.
You should as a rule have some Bitcoin in your portfolio. We now live in a networked society and economy. Bitcoin was invented as the fluid currency of this network. Cards have not transitioned onto the web well at all. Internet fraud is increasing at alarming rates each year. The fact is, Bitcoin is now less of a currency and more of a store of value in our new networked economy. This is store of value theme that has played out over the last few years and is a testimony to how trustworthy and amazing Bitcoin is. A global network treated as valuable as gold in just over 10 years since its inception.
In our new networked society we are driven by new apps and websites where we can communicate, shop and discover all sorts of goods and services in a way never possible before. This is a fundamental shift in cultural behaviour. And for entrepreneurs, markets with hundreds of millions of consumers who are ready at a tap or click to buy their new goods or services is unparalleled. Social media had a strong hand in migrating a whole generation online. So now shopping, communicating and creating are as common as real life. This is all great but why is this in an article about investing in crypto you ask? Well, it’s important to understand this fundamental change before seeing the opportunity ahead.
The opportunity is actually because there is a big problem in all of this. The current internet is fragile. Its architecture wasn’t built for all the activity we now see in it. Hackers are all over the internet.Their hacking activities and the costs of fraud are skyrocketing. Cyber security and compliance for enterprises are rising. People and companies’ data are vulnerable and getting breached on a daily basis. Countries are in a determined cyber war in the internet. Corporates have run rampant with private data over the last few years unhindered. Trump and Brexit are a direct result of flagrant misuse of customer data with unsolicited, highly targeted ads. On top of this there’s growing government surveillance and as a result you have a toxic mix. So, this new shiny new network has not one problem but many. The current internet cannot really keep growing without these issues being resolved and this will require a new shift. Blockchain can solve all these problems and be the transformational technology that the internet needs to keep growing. Blockchain can also unleash a whole level of new trustless services which have not even been invented yet. Decentralised prediction markets being one, a fairer and cheaper Betfair for example. How do you as an investor take advantage of this new opportunity? In many ways we are still in the ‘road and rails’ era of blockchain investing, meaning that the opportunity to strike some great returns for investors are all around.
These new nascent crypto networks can solve the creaking internet by its decentralised technology where data and services are split across many computers rather like the music sharing services of Napster and Kazaa in the late 1990s (interestingly the global communication application Skype still uses Kazaa technology). Our current internet carries trillions of dollars of value and we expect this value will shift into these networks. This is a huge transfer of value into a new, safer environment that is being built to last. The value of these new crypto networks is not equity, but their tokens. The token holders will benefit from the inherent governance and resultant fees that are generated, for example some of these tokens provide a monthly yield which can be converted back into fiat currency should the investor wish to do so. This means that investors have a dividend like flow as well as the potential capital appreciation of the token. Alongside this there will be many new types of service we haven’t even imagine yet. Trade and commerce without having to trust the other party removes a problem since humans started trading with currency. There will be many new and exciting projects coming out of the bigger blockchain protocols.
In the next ten years we will see a replacement of the old internet infrastructure with a new faster, safer place to shop, communicate, vote and express yourself and this will unlock trillions in value for investors. Now the time to get in and take advantage of this rare moment.
About Keld van Schreven and KR1 plc
Keld is Managing Partner and Co-Founder of KR1 plc, the London listed cryptocurrency and blockchain investment company. Keld has been involved in the tech industry since 1995 and Bitcoin since 2013. Previously, he has started several tech start-ups including SmartTrade App, a leading UK mobile payment app. Keld is true advocate for the use of blockchain technology and a regular speaker at industry events, including Techcrunch and MoneyX.
KR1 is a leading digital asset investment company supporting early stage decentralised and open source blockchain projects. Founded in 2016 and publicly traded in London (NEX:KR1), KR1 has built a notable reputation for generating significant returns by investing in many key projects that are designed to power the decentralised platforms and protocols that are emerging to form new internet infrastructures.www.kr1.io
GameStop rally fizzles; shares still on pace for 130% weekly gain
By Aaron Saldanha and David Randall
(Reuters) – An early surge in the shares of GameStop Corp fizzled and left the video game retailer’s stock down more than 15% on Friday, throwing water on a renewed rally this week that has left analysts puzzled.
GameStop shares hovered around $94 after hitting $105 in late-morning trading. Despite Friday’s losses, the company’s stock is up about 135% for the week in the face of a broader market selloff that has sent the benchmark S&P 500 down about 2% over the same time.
Analysts have struggled to find an clear explanation for the rally, leaving some skeptical that it will continue.
“You might be able to make some quick trading money and it could be a lot of money, but in the end, it’s the greater fool theory,” said Eric Diton, president and managing director at The Wealth Alliance in New York. The theory refers to buying stocks that are over-valued in anticipation that someone else will come along to buy them at a higher price.
One catalyst that sparked GameStop’s rally in January – a high concentration of investors that had bet against the stock being forced to unwind their positions – does not appear to be as much of a factor this time.
Short interest accounted for 28.4% of the float on Thursday, compared with a peak of 142% in early January, according to S3 Partners.
Options market activity in the stock, which has returned to the top of the list in a social media-driven retail trading frenzy, suggested investors were betting on higher prices or higher volatility, or both.
Refinitiv data on options showed retail investors have been buying deep out-of-the-money call options, which are options with contract prices to buy far higher than the current stock price.
Many of those option contracts are set to expire on Friday, and would mean handsome gains for those betting on a further rise in GameStop’s stock price.
Call options, which would be profitable for holders if GameStop shares reach $200 and $800 this week, have been particularly heavily traded, the data showed.
“The actors are looking to take advantage of everything they can to maximize their impact and the timing is important,” said David Trainer, chief executive officer of investment research firm New Constructs. “The options expiration will contribute to their strategy on how to push the stock as much as they can and maximize their profits.”
Bots on major social media websites have been hyping GameStop and other “meme stocks,” although the extent to which they influenced market prices is unclear, according to analysis by Massachusetts-based cyber security company PiiQ Media.
GameStop’s stock is still far from the $483 intraday trading high it hit in January, when individual investors using Robinhood and other trading apps drove a rally, forcing many hedge funds that had bet against the video game retailer to cover short positions.
Other Reddit favorites were also lower, with cinema operator AMC Entertainment down around 5.5%, headphone maker Koss off about 25% and marijuana company Sundial Growers down less than 1% in Friday trading.
(Reporting by Aaron Saldanha in Bengaluru; Additional reporting by Devik Jain and Sruthi Shankar; Writing by David Randall; Editing by Shinjini Ganguli, Anil D’Silva and Dan Grebler)
Stocks try to recover from bond whiplash, dollar gains
By Herbert Lash
NEW YORK (Reuters) – Global equity markets swooned on Friday, even as the Nasdaq and S&P 500 tried to recover and the bond rout eased a bit, but fears of rising inflation still weighed on sentiment as data showed a strong rebound in U.S. consumer spending.
Shares of Amazon.com Inc, Microsoft Corp and Alphabet Inc edged up after bearing the brunt of this week’s downdraft, while financial and energy shares fell.
The S&P 500 gained 0.80% and the Nasdaq Composite added 1.87%. But the Dow Jones Industrial Average fell 0.3%.
U.S. consumer spending rose by the most in seven months in January as low-income households got more pandemic relief money and new COVID-19 infections dropped, setting the U.S. economy up for faster growth ahead.
The benchmark 10-year Treasury note on Thursday touched 1.614%, the highest in a year, rocking world markets. The note’s yield is up more than 50 basis points year to date and is now close to the dividend return of S&P 500 stocks.
The 10-year note fell 1.7 basis points to 1.4977%.
The amount of money swirling through markets and U.S. stocks at close to all-time highs has caused investor angst, said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
“Many people are taking some profits and not necessarily reinvesting that money quite yet,” Kinahan said, but the tug of war isn’t over year.
“The U.S. equity market is still the best game in terms of safety versus opportunity. But there is a shift going on.”
The scale of the recent Treasury sell-off prompted Australia’s central bank to launch a surprise bond buying operation to try to staunch the bleeding.
MSCI’s benchmark for global equity markets slid 0.83% to 661.49.
In Europe, the broad FTSEurofirst 300 index closed down 1.64% at 1,559.48. Technology stocks lost the most as they continued to retreat from 20-year highs.
The dollar rose against most major currencies as U.S. government bond yields held near one-year highs and riskier currencies such as the Aussie dollar weakened.
The dollar index rose 0.578%, with the euro down 0.78% to $1.2081. The Japanese yen weakened 0.42% versus the greenback at 106.66 per dollar.
Gold fell more than 2% to an eight-month low, the stronger dollar and rising Treasury yields hammered bullion and put it on track for its worst month since November 2016.
Benchmark German government bond yields fell for the first time in three sessions but were still headed for their biggest monthly jump in three years after rising inflation expectations triggered a sell-off.
The 10-year German bund note fell less than 1 basis points to -0.263%.
European Central Bank executive board member Isabel Schnabel reiterated on Friday that changes in nominal interest rates had to be monitored closely.
Copper recoiled after touching successive multi-year peaks in six consecutive sessions, falling more than 3% as risk-off sentiment hit wider financial markets after a spike in bond yields.
Three-month copper on the London Metal Exchange (LME) slumped to $9,112 a tonne.
MSCI’s Emerging Markets equity index suffered its biggest daily drop since the markets swooned in March. MSCI’s emerging markets index fell 3.06%.
The surge in Treasury yields caused ructions in emerging markets, which feared the better returns on offer in the United States might attract funds away.
Currencies favoured for leveraged carry trades all suffered, including the Brazil real and Turkish lira, which slid for a fifth straight day, erasing all the year’s gains.
Asia earlier saw the heaviest selling, with MSCI’s broadest index of Asia-Pacific shares outside Japan sliding more than 3% to a one-month low, its steepest one-day percentage loss since the market rout in late March.
Oil fell. Brent crude futures fell $0.78 to $66.1 a barrel. U.S. crude futures slid $1.24 to $62.29 a barrel.
(Reporting by Herbert Lash, additional reporting by Tom Arnold in London, Wayne Cole and Swati Pandey in Sydney; editing by Larry King and Nick Zieminski)
European shares drop as high yields spark profit taking in tech, resources
By Shashank Nayar and Ambar Warrick
(Reuters) – European stocks closed lower on Friday, ending three weeks of gains as investors booked profits in technology and commodity-linked shares due to concerns over rising inflation and interest rates on the back of a jump in bond yields.
The benchmark European stock index fell 1.6%, and shed 2.4% for the week – its first weekly loss this month – with technology stocks losing the most as they continued to retreat from 20-year highs.
On the day, resource stocks were the softest-performing European sectors, tumbling 4.2% from a near 10-year high in their worst session in five months.
“Equity markets across the U.S. and Europe are quite expensive now and with bond yields constantly rising, the fixed income market is proving to be more attractive than the riskier equity market,” said Roland Kaloyan, a strategist at SocGen.
“Investors are actually looking at the pace at which yields drop and the current speed is quite concerning for equity markets.”
U.S. and euro zone bond yields retreated slightly on Friday, but stayed close to highs hit this week as investors positioned for higher inflation this year. Yields were also set for large monthly gains. [GVD/EUR] [US/]
Sectors such as utilities, healthcare and other staples – usually seen as proxies for government debt due to their similar yields – lagged their European peers for the month as investors sought better returns from actual debt.
Still, the benchmark STOXX 600 gained in February, helped by a rotation into energy, banking and mining stocks on expectations of a pickup in business activity following vaccine rollouts.
Travel and leisure was the strongest sector in February as investors bet on an economic reopening boom. Banks also outperformed their peers thanks to higher bond yields.
Better-than-expected fourth-quarter earnings have also reinforced optimism about a quicker corporate rebound this year. Of the 194 companies in the STOXX 600 that have reported quarterly earnings so far, 68% have beaten analysts’ estimates, according to Refinitiv.
“As recovery hopes gain ground with the economy re-opening and vaccines coming up, coupled with earnings being relatively positive, the near-to-mid-term outlook for equities seems positive with yield movements still a part of the equation,” said Keith Temperton, an equity sales trader at Forte Securities.
Among individual movers, Belgian telecom operator Proximus was the worst performer on the STOXX 600 for the day, after it flagged a lower core profit in 2021.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Hugh Lawson)
UK seeks G7 consensus on digital competition after Facebook blackout
LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies...
Britain to offer fast-track visas to bolster fintechs after Brexit
By Huw Jones LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at...
GameStop rally fizzles; shares still on pace for 130% weekly gain
By Aaron Saldanha and David Randall (Reuters) – An early surge in the shares of GameStop Corp fizzled and left...
Oil drops on dollar strength and OPEC+ supply expectations
By Jessica Resnick-Ault NEW YORK (Reuters) – Oil prices fell on Friday as the U.S. dollar rose while forecasts called...
Stocks try to recover from bond whiplash, dollar gains
By Herbert Lash NEW YORK (Reuters) – Global equity markets swooned on Friday, even as the Nasdaq and S&P 500...