Bitcoin is zooming up! The world’s numero uno cryptocurrency has breezed past the coveted $11,000 mark, and has already marked its highest level in more than 14 months, per CoinDesk. If we look at a single bitcoin, the digital asset was recently trading at around $11,940.48, and is flirting with the $12,000 mark. By the way, the Bloomberg Galaxy Crypto Index tracking a basket of cryptocurrencies climbed 8.6%, as rival digital coins also rallied.
Bitcoin has made a superb comeback this year after a miserable fall of more than 70% last year. In fact, so far this year, Bitcoin has jumped roughly 170%, well above the Dow Jones Industrial Average and the broader S&P 500’s rise of 19.6% and 26%, respectively.
Reasons Why Bitcoin is Beyond the $11K Mark
The primary reason behind bitcoin’s epic run is China’s yuan hitting its lowest level in more than a decade against the U.S. dollar. Chinese yuan is now trading at 7 yuan per dollar. China’s currency took a beating after President Trump accused the world’s second largest economy of manipulating its currency in a tweet.
He said “China dropped the price of their currency to an almost a historic low. It’s called currency manipulation. Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!”
Amid such distress, investors are dumping the yuan and parking money in bitcoin, which is now perceived as a safe-haven investment choice. Equity markets are already roiled after the U.S.-China trade war intensified.
While China has decided to halt imports of American agricultural goods, the Trump administration has announced that it would impose 10% tariffs on another $300 billion of Chinese products starting Sep 1 (read more: Trade War Fears Rattle Wall Street: 5 Ultra-Safe Buys).
Key Trends That Should Propel Bitcoin Higher
According to the latest report from Delphi Digital, bitcoin price is poised to rise further. A global economic slowdown could soon come knocking. After all, New York Fed’s own data shows that chances of a recession in the coming 12 months are roughly at 30%. And during an economic downturn, value of major currencies goes down. But, bitcoin’s price will go up as it acts as a hedge against any slowdown.
Now, many may not be buying the economic slowdown argument. Still, we cannot ignore the fact that several Wall Street bigwigs are showing keen interest in cryptocurrencies and blockchain technology. And this bullish approach toward bitcoin is surely driving digital assets. For instance, JPMorgan Chase & Co. (NYSE:JPM) has introduced JPM Coin, which will be helpful in handling digital settlements.
Thanks to JP Morgan’s initiative, a number of other banks including UBS Group are willing to use blockchain to assist in international clearances. Michael Moro, CEO of Genesis Global Trading, an OTC digital currency trading firm summed up by saying that “this time around, however, we believe that institutional money is playing a much bigger role than it did in 2017, which is evidenced by CME’s record of futures volumes.”
And how can we forget that telecommunication, media, and technology service provider AT&T Inc. (NYSE:T) has also began accepting crypto payments via a partnership with BitPay. Most importantly, Facebook Inc (NASDAQ:FB) has launched its global cryptocurrency called Libra.
Stocks to Make the Most of Bitcoin’s Upward Journey
If you are looking to make money from the rising bitcoin trend but want to invest in a roundabout way, you may certainly consider companies that are making use of bitcoin and technologies that support it, including blockchain.
As mentioned above, Facebook is clearly in focus. The social media giant currently has a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its current-quarter earnings has increased 6% over the past 60 days. The company’s expected earnings growth rate for the current quarter is 10.2% against the Internet - Services projected decline of 15.7%. Facebook has easily outperformed the broader Internet - Services industry so far this year (+38.6% vs +2.8%). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PayPal Holdings, Inc. (NASDAQ:PYPL) is also one of the bitcoin-related stocks that should be on your radar. The leader in digital payment process recently sealed a deal with three major bitcoin payment processors, BitPay, GoCoin and Coinbase, to help PayPal merchants accept Bitcoin as a mode of payment.
PayPal Holdings possesses a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has advanced 4.7% over the past 60 days. The company’s expected earnings growth for the current year is 28.9%, higher than the Internet - Software industry’s estimated rally of 11.9%. The stock has outpaced the broader industry over the past year (+20% vs +13.3%).
Microsoft Corporation (NASDAQ:MSFT) (NYSE:T) , by the way, is facing stiff competition from Amazon.com, Inc. (NASDAQ:AMZN) in the cloud computing space. As a result, the tech behemoth is seeking to build a ‘Blockchain as a Service’ on its Azure cloud.
Microsoft has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed 2.2% over the past 60 days. The company’s expected earnings growth for the current year is 9.7%, higher than the Computer - Software industry’s projected rally of 6.1%. The stock has already outshined the broader industry so far this year (+30.2% vs +29.6%).
Square, Inc. (NYSE:SQ) , which provides payment and point-of-sale solutions, is another impressive bitcoin-related stock. The mobile payment company is now allowing users to buy and sell cryptocurrency through its Square app.
Square flaunts a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has moved 1.3% north over the past 30 days. The company’s expected earnings growth for the current year is 61.7%, higher than the Internet - Software industry’s estimated rise rally of 11.9%. The stock has outdone the broader industry over a two-year period (+152.5% vs +51.6%).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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