Killer Timing On Coinbase

Bad Timing On That

In our post Betting On The Crypto Bubble, we presented a portfolio that included Coinbase (COIN) along with a couple of other crypto names, Silvergate Capital (SI) and Riot Blockchain (RIOT). Coinbase promptly dropped another 9%, as cryptocurrency prices wobbled in the wake of Biden's proposal to raise the capital gains tax rate. 

Chart

That's why we hedge. 

Still Bullish On Crypto Names

As we mentioned in our previous post, our system won't start estimating potential returns for Coinbase until the stock has been trading for six months. It was still bullish on other crypto names after cryptocurrency prices dropped though. Its top ten names as of Thursday's close included crypto names Microstrategy (MSTR), Silvergate Capital, Square (SQ), and the blockchain-focused Amplify Transformational Data Sharing ETF (BLOK), which has Square and Microstrategy among its top holdings. 

Screen capture via Portfolio Armor as of 4/22/2021. 

Top Names Performance Update

Our system looks at total returns and forward-looking options market sentiment to come up with its top ten names cohorts such as the one above. We then track their performance over the next six months. Here's how the one from 10/22/2020 did: 

Since we updated our security selection process on May 28th of last year, that was the 18th weekly top names cohort out of the last 22 to beat SPY. 

Update On The Dot-Com Analog 

As we've written before crypto/DeFi (decentralized finance) is both a bubble and transformational technology, and as such, is similar to the dot-com bubble of the late 1990s. Entrepreneur and venture capitalist Balaji Srinivasan echoed the transformational tech aspect of the analog on Friday. 

Meanwhile, Citicorp's chief equities strategist Tobias Levkovich compared the current equity market to 1999, echoing the bubble aspect of our analog. 

1 2
View single page >> |

We've had some interest in packaging our approach as a fund, where this would all be done automatically for investors. If that general idea is of interest to you, you can let us know your ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.