We are Bullish Crypto in 2021

Published January 31, 2021 by Cedalion Advisor

Recently cryptocurrencies have made it back into the popular mainstream. This time driven by not just retail investors, but with the backing of major hedge funds. Popular cryptocurrencies like Bitcoin, Ethereum, and even Dogecoin have tested and exceeded their all time highs. Others like Ripple have found themselves run afoul with the SEC. Since the 2017 crypto boom (and 2018 bust), we've seen blockchain ideas and startups come and go &endash; leaving only serious projects left.

Additionally, with a stock market entering its euophoria phase, low-yielding treasuries, and increased central bank easing (which in and of itself is a complicated topic), more and more investors are looking for speculative assets to put their money that isn't gold and silver. We are much more bullish on cryptocurrencies than metals.

Going into 2021, we have a bullish outlook on cryptocurrencies. We anticipate more money will flow into the major currencies (Bitcoin and Ethereum), the SEC will approve the first crypto ETF, and the Biden administration will take a more liberal approach to cryptocurrencies (this one is just a guess since Biden has previously not supported crypto and certainly does not understand them).

We've developed a selection of publicly-traded US stocks that will benefit from the crypto boom:

  • Riot Blockchain ($RIOT): This company mines Bitcoin.
  • Marathon Patent Group ($MARA): This company is a bit of a patent troll but has transitioned to mining Bitcoin in 2017 and has recently bought more Bitcoin.
  • Nvidia ($NVDA): Nvidia develops graphics cards that are core to Bitcoin, Ethereum, and other cryptocurrency mining operations.
  • Facebook ($FB)*: Facebook is a non-obvious choice but we are bullish on their development of Libra (we don't like the name Diem) and believe this has not been priced properly in the stock.
  • Switzerland ($EWL): This ETF is a non-obvious choice as well and is more of a long-term hold or possibly a hedge for European exposure. We added Switzerland because as of today, it is the friendlest nation towards cryptocurrency.

* We are most excited about Facebook because we believe this will be the only successful, leading effort towards creating a stable store of value (making it a true digital currency, not speculation) that can readily be exchanged for goods (i.e. FB market place and online stores). Long term, this will fundamentally change how nations and central banks operate.

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