Bitcoin is on the move … support and resistance points … where do Matt and Louis stand on their Race to 40K bet?
Bitcoin is breaking out.
Over the last three days, the cryptocurrency has shot up 12.5% (as I write Thursday morning).
We put this trade on your radar last week.
From our Monday, 10/12 Digest:
… in general, bitcoin tends to have three directions: up sharply, down sharply, and sideway … there is little gradual-up or gradual-down.
Right now, bitcoin appears to be setting up for its next major move.
We then provided the chart below. It showed bitcoin’s price action with trend lines added to highlight a compressing wedge pattern.
We drew attention to bitcoin’s price pushing through the top of its upper trend line, suggesting this boded well for a bullish breakout.
Here was last week’s chart:
And here’s the updated chart, with the bullish breakout circled in green.
The press is attributing this latest to surge to yesterday’s news that PayPal and Venmo will accept bitcoin.
From CNN:
PayPal says its new service will give customers the ability to hold and exchange Bitcoin, Ethereum, Bitcoin Cash and Litecoin cryptocurrencies using the company’s digital wallet, which lets people shop online, request and send money …
The online payments company declared adding crypto was a significant milestone on the path to mainstream adoption of cryptocurrencies such as bitcoin.
We agree. And we’re anticipating a domino effect of adoption that serves as a sustained tailwind for bitcoin’s price in the coming years.
***This latest surge has taken bitcoin beyond the key level of $12,000
The issue now is whether the recent gains will hold.
From a technical perspective, this $12,000 level has been a resistance point for bitcoin this spring. Though it broke through this level back in mid-August, it quickly fell back, finding support in the $10,200 range.
Given this, the first test will be if bitcoin can turn this former-resistance point into a new, support point.
In other words, if prices fall from their current level, will they bounce off $12,000 or crash back through?
We should note that this latest surge has not only sent bitcoin shooting past the $12,000 barrier, it has also topped its June 2019 high of $12,913. As I write, it’s trading at $12,965, though it pierced $13,000 last night.
The last time bitcoin rallied at these levels was all the way back in 2017 during the crypto’s monster run up to $20,000, as you can see below.
***Altcoins are surging even more
I reached out to our crypto specialist, Matt McCall, for his thoughts.
For newer Digest readers, Matt is the analyst behind Ultimate Crypto.
Launching in January, his portfolio of elite altcoins is averaging a 95% gain as I write Thursday morning.
Since the altcoin universe is closely related to bitcoin, I asked Matt about bitcoin’s surge.
From Matt:
This is the breakout I have been looking for.
After months of consolidation, bitcoin is breaking out of its most important trading range. It’s now well on its way to $15,000 in the near-term.
Such gains are to be expected as more institutional buying takes place and large companies move into the niche sector.
I absolutely expect altcoins will follow, and ultimately the right ones will outperform.
To learn more about which altcoins Matt believes will climb the highest, click here.
***Regular Digest readers will recall that Matt has a friendly bet with Louis Navellier about bitcoin versus the Dow
Which will reach the level of 40,000 first — the Dow or bitcoin?
Matt is taking bitcoin, Louis is taking the Dow.
This was just a friendly disagreement around the office until our CEO, Brian Hunt, caught wind of it.
After hearing their respective cases, Brian felt the difference of opinion would be interesting and fun for our InvestorPlace readership, so he asked Louis and Matt to debate their positions live, which we did back on July 31st.
As an update, since that event, the Dow has tacked on 7.4%, while bitcoin has more than doubled that, climbing 16.5%.
While this presents the appearance that Matt is in the lead, keep in mind each analysts’ remaining distance to the finish line.
For Louis to win, the Dow needs to climb roughly 42%.
For Matt to win, bitcoin has to add about 208%.
Now, not only does Louis have a shorter distance to go, but he believes we’re poised for an incredibly strong fourth quarter performance from stocks …
***Louis’ stock bullishness looking forward today
In Monday’s Digest, we updated you on Louis’ Platinum Growth Club market update podcast.
In short, it was very bullish.
From Louis, commenting on the strong retail report from last week, as well as his general market-perspective:
… what we call the velocity of money is very healthy. And that’s what showed up in retail sales …
Consumer spending on services has been hit by the coronavirus because the bars, restaurants, hotels, and travel industry is still down. But I can’t tell you how impressive that retail sales report was today …
It’s very, very impressive.
All I can tell you is things look awfully good.
The fact of the matter is, this V-shaped economic recovery that we’re in is real …
Are we hitting on all cylinders? Or course not, but there’s a lot of hope for the future.
There’s a lot of optimism. And there’s a lot of cash on the sidelines.
So, I just feel very, very good right now. I think it’s just time to go out and prosper.
***Louis is even more bullish on specific stocks identified by his numbers-based algorithms
For new Digest readers, Louis is a famous quant investor. This simply means he relies on numbers and quantifiable data to direct his investment decisions.
Earlier this week, Louis highlighted the power of a numbers-approach. From his Market 360 update:
… you need to look “under the hood” to make sure that your investments are safe, reliable and ready to perform for the long haul.
Take Nikola Corporation (NKLA), the electric truck startup that’s seen a lot of hype in the financial press, and Digital Turbine (APPS), the mobile solutions company, for example.
While both reported earnings in early August, the stocks went in complete opposite directions after the results were out …
While some of the financial talking heads were calling NKLA the next Tesla (TSLA), I, on the other hand, was calling it the biggest scam nowadays. The reality is the company had yet to make or start selling any vehicles that would contribute to the bottom line.
The stock took off like a rocket ship after going public, rising from $37.55 on June 4 to an all-time intraday high of $93.99 on June 9.
But the stock came crashing back to earth following its disappointing second-quarter earnings results …
Louis noted that Nikola’s sales beat expectations — but were later discovered to be attributed to solar installation services which the company performed for Nikola’s executive chairman, Trevor Milton.
Milton has since resigned from Nikola while the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are reportedly investigating the company for allegations of fraud.
On the other hand, Digital Turbine (APPS), released results on August 5, reporting blowout earnings of $0.05 per share, climbing 66.7% from the year prior and beating estimates by 25%.
Back to Louis:
The next day, the stock soared 21% and has more than doubled in less than three months.
Here’s a look at both companies’ stock performance since their last earnings report:
This is the power of earnings.
If your portfolio isn’t generating the returns you want, give a numbers-based approach a shot. Click here for more from Louis.
Wrapping up, both bitcoin and the Dow are moving higher. Matt’s horse might have just pulled ahead, but there’s a lot of race left.
The important thing is that Matt and Louis are giving their readers some great guidance. And there’s still more to come.
We’ll keep you up to speed as the bet plays out.
Have a good evening,
Jeff Remsburg