They were silent Wednesday when job openings went to an all-time high…
They were silent Thursday morning after the lowest initial jobless claims number in over 50 years…
Source: Bloomberg
But less than a week after calling for a stock market crash — then getting their faces ripped off by a blistering S&P 500 and Nasdaq rally on Tuesday…
They’re back, and focused on what they claim is a cryptocurrency market bubble.
The media bears at CNBC wasted no time pivoting from a positive jobs headline to one implying that investors are “digesting this week’s rally.”
Source: CNBC
No, they’re not… They’re taking massive profits.
Over at Bloomberg, they’re zeroed in on omicron and the ongoing testimony regarding the crypto market on Capitol Hill.
Source: Bloomberg
That’s a more relevant topic at least, as Bitcoin prices were steadily falling since the start of the session.
Is This a Crypto Market Bubble… or More Media Nonsense?
But true to form, the clickbait maestros over at CNBC even turned that into an embarrassingly stupid video about “bubbles.”
This particular crypto market “bubble,” however, looks like this…
Source: Bloomberg
Higher highs, and higher lows… bubble or not, that looks like a trend to me.
My sense here is that people don’t even understand what cryptocurrency is.
In my mind at least, it’s more commodity than currency… It’s certainly not a replacement for gold or fiat in that sense.
But more importantly, cryptocurrency is a network...
In that sense, it’s more like the internet than money.
The principle behind this concept is called Metcalfe’s Law, which states that the value of a network is proportional to the number of users.
Wikipedia’s page has a handy diagram to explain it, which shows that interconnections increase exponentially with an increase in users.
Source: Wikipedia
The greater the number of users, the greater the potential for market activity.
Interestingly, the number of crypto users from the early days until now looks a whole heck of a lot like the total number of internet users from 1990 to 1998.
Source: Worldbank, Crypto.com, Hedgeye
By 2025, the total number of crypto wallets is expected to reach a billion — nearly a tenfold increase from current levels.
And unlike investing in the internet back in the day, accessing the growth in crypto adoption doesn’t have to come with single-coin risk.
In fact, that’s why I have Coinbase Global Inc. (Nasdaq: COIN) on the watchlist here. It generates revenue from the user base itself, not off of individual coins.
It also happened to be down on relatively low volume Thursday, and positioned at the bottom of its volatility-adjusted price spread.
Source: Bloomberg
Now, the bears are right in that we may still see some market turbulence ahead of options expiry week. Should that happen, though, it’ll just be a correction… not the “bubble burst” they’re rooting for.
So while I think this is a decent opportunity to pick up shares of COIN on the cheap, we may get a slightly better opportunity sometime between now and next Friday.
But if shares of Wednesday’s FREE TRADE in RH Inc. (NYSE: RH) drift lower after that blowout earnings call — up 6% on the day — that’s one we’ll be picking up in spades.
All the best,
Matt Warder
Fortune Research
