Traders Daily – Why Cryptocurrencies are Still a Safe Bet

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We’ve been getting a few questions about the cryptocurrency market, and whether or not it should be traded.  The short answer is yes, we’re still bullish.

As are many in the institutional community.

In fact, Morgan Creek Digital just announced a “Buffett Bet 2.0,” or a $1 million wager that its cryptocurrency index will outperform the S&P 500 over the next 10 years.

That’s quite a bet on coins that have given up all of their 2017 wins.

Buffett Bet 2.0 from Morgan Creek

Morgan Creek calls its million-dollar bet the “Buffet Bet 2.0” challenge.  It’s doing so to mimic a bet Warren Buffett made during the 2008 financial crisis.  At the time, Buffett also put up $1 million saying the S&P 500 would outperform many hedge funds post-2008.

Under the new challenge, Morgan Creek believes its basket of 10 major currencies will help.  It includes Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), EOS, Monero (XMR), ZCash (ZEC), Dash (DASH), NEM and IOTA (MIOTA).

The bet will begin January 1, 2019 and end in 2029.

Better yet, the firm’s partners will use their own personal money to fund the $1 million bet.  None of the funds will come from the fund itself.

According to Morgan Creek Digital co-founder, Anthony Pompliano, as quoted by Cryptovest:

“This is a combination of our outlook not only for the upside of cryptocurrencies but also the outlook on public equities. A lot of people might look at this and just think we’re bullish on crypto — but you need to look at what asset we’re going up against. Public equities aren’t exactly at their all-time highs either.” 

Morgan Creek isn’t the Only Crypto Bull

Billionaire Michael Novogratz has been bullish on cryptocurrencies for quite some time.

And while he doesn’t believe Bitcoin will break above $10,000 this year, be believes the coin will hit $20,000 by the second quarter of 2019.  “There’s going to be a case of institutional FOMO [fear of missing out], just like there was in retail,” he says.

Fundstrat’s Tom Lee believes we’ll see Bitcoin at $15,000, saying the latest fallout from the market slump put a lot of pressure on cryptocurrencies.  He also believes coins have a bright future once institutional investors begin to come around.  “The next wave of adoption is institutional,” he said, as quoted by CCN. “There is a crossover happening. This is just an awkward transition.” Regulatory clarity may help bring in more institutions, as well.

Tim Draper predicts that the market cap of cryptocurrencies will increase 400 times over the next 15 years to $80 trillion.  “The internet started in the same way, it came in big waves and then it kind of came crashing down, and then the next wave comes concentrated but much bigger, and I suspect the same thing will go on here,” he says.  He believes Bitcoin could reach a high of $50,000 in the next three to four years.

Open Positions: 

Extreme Networks (EXTR) – $6.65

While the stock did pull back slightly, we are still holding with a $10 price target.

Velocity Shares Daily 2x VIX Short-Term ETN (TVIX) – $46.88

iPath S&P 500 VIX Short-Term Futures (VXX) — $36.55

ProShares Ultra VIX Short-Term Futures (UVXY) — $50.78

We exited half of each on Monday.  Hold remainder of each positon. 

Weight Watchers (WTW) – $51.90

WTW December 21, 2018 55 calls – $2.45

WTW January 18, 2019 55 calls — $3.40

Hold.  We’re looking for a bearish gap refill, near-term.  It pulled back to $48.43.

Square Inc. (SQ) stock – $74.58 

The stock now trades at $63.12 after running above $82.  Earnings took the stock down temporarily.  But we still believe this is a solid buy and hold opportunity. 

New Age Beverage (NBEV) — $6.76 

We have a near-term target of $10.  It last traded at $4.95 a share.  Hold. 

Ceragon Networks (CRNT) – $3.90

Boingo Wireless (WIFI) – $32.04

Zayo Group (ZAYO) — $34.42

All are long-term holds as the 5G revolution just begins to pick up momentum.  CRNT now traded at $4.20.  WIFI is now at $22.62.  ZAYO now trades at $24.92.  Hold all. 

Kroger (KR) stock – $29.75 

KR last traded at $28.70.  Give it some patience.  We have a $35 price target, near-term. 

Electronic Arts (EA) stock –$114.40

Unfortunately, the calls did not work out as well as we would have liked.  We exited the call options for a loss, but still hold the stock.

Nike Inc. (NKE) — $82.35
NKE January 18, 2019 85 calls — $3.85

Even on the pullback, hold. We have plenty of time on these calls. 

Six Flags Entertainment (SIX) — $66.25 

SIX last traded at $59.51 and remains on hold.   

Twitter (TWTR) stock — $31.90 

Hold the stock.  It now sits at $33.21. 

CoreCivic (CXW) stock – $25.25

The GEO Group (GEO) stock – $25.32

As long as immigration remains a hot issue, we’ll hold these two stocks.  CXW is now trading at $22.  GEO is now up to $23.13.

Glu Mobile (GLUU) stock — $6.55

GLUU now trades at $7.47 and remains a long-term hold with a target of $10. 

Parsley Energy (PE) stock – $28.05

PE last traded at $17.75.  Hold, as oil prices becoming ridiculously oversold.

Nucor Corporation (NUE) — $66 

NUE trades at $56.80 and remains a hold with a price target of $68, near-term.

Skechers USA Inc. (SKX) — $29.25 

We’re holding the SKX positions with a near-term target of $35. SKX last traded at $24.20.

ETFMG Alternative Harvest ETF (MJ) — $32.30 – exited half

Kush Bottles (KSHB) — $7.85

MedMen Enterprises (MMNFF) — $4.30
Canopy Growth (CGC) — $51.55
 

Marijuana stocks are benefiting from further from U.S. approval across the country, Canadian approval on October 18, 2018, and corporate interest in marijuana stocks, as we’ve seen recently.

Pro Shares Ultra Short S&P 500 (SDS) — $45.15

This remains a hedge against the long positions.  It’s now at $39.55.

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