After the South Korean government announced to officially recognized cryptocurrency exchanges as banks and regulate them under traditional laws for financial institutions in the country, the trading volume of bitcoin and the Ethereum surged by as much as 10% to $6,825 during the last week. However, over the last few days, bitcoin started a bearish retracement as Indian officials hinted about regulating cryptocurrencies as commodities and consequently, bitcoin fell toward the support near $6,100.

However, cryptocurrencies and blockchain technology continued to push for mainstream recognition as the prestigious London School of Economics (LSE) said it will start an online course on cryptocurrency investing from August 2018.

While the volatility remained high amid tentative regulatory environment around the globe, there were some notable developments for bitcoin miners in the U.S. as regulators in the New York State approved a new electricity rate scheme for cryptocurrency miners, enabling them to get electricity at a much cheaper rate.

Based on our research, we found that the following two blockchain stocks demonstrated notable price movements based on shifts in their company fundamentals.

GMO Internet Inc.

Tokyo based GMO Internet Inc. (9449) recently launched a self-developed high-performance cryptocurrency mining computer called GMO miner B3 that has a maximum hash power of 33 TH/s. Moreover, it can adjust the hash power optimally up to 33TH/s depending on the mining environment and global hash rate. The company said it will sell the B3 miner for $1,999 each and can start shipping from November 2018.

After two months of bullishness, GMO Internet Inc.’s stock started a retracement in June that pushed the price towards the support near 2437. During the last month, it also formed a well-respected downtrend line. However, with the announcement of the B3 miner, analysts are expecting it to improve its sales in the next two quarters.

While we have to wait and see that how many units of B3 miners they can manufacturer over the next few months, if traders push the stock above the downtrend line, and we see a clean break above the 2700 level, it can offer a good opportunity to increase exposure to this blockchain stock.

VitalHub Corp

On July 4, 2018, Blockchain based mission-critical information system developer VitalHub Corp (VHI) announced the results of its June 2018 AGM saying shareholders have started to redeem its stock warrants. According to the press release, a total of 5,326,220 shares were exercised and total proceeds of $895,575 were gained by the Company.

Since the start of May, VitalHub Corp’s stock has remained very volatile as it climbed up from $0.13 per share to over $0.30 per share in early June, then reversed the course and fell to below the support near $0.20 per share earlier last week.

However, as shareholders have started to redeem warrants and it started to generate cash flow for the company, we believe it will help the management achieve more organic growth in the coming months. In fact, the CEO of VitalHub Corp Dan Matlow said during the June AGM that he continues to see the company’s “pipeline grow both on the mergers and acquisition front and organic growth side of [his] business.”

If the growth momentum shows signs of improvements, given the extremely volatile nature of the stock, a break above the pivot zone around $0.20 per share will attract additional bullish momentum. Hence, it may offer investors an opportunity to buy the blockchain stock at a bargain.

Bottom Line

The regulatory uncertainty has crippled the bullish momentum for most blockchain stocks over the last few months. However, this week, it became obvious that governments around the world are trying to clarify their positions as some governments outright recognized cryptocurrencies and others started to classify it as commodities.

However, while the strength of most blockchain stocks still derives from underlying cryptocurrencies, there are still a lot of publicly traded companies that do not rely on the market value of various coins in circulation. If investors spend a little time researching these unique blockchain stocks that have a diverse set of application to solve real-world problems, they will be able to get in on the ground floor.

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