[Charts] Crypto Coasters and Trillions of Payments
Dear Wall Street Daily Reader,
“Cause it’s Friday and you ain’t got no job… and you ain’t got s*%t to do,” we’re busting out the charts in Trend Trader Daily Nation.
(Yup, I’m pretty sure I’m the only guy in the financial press to ever reference the 1995 hit film Friday in his commentary. But don’t judge me — or you might get knocked out Deebo style.)
For the regulars here, you know the drill. Scroll down and take a look at the pretty pictures.
For the newbies, don’t fret. There’s nothing illegal or aggressive going on.
When the weekend rolls around, we just take a break from our normal analysis to share some graphics to drive home a few investment insights or opportunities.
This week, I’m dishing on crypto volatility and the motivation behind the $4 trillion-plus digital payment boom.
Welcome to the Crypto Coaster
Talk about a week of volatility for bitcoin!
First Elon Musk, then China, and then the IRS made headlines with their latest thoughts and plans to intervene in the market.
The result? At one point this week, Bitcoin was down 50% from last month’s record high.
Anyone got a barf bag?
As I did earlier in the week with biotech, I want to put this volatility in perspective.
And guess what? Just like with biotech, it’s perfectly normal.
As you can see, the average drawdown for bitcoin from previous all-time highs is 48%.
And let me be clear. That’s the average — meaning there’ve been instances when the world’s oldest and most popular crypto currency was really unpopular and dropped more than 75%.
So all you bitcoin lovers out there, buckle up and enjoy the ride.
Yes, it promises to be volatile — but based on history, if you can hold on, it most likely promises to be profitable.
Speaking of holding on…
What’s in Your Wallet?
Is it cash, credit, or crypto?
Based on the latest announcements from major payment companies, it’s most likely going to be more crypto in the years to come.
Make no mistake, though…
The decisions from Visa Inc. (V) and PayPal Holdings, Inc. (PYPL) to wade deeper into supporting crypto transactions is strictly based on economics.
As you can see in the chart, all the legacy payment processors need more growth to keep boosting their sales and earnings — and in turn, their stock prices.
I can confidently tell you this: whatever the currency of choice happens to be in the future, it’s going to be transacted digitally.
Translation: If you’re not investing in the contactless and digital payments boom, you’re going to miss out on serious profits.
This tech trend is expected to balloon 17% per year over the next five years to reach nearly $8.3 trillion in total transactions, according to Verdict.
By then, the company estimates digital payments made over smartphones and other connected devices will top $1.1 trillion per year worldwide.
So whatever’s in your wallet or your portfolio…
It had better be an ETF or a handful of stocks tied to this trend!
Ahead of the tape,
Editor and Founder, Trend Trader Daily