Blockchain, Bitcoin and Cryptocurrency; these words carry a type of fear and taboo when mentioned around others. Yet hard to ignore due to the most recent and past controversies during 2020. We have witnessed arguments over voter fraud, as well as Social Security Numbers in the past stolen with the result of identify theft, and just today (December 13th, 2020) the “U.S. Treasury breached by hackers backed by foreign government”.
“The hack is so serious it led to a National Security Council meeting at the White House on Saturday, said one of the people familiar with the matter.”
Unable to turn a blind eye on a system that respects privacy and created to allow information that is digital to be recorded and re-distributed, while being kept unmodified. Please don’t confuse Bitcoin and the blockchain terms, as one is used as a digital currency and the other, namely blockchain, has been around since 1991, although without any official application for it’s use until Bitcoin. Bitcoin took advantage of the blockchain(think of the blockchain being used as a ledger) to eliminate any third party or middle man, to create a peer-to-peer digital currency system.
Forward Thinking
In my own opinion, the blockchain will lead to strong encryption for financial systems, voting, storing sensitive information in the form of transactions, deeds, inventories and most likely some type of universal ID eventually. I’m not a huge advocate of cryptocurrency in any shape or form and still believe fiat money will exist and has to co-exist, but a stronger means of encryption is demanded, and overdue.
If you wanted to try to take advantage of this new possible upcoming transition, which as always presents it’s own risk, there are multiple ways to invest. Bank of America (NYSE: $BAC) in my own opinion is a unique way to not only hedge your Bitcoin, if you own any, but also even compliment it. For as much as some of the bigger banks do not want to accept cryptocurrency, it would seem that banks are going to have to accept it.
“The U.S. Patent Office granted the bank 184 patents during the first half of 2020, a 20% increase over last year, with nearly half of those related to artificial intelligence, machine learning or information security. The bank has applied for 415 patents, also a company record. These applications relate to a variety of banking innovations, including money transfer, bill payments, ATM transaction pre-staging, check verification using augmented reality, and cardless and device-less authentication technology.” — Finextra.com
Not only is Bank of America being proactive with patents, but the bank is also hiring for blockchain specific jobs. I’d imagine that the government does not mind that the banks become involved, as most are considered government employees; therefore if a situation was to arise to use the blockchain for voting or other purposes, each employee would be working under the government.
Again this is just an opinion, I could be entirely wrong as well. One of the mentions in an article is that “The new hire would be responsible for driving product strategy and growth”. If you listen to the very keywords offered to the reader, it makes you believe they see nothing but a future with these new technologies being presented and growing in popularity each week.
The most notable patents filed by Bank of America:
Bank of America successfully locked down 418 technology patents during the year 2019. At the very worst, these patents will become used for other systems or company’s.
“We’ve got under 50 patents in the blockchain/distributed ledger space […] While we’ve not found large-scale opportunities, we want to be ahead of it, we want to be prepared.” — Catherine Bessant, Bank of America CIO
Opportunity
Full disclosure, I do own shares of Bank of America. I’ve included below 3 charts:
- 65m chart with Fibonacci Retracements for a close up of the current outcome.
- 1hr chart adjusted and zoomed in to understand where I’ve already bought into the company throughout different legs using my “buy in thirds” strategy.
- 1d chart with Fibonacci Retracements dating back to July 2016 in order to understand long term trends.
I would like to think that Bank of America still offers more upside potential since I currently hold these shares. My average sits well below the 200 moving average currently. The company is trading at a modest $28.57, and paying respect to the 65m Fibonacci Retracements. A slight bounce off the very last retracement line at $28.30 as support, and a 52 week high of $34.71 before the pandemic hit. A nice resistance for this channel would be $29.28 as the next retracement line to turtle over.
If the last retracement line was to break it’s support, I could see the price coming down to the 50 day moving average at some point into the near future to $26.04 creating another buying opportunity possibly. Following my plan if we do double my average in share price, I will sell half in order to cover my cost basis to “let it ride” without any concern.
Remember rates have been cut, whenever the yield curve returns to profitable margins for the banks, we should see a nice return with Bank of America to clear out a nice chunk of their debt. Increased rates, mean increased return for the banks.
Dividend Yield
2.52%
Ex Date Of Last Dividend
12/03/2020
Put Call Ratio
0.4457
If the put call ratio rises above a 0.7 ratio, this will mean that there are more Put’s being bought than Calls; either as hedges or as a forward looking indicator of bearish sentiment inbound.
Current Debt
$2,469,602,000,000
Revenue
$99,581,000,000
Gross Profit
$87,373,000,000
Total Revenue
$99,581,000,000
EBITDA
$22,833,250,000
52 Week High
$34.71 (01/02/2020)
52 Week Low
$17.72 (03/23/2020)
Simple Moving Average (20-Day) $28.18
Simple Moving Average (50-Day) $26.04
Simple Moving Average (200-Day) $24.28
“Bank of America spends $10 billion annually on technology, $3 billion of which is on growth initiatives, Agisim added.”
AI and machine-learning patents were geared toward a better mobile banking experience, along with the responsible use of AI, he noted. Meanwhile, blockchain patents are efforts to lay groundwork in the event the bank finds use cases in the future.
“Our patenting in the [blockchain] space is about being prepared,” Agisim said. “By trying to be innovative by patenting in the space now, we hope that will secure an ability to operate, if in the future we find those opportunities.”
MARA and RIOT
Some very quick mentions on other opportunity’s to enter into the blockchain end of the market would be these two company’s as well: $MARA (Marathon Patent Group, Inc.) and $RIOT (Riot Blockchain, Inc.).
I do think that $MARA (Market Cap $250m) might be the better opportunity here as it has had more traditional trends where as $RIOT (Market Cap $584.8m) has had more consolidation and effort by short sellers or day traders to make a few cents from the shares each day.
I cannot offer too much insight into these 2 company’s as much as I want, but I will be looking ahead in the coming weeks to hopefully find a pull back area from Mara, if not sooner than later since it does have a Put Call Ratio of only 0.1686. Likewise, Riot has a Put Call Ratio of 0.2045. Both showing more of an anticipation of a bullish mindset.
Keep in mind RIOT has double the market cap and double the institutional ownership than Mara with 12.78% owned by institutions vs Mara’s 5.50%. Both company’s offer around the same float from 44m~50m.
Bonus $MSFT
Some light reading material on a weird (and slightly scary) Patent owned by Microsoft Corporation in regards to cryptocurrency:
Human body activity associated with a task provided to a user may be used in a mining process of a cryptocurrency system.
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