Inflation and Influencers: How Investors Can Send Dogecoin to $10

Inflation and Influencers: How Investors Can Send Dogecoin to $10

InvestorPlace

Two major indices hit highs this week … can it keep going? … one indicator that suggests traders are gearing up for more gains If you’ve been invested in the Dow or S&P, you probably haven’t lost much sleep over the last two months. However, if you’ve been a tech investor, you’ve probably suffered a few uneasy moments, and perhaps considered taking some chips off the table. Below, we look at all three major indices since mid-February.InvestorPlace - Stock Market News, Stock Advice & Trading Tips While the Dow is up 5% and the S&P is up 2% (both setting all-time highs this week), the Nasdaq is still down 4% after having dipped into correction territory several weeks ago. But this shortened trading week was a good one for tech stocks. For the entire market, for that matter. However, the question now is whether it just a temporary upward spike within a broader topping-out process in the market, or if the gains will keep coming. Today, we’re going to look at a key piece of evidence that suggests “more gains.” We’ll look into this with the help of our technical experts, John Jagerson and Wade Hansen, of Strategic Trader. In their investment service, John and Wade combine options, insightful technical analysis, and market history to trade the markets, whether they’re up, down, or sideways. This means they frequently analyze all sorts of indicators, ratios, and chart patterns to suss out clues about where the market is headed. In their update from Wednesday, they highlighted one important indicator that suggests traders are gearing up to push the market even higher. Let’s see what it is. ***Forget “March Madness,” John and Wade have been watching “Margin” Madness From the Strategic Trader Wednesday update: We are always looking for confirmation of trader sentiment on Wall Street. If we can confirm traders are bullish, we feel more confident in our bullish outlook. On the other hand, if it looks like traders are becoming increasingly bearish, we feel more confident in our bearish outlook. After all, traders drive prices … One of our favorite ways to see just how bullish traders are is to look at how much money traders are borrowing to buy the stocks they are trading. To make sure we’re all on the same page, we’re talking about margin debt. John and Wade explain that traders can borrow up to 50% of the purchase price of a stock according to Regulation T of the Federal Reserve Board. So, if a stock costs $100, traders only have to use $50 of their own money to purchase the stock. They can borrow the other $50. This is called “buying on margin” and the amount borrowed is called “margin debt.” Back to John and Wade: Tracking the total amount of margin debt being used to buy stocks can give you a good sense of how confident traders are. This is because confident traders tend to borrow more. Nervous traders tend to borrow less. Before this past year, the highest level of margin debt Wall Street had ever seen was $668,940,000,000 in May 2018, according to the Financial Industry Regulatory Authority (FINRA). That is a ton of money. By the height of the coronavirus pandemic, however, margin debt had plunged back down to $479,291,000,000 in March 2020 as traders looked to reduce the amount of risk they had taken on in their portfolios. John and Wade point out that it’s easy to understand why the S&P 500 dropped into a bear market last year when you see that hundreds of billions of dollars evaporated from the stock market. ***So, where is margin debt today, and what is it telling us about what traders are expecting? Back to the Strategic Trader update: Have traders kept their risk levels low? Have they been cautiously waiting to see if the market was going to bounce back? Ha! No, they have not. In fact, it has been quite the opposite. Instead of cautiously dipping their toes back into a bullish uptrend, traders have been on the largest borrowing spree of all time. As of February 2021, traders have borrowed a total of $813,680,000,000 to buy stocks. Fig. 1 — Margin Debt Levels — Chart Source: FINRA) Yes, you are seeing that right. In less than a year, Wall Street has borrowed an additional $334,389,000,000 to buy stocks ($813,680,000,000 – $479,291,000,000 = $334,389,000,000). For greater context, below we look at a chart comparing margin debt relative to the S&P 500. The red line shows the amount of margin debt traders are using. The blue line is the S&P. As you can see, both the S&P and margin debt levels have exploded out of last year’s bear market. Debt levels are now at historic highs (though they’re not at historic highs relative to the value of the S&P). Source: Yardeni Research Back to John and Wade: Traders are incredibly bullish on the stock market right now, and they are putting their own money — plus a mountain of borrowed money — where their mouths are. Now, it is important to note here that FINRA releases its margin debt data a month after the fact. That’s why we are just now seeing the data for February. We’ll have to wait until the last week in April to know what the March numbers look like, but we expect to see the current trend continue. ***Is this a sign of market excess? If traders are borrowing historic amounts of money, how risky is that? And might it be a sign of the kind of hubris that precedes a crash? You could make that argument. Anytime investors add risk exposure by increasing their margin, it heightens the potential for an amplified wipeout. That said, some analysts suggest margin levels need to be viewed in context. Specifically, if the market is making lower highs as margin levels are topping out, that’s potentially a sign of trouble. But if rising margin levels are coinciding with higher highs in the market, that can be a sign of bullishness. On this point, I’ll repeat that both the Dow and S&P 500 set record-highs this week, and the Nasdaq sits just 4% below its record. Here’s John’s and Wade’s take: Seeing traders load up on so much margin debt gives us confidence that the current bullish uptrend still has legs. It has some built-in risk as well with that amount of debt, which could lead to faster selloffs when they eventually come. But for now, we like what we are seeing. Wrapping up, this latest clue from traders suggests the professional money expects more gains to come. Though massive levels of margin debt might turn into pain later, for now, it looks like markets will keep grinding higher. We’ll keep you updated here in the Digest. Have a good evening, and a wonderful Easter weekend, Jeff Remsburg The post The Latest Clue About Market Direction appeared first on InvestorPlace.

Elon Musk says he’s going to put Dogecoin on ‘the literal moon’

It might be April Fools' Day for a few more hours, but this is no joke.

SpaceX CEO Elon Musk tweeted on Thursday (April 1) he would put “a literal Dogecoin” (pronounced “dohj coin”) on the “literal moon.”

SpaceX is going to put a literal Dogecoin on the literal moonApril 1, 2021 See more

Although some questioned whether Musk was joking in light of it being April Fools' Day and his reputation for making off-the-cuff remarks, others, including CNBC space reporter Michael Sheetz, suggested Musk could very well be telling the truth.

“I know it’s April Fool’s but I don’t for a second question that he means this,” Sheetz tweeted, to which Musk replied: “After all, SpaceX’s first payload to orbit & back was a wheel of cheese.” (SpaceX did in fact deliver a wheel of cheese to orbit in 2010, during a test flight of its Dragon cargo spaceship.)

After all, SpaceX’s first payload to orbit & back was a wheel of cheese …April 1, 2021 See more

The self-proclaimed “techno-king of Tesla,” Musk, 49, is an ardent supporter of cryptocurrencies, including Dogecoin and bitcoin. In February, Tesla announced that it had purchased $1.5 billion worth of bitcoin. One month later, Musk said Tesla would accept it as payment for its vehicles.

You can now buy a Tesla with BitcoinMarch 24, 2021 See more

SpaceX has not yet made a similar announcement.

Musk also famously launched his own cherry-red Tesla Roadster into space with the first test flight of SpaceX’s Falcon Heavy rocket, in February 2018. The Roadster has since passed by Mars and is still orbiting the sun.

Related: SpaceX founder Elon Musk is now the richest person in the world

Dogecoin, which originally started as a joke, was created in 2013 by software engineers Billy Markus and Jackson Palmer. The cryptocurrency, which uses a Shiba Inu as a mascot, is “an open source peer-to-peer digital currency, favored by Shiba Inus worldwide,” a description on Dogecoin.com states.

The cryptocurrency can be obtained in several different ways: purchased, traded on an exchange or “mined.”

This is not the first time Musk has mentioned Dogecoin’s presence on the moon. In February, Musk tweeted a meme of a Shiba Inu in a spacesuit on the moon holding a Dogecoin flag.

Literally pic.twitter.com/XBAUqiVsPHFebruary 24, 2021 See more

The price of Dogecoin skyrocketed following Musk’s tweet, as its value rose nearly 30% to $0.70 just minutes after Musk’s proclamation.

It’s unclear if Musk was serious about sending Dogecoin to the moon, but the company could potentially make that happen, given its lunar exploration plans.

In August 2020, Space.com reported that SpaceX’s Starship spacecraft could reach the lunar surface with NASA payloads as soon as 2022. And in February, NASA said it would use SpaceX to provide launch services for parts of its ongoing Gateway project, an upcoming outpost that orbits around the moon.

As Business Insider notes, the physical coins are sold as memorabilia but do not function as currency.

Follow us on Twitter @Spacedotcom and on Facebook.

Forget Dogecoin, These 3 Tech Stocks Are Better Buys Right Now

Dogecoin (CRYPTO:DOGE) is a minor cryptocurrency that initially gained some traction during the cryptocurrency bubble three years ago. Interest in dogecoin seemingly faded after that bubble popped, but its price abruptly surged about 850% this year.

The rally started as speculative traders on Reddit dubbed it the “next Bitcoin (CRYPTO:BTC),” and additional support from celebrities like Elon Musk, Snoop Dogg, and Gene Simmons propelled its price to all-time highs.

However, there’s very little evidence that Dogecoin will ever gain as much mainstream recognition or acceptance as Bitcoin. So instead of making brash bets on a cryptocurrency inspired by a meme, investors should check out these three adjacent tech stocks instead.

1. Square

Square (NYSE:SQ) is mainly an online payments provider, but it also represents one of the easiest ways to gain exposure to Bitcoin without directly buying the cryptocurrency or investing in an overpriced ETF.

Square buys Bitcoin for two purposes. First, it holds it on its balance sheet as an investment. At the end of 2020, Bitcoin accounted for roughly 5% of its $3.16 billion in cash and cash equivalents.

Second, it lets its Cash App users buy and sell Bitcoin. It buys the Bitcoin for those users and sells it at a slight premium to the market price. Square claims over 3 million of Cash’s 36 million active users purchased or sold Bitcoin in 2020, and over a million users bought Bitcoin for the first time this January.

Square’s Bitcoin revenue from its Cash App surged 785% to $4.57 billion, or 48% of its top line, in 2020. That stunning growth offset its slower growth in transaction, subscription, and services revenue throughout the pandemic, and its total revenue more than doubled to $9.5 billion.

Square’s higher dependence on lower-margin Bitcoin revenue during the pandemic squeezed its margins, but its other payment and seller services should recover after the crisis ends and stabilize its profits again. That’s why analysts expect its revenue and earnings to both rise 45% this year.

2. NVIDIA

NVIDIA’s (NASDAQ:NVDA) high-end GPUs were used to mine many types of cryptocurrencies, including Dogecoin, during the previous bubble.

But that bubble was a double-edged sword for NVIDIA: Its GPU sales initially surged as miners hoarded the cards, but the subsequent shortage of GPUs boosted market prices for its core market of PC gamers. After the bubble popped, the miners flooded the market with used GPUs – which drove down prices and cannibalized NVIDIA’s sales of new GPUs.

To avoid another cryptocurrency bubble, NVIDIA recently halved the hash rate, which gauges the efficiency of its GPUs in mining cryptocurrencies, for its newest RTX gaming GPUs.

It also launched a new line of CMPs (cryptocurrency mining processors) which are specifically designed for mining cryptocurrencies. That balanced approach could help NVIDIA profit from the growth of the cryptocurrency mining market while continuing to expand its core gaming business.

Analysts expect NVIDIA’s revenue and earnings to rise 33% and 34%, respectively, this year as it sells more gaming and data center GPUs. The expansion of its new CMP business could complement that growth.

3. Lemonade

Lemonade (NYSE:LMND), the online insurance company that uses AI and chatbots to streamline applications and process claims, doesn’t directly deal with cryptocurrencies.

However, its automated system runs on blockchain, the same distributed ledger technology that powers cryptocurrency transactions. The combination of Lemonade’s AI algorithms and its “smart contracts,” which are stored within the blockchain, enables the company to ensure users within 90 seconds and process claims within three minutes.

Lemonade claims its platform represents “insurance built for the 21st century,” and it’s gaining a lot of momentum with younger users. The median age of its entry-level customer is about 30, and it currently offers home, renter’s, life, and pet insurance policies. It ended 2020 with more than a million customers – up from just 308,835 at the end of 2018.

Lemonade expects its gross earned premium (the percentage of the gross written premium it retains) to surge more than 70% this year. It isn’t profitable yet, but it’s incurring lower net losses on each plan.

Lemonade is still a speculative stock, and it’s undeniably expensive at nearly 50 times this year’s sales. However, investors looking for a disruptive company that runs on the same technology as Dogecoin and other cryptocurrencies should consider taking a sip of Lemonade.