All crypto-related stocks are seeing momentum. Bitcoin crossed $53,000 (up 9.7%) on August 1 but corrected 10.9% to around $47,246 on August 3. A 9-10% movement is a normal day in the crypto world. But the fact that this momentum came after almost 45 days of cool-off is welcome news, especially for crypto-related stocks. This time the momentum driver was Amazon (NASDAQ:AMZN) and Twitter (NYSE:TWTR).
Why is crypto volatile?
For those new to crypto, it is a digital currency that many visionaries believe has the potential to become the global currency. This revolutionary concept of digital currency was made possible through blockchain technology, where everyone has to mine the currency to own it. I will leave the blockchain discussion for some other day.
Right now, cryptocurrencies are facing an issue of acceptance by regulators worldwide. Regulators are concerned about money laundering and terrorist funding happening through crypto. If they can regulate such activities, crypto can become the future internet currency.
Then there is another issue of infrastructure. Any software developer with experience can create a cryptocurrency. This raises the question of which crypto to use. Any crypto that gains wider acceptance will steal the show. Bitcoin, being the first cryptocurrency, will lead the change from the crypto revolution.
The whole Amazon to accept Bitcoin speculation
This topic of BTC acceptance is what drives its price. Many crypto lovers commented how great it would be if Amazon, which sells everything from A to Z, starts accepting crypto. Rumours floated that this thought could become a reality.
Recently, rumours floated that Amazon might start accepting BTC as the tech giant posted a job opening for a “Digital Currency and Blockchain Product Lead.” This job posting could have several meanings; maybe Amazon is looking to develop its digital currency, or it is just evaluating blockchain and digital currency. Anyways, Amazon has denied these rumours.
But this speculation drove BTC and two crypto-related stocks.
Bitfarms (TSXV:BITF) and Hive Blockchain Technologies (TSXV:HIVE) stocks surged 7% and 3.08%, respectively, in a day. The two companies mine cryptocurrencies and store them as inventory. They earn money by selling this crypto. Hence, when the BTC price surges, their inventory value surges, and so does the stock price.
What Twitter CEO has to say about Bitcoin
Now, this Amazon speculation reignited some momentum in BTC. Then there was a comment from the Twitter CEO Jack Dorsey, who is also the co-founder of the financial payments company Square. Square first invested in cryptocurrency in October 2020 and added BTC in February.
In the past, Dorsey said, “Bitcoin reminds him of the early days of the internet.” This comment got me thinking of crypto as a revolutionary technology and its potential to make you a millionaire. Imagine if you could travel back in 2000 when the dot.com bubble burst and buy Amazon or go back to 2007 and buy Google or Facebook. This was the time when internet penetration wasn’t strong, and the world was realizing the potential internet holds.
Today, the internet has made trillion-dollar companies. The internet is not just an industry but an alternate world by itself, the digital world. And a digital world needs a digital currency. When social media first came, there were thousands of security and data privacy issues. Social media called for a new set of regulations, infrastructure, and consumer awareness about the right use of their account.
Once an ecosystem was in place, social media flourished and now touches the everyday lives of billions of people. That kind of potential is what crypto possesses. As the world builds an ecosystem, there will be crypto cycles and volatility. But once a system is in place, BTC could become the Google or Facebook of payments, a global platform.
The fool’s way
If you have the patience to stand these hurricanes of volatility and stay invested in crypto-related stocks for another 10-15 years, they could become your ticket to millions.