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BTCS Inc (OTCMKTS:BTCS) Is Flying: What's Next?

BTCS Inc (OTCMKTS:BTCS) Is Flying: What's Next?
Written by
Chris Sandburg
Published on
November 22, 2016
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BTCS Inc (OTCMKTS:BTCS) is flying right now, with the company up close to 200% heading into a fresh week's trading, and volume eclipsing the average three month trailing figures. Friday's volume saw a little over $134 million shares change hands, while Thursday saw 95 million. Across the last six months or so, volume struggled to reach high dingle digit millions. It looks as though markets are under the impression that something big is in the works, and the speculative volume is flocking to the stock in anticipation of said development.On the non speculative side of things, however, there's been little to support a run of this degree. This begs the question, then, what's next?Let's have a look, see if we can figure out the answer.BTCS is a digital currency company, which focuses on the verification of transactions across a host of different incarnations of digital currency, including the space's flagship offering – bitcoin. Now, we're going to kick things off with a bit of cynicism. BTCS brands itself as securing the blockchain through transaction verification. This sounds great, but doesn’t really mean anything. Blockchain transactions are verified by the mining process, and by their very nature, are secure. No external protocol is going to improve security. Yes, a root code alteration could achieve this, if the community felt it was appropriate, but it's not going to be implemented by BTCS.If the company is mining bitcoin, then there's some truth in its claim that it is verifying transactions. We'll give it the benefit of the doubt here, and assume it is.Anyway, that's the negative out of the way. BTCS really is an ecommerce company, which allows customers to purchase goods using bitcoin and a variety of other digital currencies. Readers can check out the website here, but to briefly summarize, it's a platform that prices items sold by the company's Bitcoin Shop brand's partners in digital denominations.It's pretty neat, and generates revenues for the company - $199K and $141K for the first and second quarters of this year respectively – but it's not supportive of a 200% overnight gain. It's been live for a couple of years now, and there have been no developments to the platform of note.So what's moving the stock?Well, bitcoin as a currency has soared in value over the last year or so. It's now priced just short of $800 per BTC, and this value increase is starting to filter through to the mainstream media. When mainstream media picks up on something that is relatively under the radar, markets flock to pick up an exposure to the hype. In this instance, there are very few available exposures to bitcoin and digital currency as a whole, with only a handful of companies trading publicly in the space.BTCS is one of these exposures.That's why the stock is running up right now – investors are looking to benefit from the boost in wider sector attention, and from a publicly traded perspective at least, BTCS represents this sector. There are a couple of other options – MGT Capital Investments Inc. (OTCMKTS:MGTI) is one, and the Winklevoss' have a fund that offers a limited exposure – but none are as established or as direct as BTCS.So that's why investors are flocking to the company, but it doesn’t answer the question – what's next?Well, here's how we see it. If bitcoin increases in value, and it is doing, it will garner more and more mainstream attention. Increased mainstream exposure will translate to increased desire to transact in bitcoin, and BTCS is one of the most trusted and established portals through which this is possible. Overstock.com, Inc. (NASDAQ:OSTK) is another, and the company has gained 30% since the start of November, in line with bitcoin's run up in value. So, if bitcoin continues to gain, and once it breaks $800 there will almost certainly be a follow through in value increase, BTCS should follow suit.There's a risk of course, and it's rooted in over-enthusiasm. The 'only exposure' concept that underpins a bull thesis also primes the stock for over buying, and this could temporarily boost market cap levels unrepresentative of fundamental value. Even with the latest gains, however, we don't think that point is yet reached.We're looking for an update from the company (and we're fully expecting it, there's precedence dating back to earlier in the year on the back of high volume) to provide clarity, and to concurrently serve as an upside catalyst.We will be updating our subscribers as soon as we know more. For the latest updates on BTCS, sign up below!Disclosure: We have no position in BTCS and have not been compensated for this article.

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