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BTCS Inc (OTCMKTS:BTCS) Is Running On No News: What's Next?

BTCS Inc (OTCMKTS:BTCS) Is Running On No News: What's Next?
Written by
Chris Sandburg
Published on
May 11, 2017
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BTCS Inc (OTCMKTS:BTCS) is an early session runner on Thursday, with the company currently trading at around a 15% premium to its daily open price. We’ve not seen any news hit press for this one for coming on 12 months, and even then the news was a note addressing some unusual volume. Nevertheless, it is spiking as described, and so we are going to take a look at what’s going on in an attempt to figure out whether there is any value in picking up an exposure to the run, or whether it’s a one-off move.Here goes.Before we get into the detail, let’s kick things off with a quick introduction to the company. A couple of years ago, this one was called Bitcoin Shop. In July 2015, the company changed its name to BTCS with the goal being, as far as we can tell, to accommodate for any potential expansion in the space outside of its retail operations. We'll touch on this again shortly, but as yet, we haven’t really seen any example of said expansion.The company pretty much remains a one trick pony, and operates through this website, serving as a sort of affiliate partner to retail outlets. Basically, it takes the product listing database from large retail sites and converts the pricing into bitcoin based on current exchange rates. Users can then buy the products with bitcoin through the Bitcoin Shop interface. It’s a neat idea and there looks to be a decent amount of traffic going through the site. The major metrics providers rate it pretty highly and the shop’s inventory is updated regularly - suggesting there’s something going on behind the scenes (which is more than we can say for a lot of the fly by night bitcoin entries we’ve seen hit the public markets over the last few months). So there's that, and saying it’s a one trick pony is probably being a little harsh. The most recent investor presentation (here, for anyone interested in taking a look) details a sort of cryptocurrency sector investment portfolio approach, with which BTCS is apparently seeking to take a position in early stage companies in the sector and, in doing so, benefit from the growth of said companies as the space matures.That’s a valid strategy, but it’s got to be pointed out that any such investment is going to be funded by shareholder capital, and this brings with it a whole host of risks. The primary two as far as we see it are that any investors are immediately reliant on management to make smart allocation decisions, and will also have to shoulder quite large degree of dilution every time the company wants to raise in order to allocate to a new entity, or to build on an existing stake. The dilution risk is self-explanatory. The management risk comes down to whether a shareholder thinks that the guys in charge have the ability to make smart allocation decisions. There are bios in the above linked to investor deck. So what is happening at the moment that is causing this one to run up as it is doing?Unfortunately, not that much. The company is gaining strength purely on the back of the current run in the price of bitcoin and the attention that this run is drawing towards the digital currency space. Market participants are looking to pick up an exposure to the run up in price (which is up around $1800 currently) without having to buy bitcoin, and this company offers exactly that. In other words, it’s gaining strength, but don’t be fooled into thinking it is running on its own operational developments.So with all that said, what does the stock look like from a trade perspective?Against a backdrop of industry excitement, we think it’s one of the more attractive plays in the space for a trader wanting to pick up an exposure to the space as a whole, but that concurrently is not wanting to buy bitcoin. Beyond that, however, it’s a bit of a punt.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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