COIN Flip
10/17/24 Prospero.Ai Investing (162nd) Edition (Midweek)
Yesterday was a strong day for the market where we saw Small Caps have a great runup that tested a crucial upward resistance zone. This is hopefully the beginning of a breakout of a sector that has been beaten down for some time. But there's another group of assets that have underperformed over the last several months that have seen a strong uptick over the last several days; Bitcoin Miners. For those of you that are unfamiliar, Bitcoin miners are often a proxy for those not exposed to Bitcoin. In other words, when Bitcoin does well, Miners tend to follow. One stock in particular that has caught the attention of Prospero's signals is Coinbase (COIN). Let me explain.
Sometimes, Prospero's signals become so clear that you can't ignore them. This is a great example. I personally noticed around October 3rd that COIN's Net Option Sentiment Score jumped to 100. That my friends, is as high as you can get! I keep COIN in my Prospero app's watchlist, because it's a good way to watch the Bitcoin sector's performance. Well, the next day, I checked again and sure enough, it was 100 again. That caught my attention, so on Monday October 7th, I grabbed some longer dated call options for COIN. Over the next 3 days, the stock actually dropped. A buddy of mine that bought some calls at the same time I did was mad at me, he texted: "I thought Prospero had COINT at 100 Net Options, what's the deal? Why is it dropping?". I told him to be patient because Net Options doesn't hit 100 everyday. Sure enough, at 1pm on October 10th (my birthday), everything changed. As of the writing of this letter, over the last 5 trading days COIN has run from $162 to $210. That's an incredible 29% in 5 days! Let's just say that my calls did pretty well. Thanks for the amazing birthday present Prospero! But that's not the end of the story. Let me show you a quick screenshot I took from my phone of COIN after the market closed yesterday:
Look at the Net Options AND the Upside! Both are at 100. And that's after the run up of the last 5 days. We'll see if those numbers hold, but this is a strong indication that there is more upside to come. We're going to be watching this closely and probably will add this on any dip today, and maybe if there isn't one. These two indicators sitting at 100, shows us that institutions are VERY bullish right now on COIN in particular and Bitcoin in general.
It is also the end of an era, META, one of our best long-term case studies lost its almost 2 year run atop Upside. That says something about the COIN prospects.
Oh, and by the way. My buddy sold his COIN calls right before the run up that started on Oct 10th. I sent him a screenshot of my gains yesterday with a simple message. "TRUST PROPERO 🤑". I won't show you what emoji he sent me back. But he repented and said he would never doubt again. We'll see. Now a word from our CEO, George Kailas.
A WORD FROM OUR CEO
I have my own views on COIN, going into the election I think it is one of the safer investments with high upside, so the 100 Upside rating is no surprise. If Trump wins it will do very well and if he doesn’t there is likely to be some turmoil which could benefit bitcoin stocks as some view it as disaster insurance and/or validation that an alernative economy would gain value in ongoing turmoil. Whether or not that is true, people believe it. We already own it in our trading portfolio and will definitely look for a spot to add for our investing portfolio.
It has been an up and down week with lost of twists and turns we continue to hedge aggressively and are beating the S&P 500 by 75% annualized, with a win rate of 60% against SPY benchmarks.
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