In early morning trading, the Dow Jones is up nearly 200 points lead by CSCO, who reported earnings last night. The hardware and network company announced that they will be bringing back a large portion of their $67 billion cash pile that is stashed overseas, and will deliver it back to shareholders the form of future dividend growth and a large share buyback program($25 billion, 12% of its market cap). Additionally, they raised their revenue growth guidance for the year. If the Dow closes in the green today, that would make a 5-day rally from the lows of an 11.2% correction from the all time highs.
Where Do We Go from Here?
While it is impossible to predict where the market is going, the longer term trend is that the stock market is still in a bullish uptrend. This 11% correction was a healthy and needed reset of expectations, sentiment, and complacency. Analyze your favorite companies for a possible opportunity to add to your positions that pulled back. The Dow hit an all time high of 26,632, only about 6% now from that high. At the beginning of the new year, the Dow crossed the 25,000 milestone, the place we are today. The differencesare the higher volatility and more cautious sentiment. I believe the worst is over for now and the Dow will travel towards 26,000 barring any shocking geopolitical event that could send a shock to the system.
Is Bitcoin in a Dead-Cat Bounce or Is this the Bottom?
Bitcoin is approaching 10,000 again as it closed below 7,000 a few weeks ago, a far cry from its all time high of 19,500. Even with the rally to 10,000, Bitcoin is still in bearish territory, and could return back towards 5,000. Why did Bitcoin rally? Some recent fundamental cryptocurrency news lifted the whole asset class ushering some confidence that widespread adoption is taking place.
Litepay, a payment processor company, will approve and adopt the cryptocurrency Litecoin, to be used as a form a payment. Litepay has merchants in 41 countries, including the United States, Japan, Germany, and the United Kingdom. One of the issues of cryptocurrency was adoption into real world use cases and applications.
Coinbase, the leading United States online marketplace for buying and selling cryptocurrencies, announced that are releasing a service(called Coinbase Commerce) for merchants to accept Bitcoin, Bitcoin Cash, Ethereum, and Litecoin payments, and deposit them into their digital wallets on Coinbase.
Software giant Microsoft announced on February 12th that they will develop blockchain applications and architectures in decentralized identity systems using Bitcoin and Ethereum. Microsoft chose a decentralized blockchain architecture over a centralized system due to their ability to enable privacy, self-ownership, and permissionless access. Microsoft could use Bitcoin, Ethereum or even Litecoin at the same time for their decentralized ID systems.
Cryptocurrencies are Here to Stay
While the prices of cryptocurrencies are very volatile, and impossible to predict the bottom in this recent downtrend in prices, the news of adoption(or expanding their uses of cryptocurrencies) by these 3 firms of MIcrosoft, Litepay, and Coinbase, is very bullish news for this young asset class. While I believe that most of the over 1,400 cryptocurrency coins will eventually fade away due to failed projects or lack of liquidity, the large cap cryptocurrencies of Bitcoin, Ethereum, Litecoin, and Ripple are here to stay as they continue to be adopted by firms looking to build on blockchain technologies.
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