Bitcoin Price Consolidation Opens This Trade Opportunity
The promise of a friendly Trump administration and its cult-like following makes bitcoin a buy, even after the price dip.
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News that Donald Trump is planning to immediately impose tariffs on Mexico, China and Canada is causing some market uncertainty on Tuesday. Many stocks and the Russell 2000 IWM were extended, so it isn’t too surprising that the news triggered rotation out of some of those names and into the Magnificent Seven MAGS stocks.
On Monday, I discussed how Nvidia NVDA is generally regarded as a "safe-haven" play, and we are seeing that at work today. I expect to see bouts of weakness in small caps to trigger rotation back into the Magnificent Seven names. It would be a steady trend, but it should be a tradable phenomenon.
Another trade opportunity I see is in bitcoin and related stocks like WULF and CORZ. Bitcoin has been ripping higher since the election and has finally pulled back again, but I believe this is just some healthy consolidation that will set up a further move higher to end the year.
I was a bitcoin skeptic for a long time, primarily because there is nothing physical and there and no clear intrinsic value. It can’t be seen, touched, heard or tasted, and it still has very limited practical use on a daily basis. What it does have is a devoted cult of supporters that view it almost as a religion. It is gaining more and more acceptance and is now at the point where institutional investors feel that they have to have some allocation to it as an asset class, much like precious metals.
There is never going to be a way to value bitcoin like a stock. Its value will be determined solely by supply and demand, which will make it very volatile. With the Trump administration supporting it and the likelihood of a friendly SEC, there is no reason for demand not to keep building.
I have a core position in IBIT and will look to increase it on the current pullback. I’ll keep the core position and will inform you of trading opportunities that I see. I am also adding to my position in Bitcoin miner play WULF today.
Another trade I’m making is buying Amgen AMGN. The big drug company stock is down over 10% on news that its obesity drug, which is in development, had subpar results. While that is a disappointment, the company has many other tremendous opportunities, and the obesity drug blow-up is overdone.
Amgen gapped up to around $300 when the obesity drug was first announced. The stock ran all the way up to $340, and now it is down to around $261, which is well below the price it was at before that drug was even announced. Amgen is expected to earn over $20 per share without the obesity drug in 2025 and has a trailing PE of 15. I think it will recover quickly.
At the time of publication, DePorre was long NVDA, IBIT, WULF and AMGN.
