Don’t look now, but the Bitcoin rebound is gaining momentum!
After a devastating pullback and the high-profile FTX bankruptcy, many investors left this asset class for dead.
But financial markets (including Bitcoin) can be tricky.
When most investors decide to exit one area of the market, that’s when things get interesting. Since most short-term traders have already closed their positions, few sellers are left in the market.
This is often known as “shaking out the weak holders.”
And once those “weak holders” are gone, a new wave of buyers can quickly push prices higher.
That’s exactly what we’re seeing as a new Bitcoin rally emerges.
Now I’ve got my doubts when it comes to the long-term usefulness of this cryptocurrency.
And while I can see that blockchain technology will certainly have some applications, I’m still skeptical about putting too much capital into this broad asset class.
But as a long-time trader, I can see exactly what is happening here.
It’s the kind of situation we would pay close attention to when I was a hedge fund manager. So today, let’s take a look at some of the ways you may want to play this new trend.
Stocks Tied to the Bitcoin Rebound
Many Bitcoin enthusiasts will tell you to “keep stacking” or to “HODL” your tokens in a cold wallet.
Maybe I’m just old fashioned…
But I prefer to play this Bitcoin rebound with a more traditional approach — using stocks listed on U.S. exchanges and option contracts to set up better risk / reward situations.
While not perfect, U.S. stock exchanges have certain disclosure and custody requirements. So I feel a lot safer investing in this regulated area instead of “wild west” transactions that have more unseen risks for investors.
A couple Bitcoin rebound stocks I’ve got my eye on include Riot Platforms Inc. (RIOT) and Marathon Digital Holdings Inc. (MARA). Both companies are known for Bitcoin mining, and should be worth more as the value of their tokens increase.
Other more “traditional” payment processors like Block Inc. (SQ) — formerly “Square” — and Paypal Holdings Inc (PYPL) are also finding support as the Bitcoin rebound evolves.
And while trading firms Coinbase Global Inc. (COIN) and Robinhood Markets Inc. (HOOD) both have serious risks to their business models, these stocks could trade higher for several months as investors confidence grows.
A word of caution here: These stocks are speculative in nature and carry significant risks. So I don’t recommend putting too much capital into any one stock — or into the overall group right now.
But the Bitcoin Rebound may create some great short-term trading opportunities to help grow your family’s wealth.
Two Strategies I’m Considering
For my own family’s trading, I use two distinct strategies with stocks I expect to trade higher.
The first strategy is very conservative, and it’s designed to produce reliable income.
I sell “put option contracts” for stocks I expect to trade higher.
With this approach, I collect an up-front payment in exchange for an agreement. I’m agreeing to buy shares at a specific price. But only if the stock is trading below my agreement price on a specific date.
You can read all about how this strategy works by downloading my free Accelerated Income Trading Blueprint here.
The second strategy is much more aggressive — taking on more risk in exchange for potentially much bigger returns.
For this approach I buy “call option contracts” for stocks that I believe will trade higher.
While option contracts can be risky, they can also generate very large percentage gains. That’s why I like investing a smaller portion of my family’s savings into these contracts.
If the trade pans out as planned, the small investments can generate large returns. And if not, I’ve only invested a small amount so my risk is still manageable.
You can follow my aggressive trades in real-time with a subscription to my Speculative Trading Program.
And with both of my trading services, I send you an alert (and optional text message) before I put my own family’s money to work.
Keep a close eye on the Bitcoin rebound this week. It could be a great short-term trend to help you lock in some profits in early 2023.
Here’s to growing and protecting your wealth!