This Crypto Stock Can Find 'Cement Floor' After KindlyMD, Bitcoin Price Surge
Crypto adoption continues to make major strides and this small-cap name could benefit next.
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The adoption of crypto was inevitable.
OK, so maybe that statement is a little over the top and benefits from hindsight, but the push of crypto adoption by smaller companies has been impressive and swift. The reaction by traders has been even more impressive, blasting shares of micro-cap companies into the stratosphere on the announcement of financing for the creation of a digital treasury.
The latest company to hit the market with a Bitcoin treasury strategy is Kindly MD (KDLY), which merged with bitcoin holding company Nakamoto. Shares soared from a $3.90 close on Friday to over $31 in early trading on Monday. The stock eventually closed at $13.69, a huge retracement from its high, but keep in mind that Kindly MD was trading below $2 to begin the month.
I want to keep an eye on the after-announcement action. Kindly’s $510 million PIPE, priced at $1.12, marks the largest PIPE for a public company performing a crypto-related transaction. Pairing that with $200 million in convertible notes and snagging David Bailey as CEO should keep this name on the radar.
The bigger question now is: How long can Strategy MSTR maintain its dominance with so many competitors entering the Bitcoin treasury space? It appears that the barrier to entry with a Bitcoin strategy remains low, and the available financing is high.
Crypto investors received another big endorsement with the announcement that Coinbase COIN will be added to the S&P 500.
Amid all of this positive news, the price of bitcoin has surged back over the $100,000 mark.
It didn’t stop there, either. DeFi Technologies (Nasdaq: DEFT), my small-cap selection of the year, received approval to graduate to the Nasdaq. The move was long overdue, but the prior administration created approval challenges.
The Nasdaq up list is only one of several catalysts that was behind my bullish thesis for the company. Continued momentum for crypto is another, and we’re seeing that with the price action across the board of tokens. I expect May will show a massive inflow for Valour, the company’s ETP management subsidiary.
Shares broke out higher before the Nasdaq up list. With the big board listing cemented, I expect mutual funds, family offices and investors will move into the stock, although it may take a few weeks for everyone to discover the value still in play. Unless crypto falls apart, I believe the $3.10 to $3.50 range becomes a cement floor for DEFT. Any pullback into that range should be aggressively bought.
As crypto continues to expand, the company’s ETP business, digital trading business and new AI trading software should support revenue growth and profitability. I still believe the stock could see double-digits this year.
At the time of publication, Byrne is a partner in a venture equity firm that has a business development relationship with Defi Technologies, and Byrne owns shares of DEFT for his own account.
