Stock offerings for the blockchain company surged after the announcement of the first-ever bitcoin dividend on Nasdaq.
On Jan. 5, the Nasdaq Composite posted its biggest one-day loss since last February. But for one of the listed companies, the day was extremely optimistic.
Blockchain stocks are rising
BTCS Inc. (BTCS), a blockchain technology company, was up nearly 44% at the closing bell in New York to $4.36, the third-highest behind Lixte Biotechnology (LIXT) and Mainz Biomed BV (MYNZ). Nasdaq. ).
Top Nasdaq participants at the close on January 5, 2022. Source: TheStockMarketWatch.com
In contrast, Nasdaq shares fell 3.3% on Jan. 6, with their losses largely driven by the release of minutes from the Federal Open Market Committee (FOMC) meeting in mid-December last year. In detail, the minutes revealed the intention of US Federal Reserve officials to raise interest rates faster than expected.
The Fed’s concerns had no impact on BTCS, as they came on the same day the company announced “Bividend,” the first-ever dividend paid in Bitcoin (BTC) by a Nasdaq-listed company. Excerpts from a press release published on January 5 show that:
“BTCS intends to pay $0.05 per share in bitcoin based on the price of bitcoin on the ex-dividend date. Investors who choose not to receive Bividend in Bitcoin will receive a cash dividend of $0.05.”
Investors/traders took the announcement as a signal to increase their bets on BTCS shares as its price per share rose to $5.05 on Jan. 5, a three-week high. However, the stock price later fell more than 13.50% due to profit-taking, but ended the day in profit overall.
BTCS correction continues
BTCS fell another 8% to $4.01 a share after opening on Jan. 6 in New York, this time in sync with the Nasdaq, which fell nearly 1%.
Daily BTCS price chart. Source: Trade View
The sell-off appears to have accelerated after BTCS tested its 50-day exponential moving average (50-day EMA; velvet wave in the chart above) as resistance near $5.12. Similarly, the 20-day EMA (green wave) attempted to limit BTCS’s downside momentum by acting as a support.
Related: Bitcoin price falls to $43.7K after Fed minutes confirm rate hike plans
With BTCS appearing to be range-bound between the two critical moving averages, some financial pundits warned investors not to invest in stocks amid the hype surrounding the Bitcoin dividend launch.
Among them was Ivory Johnson, founder of Delancey Wealth Management. The Certified Financial Advisor recommended investors buy Bitcoin directly if they want to buy it, rather than seeking exposure through BTCS.
“When buying stock, your decision should be based on the fundamental principles of the company itself,” he told CNBC.
Douglas Bounpart, President of Bone Fide Wealth, called Bividend “a really nice bridge” for institutional investors looking to own Bitcoin. However, he noted that the BTCS offering is more of a feature than a product, stressing that investors should focus on other factors before buying BTCS stock, such as: B. the future cash flows of the company.
BTCS is currently trading nearly 85% below its all-time high of $32.40, which was set in early January 2021.
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