As Liquidation Fears Wane, This Oversold Sector Could Slowly Recover from Here

The past few months have seen stocks move off their lows. Despite the daily swings in the market, the potential for a recession has been priced in. Some sectors have fared better than others during this downturn.

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  • In the meantime, the market recovery of the past few weeks has been best for beaten-down tech plays. And one of the hardest hit places, cryptocurrencies, has technically entered into a new bull market. From its lows last week alone, Bitcoin is up nearly 25 percent.

    Considering a number of cryptocurrency staking and lending platforms have had to liquidate their holdings, this performance is impressive. And it’s a sign of hefty buying activity across the board, even amid the need for others to sell. And some analysts see a further short-term gain in the months ahead for the space.

    In this space, investors have a number of options. One that could be attractive for a rebound is Coinbase (COIN). One of the largest brokerage plays, the company makes money on transactions, and volume has certainly been up. Plus, the company wasn’t invested in any platforms that have had to liquidate.

    Action to take: Shares are already about 70 percent higher than their recent lows. But there could be further gains ahead. The stock is still down 71 percent in the past year, and shares trade for just under 5 times earnings.

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  • For traders, the December $150 calls would require shares to roughly double from here. But going for about $3.75, a further rally in the space could lead this option to high-double or low-triple-digit gains.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.