Market Fears Point to Potential Buying Opportunity

The past few months have been brutal for cryptocurrencies, which went from a total market cap over $2 trillion to shedding over half its market value in just a few weeks. One culprit? China, which banned cryptocurrency mining.

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  • While the global mining network is reestablishing itself in friendlier jurisdictions, there’s rising concern over how long that will take and if the market will be flooded with used mining equipment.

    Such equipment is usually in the form of high-end graphics cards, which could spell trouble for Nvidia (NVDA). The company’s shares are near an all-time high, even when adjusted for its recent stock split. However, in the short-term the market may be saturated.

    Given how robust the cryptocurrency mining network has been, and how quickly things have been online, such fears are likely looking overblown. But any short-term fears could create a buying opportunity in the stock. Shares have nearly tripled the S&P 500’s return in the past year.

    Action to take: Growth remains robust at the company, which hasn’t raised any concerns over cryptocurrency mining. That’s just a small part of the company’s business among supplying other high-end technology with graphics processing, including technology such as lidar.

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  • Investors should look for a 10 percent minimum pullback from the peak to look for a buying opportunity. Post-split, that would ideally be in the $175-180 range for shares.

    For traders, consider selling a put option like the October $165. Last going for around $4.25, traders could potentially get paid to buy shares at a heavy discount from their highs, or simply collect cash for the risk of doing so.


    Disclosure: The author of this article has a position in the company mentioned here, and may make further trades after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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