United Kingdom Eyes Broader Crypto and DeFi Regulations

Many people predicted 2022 to be the year of regulation for crypto. However, it looks like that’ll happen sooner than later. Regulators in Britain plan to regulate decentralized finance and the crypto industry in general. 

Blockchain References to be Removed From Crypto?

Walter Bloomberg first broke the news on Twitter, stating there won’t be a universal regulatory framework for DeFi.

Instead, the regulator intends to develop rules for DeFi assets like Uniswap, Aave, etc, on a case-by-case basis. There are also plans to remove any reference to blockchain from the definition of cryptocurrencies.

While there is no additional information about the proposed regulations yet, there are obvious plans for a regulatory framework. Regulators in the United Kingdom appear to be at the forefront of calls for crypto regulations.

In November 2021, the Bank of England called for better legal and regulatory frameworks to deal with the fast-evolving market. It gave reasons why such regulatory frameworks would be beneficial while asking for changes at the local and global levels.

UK Regulators are at the Forefront of Crypto Regulations

The foremost financial regulator in the country, the Financial Conduct Authority (FCA) had also adopted a tough stance towards the industry before. Early last year, it released a publication warning consumers of the risk of losing all their assets if they invest in crypto.

Beyond talking about crypto regulations and risks, regulatory agencies in Britain have been taking action. At the forefront of this is the Advertising Standards Authority (Asa). The advertising watchdogs have cracked down on crypto ads significantly in the past year.

In December 2021, it banned seven crypto ads, including a Twitter post from Papa John’s Pizza and a Facebook ad by Coinbase.

According to the agency, the ads were misleading or didn’t include warnings about the risks of cryptocurrencies. Later in the same month, it ordered Arsenal FC to take down two ads promoting its fan tokens.

With the proposed rules, British regulators will now have more authority on cryptocurrency. According to reports, the rules are necessary because of consumer risks, lack of information, and misleading advertising. 

While the regulatory framework will add more clarity and consumer protection to the crypto industry, several things remain unknown. For example, the idea of removing blockchain references for the definition of crypto assets would need more clarity.

QQQ: The Downside Risks on the Nasdaq Seem Exaggerated

The performance of the Nasdaq now encompasses a higher degree of volatility as seen by the 5.5 to 9% corrections in the Invesco QQQ Trust (QQQ) which has now become the new normal in a macroeconomic environment where hawkish Fed hiking interest rates is seen as being unfavorable to high-valued and unprofitable tech stocks.

Source: Initial chart from Trading View

For investors, QQQ tracks the Nasdaq-100 Index which features Apple (APPL), Alphabet A (GOOGL), Alphabet C (GOOG), Microsoft (MSFT), NVIDIA (NVDA), Meta labs (FB), Amazon (AMZN), Tesla (TSLA), Adobe (ADBE) and PayPal (PYPL). These are the main holdings out of a total of 102.

Assessing the risks

There are certainly risks in 2022 in the context of being invested in tech equities, but, I would like to bring to the attention of investors that despite all the volatility, QQQ has gained 6%, and this shows that the market’s repositioning (amid the rotation from growth to value names) does not seem commensurate with the forthcoming pace at which interest rates will increase.

Exploring further, trades are no longer crowded as in 2021 as people look for income or other asset classes to diversify. However, this diversification away from tech seems not to have hit QQQ’s main holdings which constitute 52.73% of the portfolio. As per my observation, this has been the case from April through December this year when most of the market gains were just from AAPL, MSFT, NVDA, TSLA, and GOOGL.

Source: Ycharts.com

Given the fact that the rotation has lacked in breadth, I see the corrections in tech as a rather muted market reaction, and this also prompts me to discard fears that tech stocks will suffer in the same way as during the bursting of the Internet bubble back in 1999-2000. At that time, in the first phase of the bear market, the large-caps names were doing fine but a large percentage of Nasdaq’s other components crashed by more than 50%. Ultimately, all the components crashed.

However, that was a completely different Nasdaq with the top stocks of the time being Cisco (CSCO) followed by Microsoft then Intel (INTC), or from the networking, software and semiconductor sectors respectively. Today, it is more about social media, online advertisement, internet marketplaces, electric cars, the cloud, smartphones, and virtual reality. In short, tech is now fully integrated into all spheres of economic and social life compared to twenty-two years ago.

Considering the inflation factor

Moderating slightly, QQQ’s other holdings seem to be impacted as investors become more selective, putting more emphasis on quality (free-cash-flow, balance-sheet, economic moat, etc) and valuations. Still, here also, rising inflation, currently at above 7% compared to 3.75% in 1999-2000 could prove to be more difficult for value stocks like banks as their customers suffer from rising prices and are faced with the rising cost of doing business. For this matter, as shown in the chart below, Bank of America (BAC) and Berkshire (BRK.B) saw a more pronounced dip in their total return level in August 2008 than Apple or Microsoft when inflation was above 5%.

https://static.seekingalpha.com/uploads/2022/1/14/49663886-16421719831560977.png

Source: Ycharts.com

Industrials are also likely to suffer from soaring raw material and labor costs. As for tech, they should better withstand high inflation with their ability to make use of software, AI, and automation tools more rapidly than companies from other sectors of the economy. These tools enable them to reduce operating costs and better circumvent wage inflation. Examples are FinTechs like PayPal’s (one of QQQ’s current underperformers) ability to reduce money transfer fees for customers compared to traditional banks and companies making use of cloud-based collaboration instead of having to invest in costly infrastructure.

Tech should continue to outperform as digital transformation enablers

Furthermore, with relatively less dependency on physical interactions caused by variant-related uncertainty, tech stocks are less likely to see a reduction in profitability. Here, some will note that Apple’s revenue share from its App Store ecosystem is increasing more rapidly than for devices and Tesla is considered as an internet-of-cars company.

Historically, as shown in the chart below, big tech’s gross profit margins have either increased or remained constant during the last five years, which include 2021, a year characterized by rapidly rising inflation.

https://static.seekingalpha.com/uploads/2022/1/14/49663886-16421723117351067.png

Source: Ycharts.com

Thus, inflationary pressures grappling the economy as from 2022 is likely to put valuations on the backstage, with tech, especially the more profitable ones, likely to continue seeing positive returns. This said tech remains highly dependent on semiconductors, a sector that needs to be watched closely for some short term pain when some of the big names report earnings on the last week of January. Finally, looking at the performance of the Nasdaq in 2020 and 2021 when it gained 43.64% and 21.39% respectively, even a 10-12% gain in 2022 would put it in positive territory.

Disclosure: I am long Apple. This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before investing.

3 NFT Tokens Tipped to Rise in 2022

Since Non-fungible token (NFT) was first created in 2015, the market has been steadily growing to new highs.

However, 2021 proved to be a landmark year for the NFT sector. Compared to 2020, when the industry generated less than $100 million, the nascent sector had a trading volume of more than $23 billion by the end of the year.

It’s on this backdrop that we enter 2022, and as more firms turn to the space, the future for the NFT market is very positive. According to Chainalysis, the NFT market, now worth about $27 billion, would skyrocket in 2022. 

What Are NFTS? 

NFTs are digital tokens of tangible and intangible items that can be transacted on the blockchain. 

They can be digitized art, code, tweets or tickets, or collectible cards.  While there are hundreds of NFT projects, only a few are truly outstanding. Here are some of the best NFT tokens to look out for in 2022.

  1. The Sandbox (SAND)
  2. Axie Infinity (AXS
  3. Enjin (ENJ)

The Sandbox

The Sandbox is a gaming ecosystem based on the Ethereum blockchain. It’s an earn-as-you-play gaming platform based in Hong Kong, China. It was co-founded by Sebastien Borget.  

The online gaming community is a multiverse that combines blockchain technology, NFT, and decentralised finance in a virtual metaverse.

Players can choose their avatars and develop them across various games. Just think of GTA, but as an online, virtual multiplayer, allowing you to transact in real-time.  

Venture capital group Softbank recently took part in a $93 million funding round for Sandbox, which positively influenced its price.

The coin has risen by over 14,000%, and as more people get on the Sandbox gaming platform, there is still room for much increase. Sandbox sells around the $5 mark presently. It has a market cap of $4.67 billion.

Axie Infinity

Just like Sandbox, Axie Infinity is also a play-to-earn community-based network. Axie is simply an online world, having its own economy, landscape and politics. 

On Axie, the fun is unlimited. Players interact with one another and can build complete lives. They also can buy, collect or breed digital companions called “Axies” and also buy “small love potions” (SLP). 

Axies are somewhat of a digital pet; you can buy Axies or win them from other players. And, if you want, you can breed them from scratch. 

When they are grown, you can sell them to other players to earn AXS, the native token of the platform. AXS can also be used to generate real income if they are sold outside of the Axie infinity network.

Gamers can enter into the metaverse by converting their assets into AXS. Axie Infinity is based on the Ethereum blockchain and was founded by Sky Mavis, a company based in Vietnam. 

AXS is currently in a top 3 NFT tokens, and while it has surged by over 10000% within the last year, many analysts still tip the asset’s value to go higher.

Due to the current bearish nature of the market, its value recently dropped to around $68 from a high of $95 seen last week. Its market cap stands at around $5.83 billion.

Enjin

Enjin started as a community gaming platform in 2009  when it was created by Witek Radomski and Maxim Blagov.

The project had somehow been able to evade the public’s attention until 2017, when it launched an initial coin offering (ICO) through which it raised around $19 billion through the sales of ENJ tokens.

The Enjin blockchain powers a social platform based on the Ethereum network. Participants can create groups and chat and form forums on the platform. They can also play games, host communities, and sell merchandise. 

There are various gaming groups on the platform, and it has millions of gamers on its platform. Its growth has made it one of the closest rivals to the Axie and Sandbox gaming communities. 

With the chance for gamers to tokenize their items, in-game purchases are possible, and that has contributed to its growth. 

The platform is also looking to draw in more users with a recently launched Effinity Metaverse Fund, projected to rise to $100 million. 

The Enjin coin is one of the top 70 digital assets and has a market cap of over $2 billion.

Why These NFTS Would Rise

NFT-based projects are undeniably the darling of the crypto-sphere in recent times, especially since Facebook revealed that it was changing its name to Meta. This move by the social media giant has led to the rise in the adoption of these tokens and, at the same time, the growth of the space.

Thus, with many traditional firms investing in NFTs by buying these digital tokens and also making strategic moves in the space, one can be sure that these assets would witness an uptrend in their values throughout this year too.

For High-Growth Tech Lovers, the Trend Indicates That it is Time to Consider Value-Oriented ETFs

Also, subtracting 2% due to “positive sentiment” induced by the Santa Claus rally, it can be inferred that the index actually fell by more than 8%. At the same time, a look at the S&P 500 (in orange) which holds more than 28% of technology assets exhibits a more neutral position, while the Dow Jones Industrial average (in blue), up by 1.52% indicates that the more cyclical names are being prioritized by investors, as potential beneficiaries of the economic recovery.

https://static.seekingalpha.com/uploads/2022/1/9/49663886-16417501192287376.png

Source: Trading View

Going further in the past, the weakness in tech started from the second quarter of 2021 when it became evident that the Fed was adopting a more hawkish tone and bond yields were on the rise. However, the adverse market conditions for technology were masked by the gains from these six most popular stocks, namely, Tesla (TSLA), Apple (AAPL), Microsoft (MSFT), NVIDIA (NVDA), Meta Labs (FB), and Google (GOOGL). Now, with the Nasdaq bearing a P/E ratio of 28, tech valuations remain high compared to the broader market, and the weakness in richly-valued high-growth names in the technology sector should continue, perhaps in the same way as during the Internet bubble of 1999-2000.

Growth to value rotation

Now, moving away from high-growth tech names to lower-valued cyclical names reminds us that the “rotation from growth to value”, which some analysts were invoking in 2021, has gained momentum. For investors, rapidly growing tech stocks with their high R&D and sales expenses primarily focus on growth while value names are more conservative in spending and lay more emphasis on profitability.

To further verify whether the growth to value shift is really happening, I make a comparison between growth and value ETFs as per the chart below. In this case, the iShares Edge MSCI USA Value Factor ETF (VLUE) and the Vanguard Value ETF (VTV) are both up by 5.6% and 3.9% respectively, while the Schwab U.S. Large-Cap Growth ETF (SCHG) and the Technology Select Sector SPDR ETF (XLK) are down by more than 3% each. This one-month performance confirms that value is up, while growth/technology is down.

https://static.seekingalpha.com/uploads/2022/1/9/49663886-16417501193779671.png

Source: Trading View

Looking ahead, in view of the uncertainty associated with Covid variants, supply chain issues, and inflationary concerns in the first half of 2022, there is no guarantee that the current trend favoring value will continue, but, at the same time, we cannot remain insensible to the new market regime. Moreover, for those who have been used to investing in growth made relatively easy due to the momentum induced by the mighty Nasdaq, it may prove difficult to screen the market for high-quality value stocks with appropriate free-cash-flow, balance-sheet, and valuations metrics.

The value-oriented ETF rationale

Hence, it is precisely for these tech investors that investing in value-oriented ETFs where the fund managers select the best stocks, makes sense.

In this respect, VTV with an expense ratio of 0.04% and paying dividends at a yield of 2.15% holds mostly Financials (22%), Healthcare (18.5%), and Industrials (14%) stocks as part of total assets. Finally, for tech lovers, better performing VLUE, with 30.85% of IT exposure, and paying a 2.41% dividend yield at an expense ratio of 0.15% is a better choice.

Disclosure: I am long XLK.

 

Accounts on The TRON Network Surpass the 70M+ Mark

The TRON network ecosystem hosts multiple kinds of products, including public chain, wallet client, and dApps, among others. TRON also boasts being the fastest growing public chain in the world with 2.7 billion transactions, millions of DAU, and continuous daily new accounts.

Recent Price Action TRON(TRX)

TRON (TRX) is a virtual currency that was established to fuel the shift away from the centralised web to a more decentralised internet by removing intermediary control over entertainment enjoyed by corporations such as iTunes and Facebook.

Unlike conventional cryptocurrencies such as Bitcoin and Ethereum, TRX was not created to be an alternative to fiat currencies but to deliver a payment system and platform for creators who publish and store their works on the TRON blockchain. There exist a finite number of TRX coins, amounting to 100 billion, which were released at the launch of TRON.

TRX hit an all-time high of $0.3004 on the 5th January 2018 at a time of a strong rally in cryptocurrency prices, although it ended the year at around $0.01 as a result of market collapse. TRX price bottomed out again in March 2020 but burst to a peak of $0.1799 on 17th April during another cryptocurrency market rally. TRX subsequently fell sharply over the next week before reaching a peak of $0.15 in May.

A series of fluctuations from June to August saw the price of TRX drop to lows of $0.04917 in July prior to a rally which saw it peak at $0.0951 on 15th August. Another longer rally saw TRX peak in September at $0.12, with November 15 recording a high of $0.1291 after a dip and slight recovery.

An announcement on 23rd November by eToro, one of the leading brokerage firms globally, that it would be de-listing TRX and ADA (Cardano) from its platform by the end of the year due to regulatory concerns led to a 5% dip in TRX prices within 24hours.

At the moment, the TRX/USD chart is bearish since the cryptocurrency is trading in the red zone. By 29th December 2020, TRX had been trading below its 50-day moving average of $0.0933 and had been below that level for three weeks. The MACD line currently sits in the red region while TRX’s RSI could dip further into the oversold territory.

Can the price of TRX return to All-Time Highs?

TRX is on the decline this week, trading at $0.07, having lost 3.7% of its value in the past 7 days. The coin also shows a decline of 16% in the last month, although there is a 150% gain over the past year. TRON’s current price is also 74% below its all-time high of $0.3 in 2018.

At the moment, TRX is on a bearish trend and risks slipping below the current price of $0.07. However, some like Wallet Investors are predicting a bullish trend, forecasting the price will rise to $0.164 at the end of 2022 and that it will more than double to $0.41 by the end of 2026.

Others like DigitalCoin are also bullish but expect the price rise to rise at a slower rate, predicting an average price of $0.123 in 2022 which rises to $0.15 in 2025.

MANAMA Stocks Should Continue to Empower SPY, VOO and QQQ till 2024 and Beyond

These are Microsoft (MSFT), Apple (AAPL), NVDIA (NVDA), Amazon (AMZN), Meta Platforms (FB) and Alphabet (GOOG) which I have aggregated under the acronym of MANAMA. Three of the ETFs which own them are the SPDR S&P 500 Trust ETF (SPY), Invesco QQQ ETF (QQQ) and the Vanguard S&P 500 ETF (VOO).

https://static.seekingalpha.com/uploads/2021/12/30/49663886-16408833269688747.png

Source: Prepared by author

The funds hold these mega-cap tech stocks as part of their top holdings, with the exact percentage held out of total assets held varying and depending on the objectives of the individual fund managers. Looking at the last one-year period, the three have delivered performances of above 28%, with the SPY and VOO gaining 28.54% and 28.59% respectively, slightly outperforming QQQ at 28.31%. Now, the fact that SPY and VOO, despite holding companies in the non-tech sector like pharmaceuticals and financials have managed to deliver such gains normally associated with QQQ would tend to show that in addition to their individual portfolio specifications, they have also benefited from the “MANAMA factor”.

https://static.seekingalpha.com/uploads/2021/12/30/49663886-16408833273404047.png

Source: Trading View

For this matter, both SPY and VOO are passive ETFs with expense ratios of just 0.09% and 0.03% respectively, far below the tech-heavy QQQ’s 0.20%.

The case for technology

One certainty is that tech has been growing since man invented fire and tools, and will continue to grow as long as he inhabits the earth. Starting with Microsoft, its current CEO Satya Nadella has successfully transformed his company from a traditional software company to one whose revenues are based on the cloud, and this, despite embracing the SaaS (software as a service) model after Amazon. The latter, known primarily for its online marketplace, continues to grow at a frantic pace. After having been the first to market the commoditized cloud services since 2006, Jeff Bezos’ company now aims to provide private 5G services with its usual “as-a-service” approach as well as launch its own constellation of communications satellites.

Now, the market size for 5G and related services should grow from $53 billion in 2020 to $249 billion by 2026, whereas for cloud computing, it should reach  947 billion from 445 billion in 2021. This rapidly expanding market should also benefit Google, with its AI focus.

As for Facebook, its name change into Meta Labs marks a shift in its CEO’s vision of the future, namely from a social networking company to one which is increasingly oriented towards virtual reality. Also, knowing Mark Zuckerberg failed attempt to launch a cryptocurrency sometime back, it is highly probable that FB will most likely acquire one of these blockchain-powered metaverse projects like Sandbox or Decentraland where goods ranging from virtual land to digital art are being exchanged for millions of dollars.

As for Apple, with its smartphone and forthcoming augmented reality devices, it should play a key role in the transition from the metaverse to the physical world and vice versa.

Metaverse demand and huge addressable markets

Now, in order to build smartphones, 5G equipment, electric cars, or cloud, you need powerful chips, produced by the likes of NVIDIA. The company through its GPU-based processors has a niche position among gamers as well as Bitcoin miners. This is a company that has been very innovative in the type of chips it produces and is expected to benefit significantly from metaverse demands as evidenced by its share price surging higher as shown in green (in the chart below), with the start of the surge coinciding with Facebook’s change of name.

https://static.seekingalpha.com/uploads/2021/12/30/49663886-16408833275020514.png

Source: Trading View

In this respect, the global metaverse revenue opportunity could approach $800 billion in 2024 compared to about $500 billion in 2020, out of which $400 billion would be made of online games and the rest by opportunities in live entertainment and social media. Interestingly, one company which should benefit as people’s purchasing habits evolve into more “experiential events” is Amazon, which only saw only a 3.79% appreciation this year.

Valuations and key takeaways

Consequently, with addressable markets in their areas of operations expanding rapidly and big techs having the cash to make acquisitions to power on with growth, I see share prices continuing to rise well into 2024. As for valuations, I foresee a 25% upside for SPY, VOO, and QQQ by the end of next year, based on the forecast of analysts at Wedbush Securities, according to whom the NASDAQ will reach 19,000 by the end of 2022, on grounds that mega-caps benefiting from continued tech spending as there is more focus on digital platforms, both for work and entertainment purposes.

Finally, the first part of 2022 should be volatile for stocks in general due to inflationary pressures and this is likely to impact valuations, but I am positive on tech generally, more specifically on MANAMA’s stocks as they take on the task of converging our physical and virtual worlds through an evolution as to the way we interact socially, purchase goods, work and entertain ourselves.

 

ProShares to Launch New Metaverse ETF Tracking Industry Heavyweights Meta, Apple, and Nvidia

ProShares, an investment firm renowned for launching the Bitcoin Futures ETF in the U.S., has now set its sights on the fast-evolving Metaverse universe.

In a December 28 filing with the U.S. Securities and Exchange Commission (SEC), ProShares declared its intention to launch a new metaverse-focused ETF. Dubbed the ‘ProShares Metaverse Theme ETF,’ the product will focus on tracking the Solactive Metaverse Theme Index (SOMETAV).

The index reflects the performance of multiple public companies offering metaverse-related products and services. It features some top-weighted stocks such as Apple, Meta, and Nvidia.

SOMETAV also tracks the performance of companies operating in online gaming, the creative economy, and the manufacture of metaverse-related devices such as V.R. headsets.

The ETF prospectus from ProShares highlights the growing popularity of the metaverse, an online virtual world that has become a key buzzword in recent months.

Big Companies Are Jumping on the Metaverse Train

The rapidly evolving metaverse trend has attracted some big names over the past few months. In October, social media giant Facebook rebranded to Meta, citing its ambition to create a virtual environment offering gaming and NFT trading features.

More recently, several prominent asset managers have decided to capitalize on the booming metaverse sector, which analysts from Reports and Data estimate could hit $872 billion in 2028.  Last month, metaverse appetite hit new heights as two Canadian firms launched two ETF products based on the emerging virtual world on the same day.

Meanwhile, the Roundhill Ball Metaverse has enjoyed tremendous success with the launch of its ETF, drawing in a staggering $916M from investors since June. Proshares now looks set to become the latest entity to join the metaverse sector, assuming financial regulators green light their ETF filing.

Metaverse: The Next Big Tech Platform

Per a recent Bloomberg report, the metaverse industry has reached $2.2 billion in a few months and is estimated to become an $800B industry. Some analysts view the metaverse as the next big tech platform that could propel the crypto industry to new heights.

The metaverse creates an online 3-D virtual environment that merges virtual, augmented, and physical realities into one immersive platform. The emerging world promises to transform virtual social experiences, e-commerce, gaming, NFT trading, and much more.

One expert points to recent developments in the metaverse universe as a sign that the sector is well primed to evolve and grow. Todd Rosenbluth, the director of ETF research at CFRA, told Bloomberg:

“I don’t know if the Metaverse theme has legs, but investors believe in it. Given the success of the ETF META, we are likely to see more products come to market that offer a unique twist on this long-term theme.”

Antitrust Battle Against GAFAM

Powerful big technology companies such as Google, Apple, Facebook, Amazon, and Microsoft have significant market share and influence on the economy. The five biggest tech companies make up 22.9% of the S&P 500. In recent years, the dominance of big tech stocks has resulted in large gains to shareholders. Considering the antitrust battle that began to take hold in July 2020, along with the projected rise in interest rates, share trading may be on the decline. The antitrust topic’s central question is to what extent do these companies wield too much power and hone monopolistic practices in the marketplace?

Big tech companies tend to control all modern technology components, which keeps other firms out of the marketplace. These anti-competitive practices manifest themself in social media, e-commerce, internet search, cloud services, and app stores. Antitrust laws provide an equal playing field for businesses that operate in a similar industry while limiting the power of big companies over their competition.

Core U.S. antitrust law was created by three pieces of legislation: the Sherman Anti-Trust Act of 1890, the Federal Trade Commission Act, and the Clayton Antitrust Act. The tech sector is now seeing the greatest antitrust test since 1998, and it is unclear how stock trading will respond to it.

Europe vs GAFAM: How the Battle Against Big Tech Unfolded So Far

Alt Text: The digital giants are regularly criticised for dominating the market by elbowing out rivals

https://gadgets.ndtv.com/internet/features/google-apple-facebook-amazon-microsoft-big-tech-curb-battle-europe-hearing-antitrust-2605654

Google and App Monetization

Alphabet, Google’s parent (GOOG), faces three pending lawsuits. The most recent one might make it harder for it to monetize some of its apps. However, antitrust legislation is unlikely to hurt the company and improve stock trading. Alphabet’s primary business is Google, which accounts for nearly all the company’s revenue. Therefore, Alphabet could unlock revenue from its non-Google businesses if antitrust pressure increases. Alphabet could also split its businesses and give stockholders shares of new companies.

Amazon and E-commerce

Amazon (AMZN) has attracted significant regulatory investigations since 2020. As recently as in September 2021, Washington, D.C., expanded its antitrust lawsuit against Amazon to challenge the online retailer’s agreements with wholesalers, or first-party sellers, in addition to third-party sellers. Amazon could potentially be broken down into smaller businesses. These might include online retail, cloud services (Amazon Web Services), transport (Flex and trucking), and media (Prime Video and MGM).

Despite this, it has been argued that Amazon will continue to trade higher. If Amazon split and the smaller companies became dividend-paying stocks, then investors would still be attracted to it and benefit more than if Amazon remained as one company.

Facebook and Social Media

Meta Platforms, formerly known as Facebook (FB), was sued in 2020 for buying up competitors Instagram and Whatsapp. It was argued that Facebook had a “personal social networking” monopoly. However, recently, a federal judge shut down the antitrust case against Facebook, who said there is no universally agreed-upon definition of personal social networking service. The result was a devastating blow to antitrust enforcement. It caused the Facebook stock to jump and its market share to exceed $1 trillion.

Apple and Vertical Integration

Apple (AAPL) currently maintains vertical integration over its technology. For instance, Apple controls the iPhone itself, the operating system, and the app store. It is even considered a “warm and fuzzy monopolist” since it does not have the same negative perception as the rest of big tech. Apple has blocked out competition from entering the market. Consumers see that Apple’s exclusive control is a threat to the economy as other business investment is pushed out. This might be harmful to share trading.

Apple still faces antitrust action in the coming years, which could impact the company’s share trading. Namely, several countries have already proposed laws targeting App Store practices or are investigating potential violations of their competition rules. These include but are not limited to the European Union, the United Kingdom, Germany, the Netherlands, Japan, South Korea, and Australia. While these actions can make Apple pay fines, it will likely not cause Apple to overhaul its practices. On December 8th, Apple won its appeal to delay implementing the court order that would allow apps to link out to other payment methods. There is a lot to be done to force big tech companies like Apple to change.

Microsoft

Despite being the world’s dominant operating system and second in cloud market share behind Amazon, unlike the rest of big tech, Microsoft (MSFT) has not engaged in antitrust practices. Therefore, the legislation has not impacted share trading, and the stock has continued to perform well.

The Bottom Line

Despite widespread and global anti-regulation enforcement efforts, there is still a long way to go to reign in the power of big tech companies. These companies are dealing with pending lawsuits and will continue to face lawsuits in the coming years. These companies will likely find a way to continue to be the most potent companies even if they lose cases. They will still find ways to be profitable and incentivize stock traders to invest in their company.

 

META: Specifically for Metaverse Exposure but Not Yet Convincing

After Mark Zuckerberg renamed Facebook to Meta Platforms (FB), the metaverse has suddenly become a hot topic with search interest on Google Trends peaking at a value of 100, signifying immense popularity. However, there is currently no universally accepted definition of the metaverse apart from some key words like “virtual reality”, or “advanced Internet”. Learning from Blockchain’s world where there are already metaverse projects like Sandbox where land can be exchanged against payments of millions of dollars, it could be defined as a virtual universe with a functional economy.

Of course, this definition is not straightforward and to be frank, no one knows exactly what shape the metaverse will take. But, for investors willing to invest hard-earned money in ETFs like the Roundhill Ball Metaverse ETF (META), it is important to understand which sectors are most likely to benefit. Some use cases are already being proposed such as attending a virtual concert, taking an online trip or creating digital art in the form of blockchain-powered NFTs or Nun Fungible Tokens.

Now, these applications will require a lot of computing power due to increased utilization of artificial intelligence and augmented reality (“AR”). At the same time, for communication purposes, there will be requirement for next generation Wi-Fi and 5G. Roundhill Investments does list some sectors like Compute, Networking, Virtual platforms, Interchange standards, etc from where they choose companies to be included in their fund, but for illustration purposes, I provide a chart which I recently used it in an article on VanEck Semiconductor ETF (SMH).

Description: https://responsive.fxempire.com/v7/_fxempire_/2021/12/word-image-274.png?func=cover&q=70&width=436

Source: Chart prepared by author using data from IEEE Spectrum and augmented to highlight metaverse demand

This chart basically shows semiconductor revenues per sector (with most coming from computing at 34.5%), but, since I have highlighted the technologies needed to build the metaverse, I use it to explore how META’s holdings fit the “meta” investment rationale.

The META rationale

First, META tracks the Ball Metaverse Index, the first index designed to track the performance of the metaverse.

Second, the ETF’s main holding is NVDIA (NVDA) at 8.34% of total assets, also happens to constitute a significant chunk of SMH’s basket. Now, as a designer of graphics processing units for the gaming and Bitcoin markets, this chip play whose products are vital for computing should be one of the main beneficiaries as a building block for everyone’s “virtual space”. Additionally, NVDIA is a system-on-a-chip unit’s provider for the mobile computing and the automotive industry.

Third, there is FB itself, and with more than 2.9 billion users as at the third quarter of 2021, and its success as a highly addictive social networking brand, there is no doubt that it will profoundly change our lives by rendering more virtual than ever, helped by a Covid-induced restriction in physical interactions.

https://static.seekingalpha.com/uploads/2021/12/26/49663886-16405745860315373.png

Source: RoundHill Investments

As for software plays like Microsoft (MSFT), Autodesk (ADSK), Unity Software (U), the metaverse is already proving to be a game-changer for working from home due to Covid. Continuing along the same thought process, instead of seeing their colleagues on a video call screen, employees could join them in a virtual office. Here, one of the main benefits of the metaverse is believed to be “presence,” meaning the feeling of physically engaging places and characters instead of looking at them through a laptop or smartphone screen.

Coming to Apple (AAPL), it has one of the world’s largest AR platforms with hundreds of millions of AR‑enabled devices, as well as thousands of related apps on the App Store. Now, one of the essential building blocks of the metaverse is interoperability whereby users must be able to move throughout the metaverse, while effortlessly make the transition to the physical world. For this purpose, they need AR devices which are supported by Apple’s iPhones. There is also an analyst forecasting that Apple’s “mixed reality headset will come out in the late 2022 or early 2023”, with the Apple Glasses to follow in 2025.

Apple should also benefit through its gaming division just like Roblox (RBLX), an online game platform which allows users to play games created by other users. In a metaverse scenario, one can envisage players retaining their avatar while hopping from one game to another or even a virtual shop for purchasing purposes, regardless of the brand of the user’s device.

After painting an enthralling picture of META, I now address some pain points.

META’s shortcomings

Since the concept of metaverse is relatively new, there will be many use cases that will arise in the future, but the space is also likely to be under intense regulatory scrutiny as lawmakers become wary of the power of big techs at extending their control on our social lives to a further degree through virtual reality. Governments may for example restrict the number of hours we can spend in the metaverse just like China is restraining the number of hours children can play games. Furthermore, Apple with its IOS operating system is only a part of the global smartphone ecosystem and it will have to be a metaverse which also encapsulates the Android operating system by Google (GOOG) with its brand of AR. META certainly includes the Android play, but only at a paltry 1.71% of holdings.

Pursuing further, META does include pioneers in content, commerce, and social for the metaverse, such as Sea (SE), Amazon (AMZN) and Snap (SNAP), and I also noted that it includes web infrastructure companies like CloudFlare (NET). On the other hand, I noted the absence of wireless plays from its portfolio. Also, the fund managers do not mention Industrial 4.0 applications, namely 3D printing which is crucial to allow transition from the virtual to the physical world.

Looking for further support from the share performance side, despite all these hot talks about the metaverse and META having already crossed the $900 million in total assets under management within six months, it managed to produce a meager 2.59% gain during this time. This is dwarfed by SMH or even the Technology Select SPDR ETF (XLK), with both these two funds producing above 17% gains in the same time period.

https://static.seekingalpha.com/uploads/2021/12/26/49663886-16405745860053453.png

Source: tradingview.com

This calls for a dose of realism.

Conclusion

There is no doubt that META is an innovative ETF with its index consisting of a tiered weight portfolio of globally-listed companies who are actively involved in the metaverse, but this whole concept is still new and rapidly evolving. I also like the fact that Roundhill Investments have also included companies like Block (SQ) and Electronics Art (EA), thus showing their perfect understanding of the Blockchain side of things.

Still, I am not convinced as to the percentage of asset held for each stock. Now, as an actively managed fund charging 0.75% in fees, the portfolio is likely to see rapid changes, but at this stage, it is preferable to wait. Finally, those who want early metaverse exposure, both SMH and XLK can be considered as proxy ETFs for this purpose, and come at lower expense ratios of 0.35% and 0.12% respectively.

Disclosure: I am long XLK.

NUGO: Growth Has a New ETF

I came across the Nuveen Growth Opportunities ETF (NYSEARCA:NUGO) while reading a report by ETFGI, an independent research and consulting provider providing insights on the entire global industry of ETFs and ETPs listed globally. Also, out of the top 10 most active funds by net new assets, NUGO, which had been incepted only on September 27, gathered $1.63 billion, representing the largest individual net inflow. It outperformed many well-established names like the SPDR Blackstone/GSO Senior Loan ETF (SRLN) with inflows of only $562.16, coming at second place.

https://static.seekingalpha.com/uploads/2021/12/26/49663886-16405368201872425.png

Source: Table prepared with data from etfgi.com

Interestingly, NUGO also beat the newly incepted ProShares Bitcoin Strategy ETF (BITO) which garnered a lot of media attention lately, and, tellingly, the above figures predate the volatility period engulfing crypto-currencies, signifying that they were benefiting from relatively higher inflows than currently.

The reason for NUGO’s higher inflows

Investigating further as to why NUGO collected as much as 34.5% (1,632/4,731) of the top-ten list of money inflows, the main reason was Nuveen’s parent company, TIAA moving funds from the “$13.7 billion” TIAA-CREF Large-Cap Growth Index fund to NUGO. This strategic re-allocation of assets to NUGO reflects Nuveen’s outlook on areas of opportunity in global equities and is aimed at improving risk-adjusted returns and enhancing retirement outcomes for investors.

Taking a bird’s eye view, EFGI’s report also mentioned that actively managed funds in these two investment vehicles (ETFs and ETPs) brought net inflows of $63.72 billion from the start of the year to November 2021, compared to only $33.06 billion for the same period in 2020. This represents nearly a 100% increase.

Now, these actively managed funds generally carry a higher expense ratio or the fees charged by the fund managers compared to more passively managed funds like for example, the SPDR S&P 500 ETF (SPY). My reason for considering SPY is that it shares some common holdings with NUGO like Microsoft (MSFT), Apple (AAPL), Tesla (TSLA), and Meta Platforms (FB) as shown in the table below with SPY to the right.

https://static.seekingalpha.com/uploads/2021/12/26/49663886-1640536820367116.png

Source: Table prepared from nuveen.com and ssga.com.

Coming to the expense ratio, as an active fund implying more work to rebalance the portfolio, NUGO carries an expense ratio of 0.55% compared to only 0.09% for SPY as a passive ETF. The latter comprises 505 holdings with an AUM of $442.6 billion, a huge amount when compared to NUGO’s total net assets of only $3.3 billion. Also, SPY comes with a 1.22% dividend yield whereas NUGO has not announced any distributions yet.

Looking at NUGO’s performance and risks

Still, for growth-oriented investors who pay relatively less attention to quarterly dividends, two key factors remain performance and risks. For this purpose, I analyzed the three-month performance of SPY and NUGO and found that the latter lived up to “growth” wording in its name by delivering better performance, at 7.76% compared to 7.38% for the SPDR ETF. Now, some may affirm that this 0.38% underperformance is not much given SPY’s much lower fees.

However, as seen by NUGO’s chart in orange below, it delivered intermediary performances of up to 11%-12% on two occasions in November whereas SPY was mostly stuck around the 7% mark. More importantly, this performance has been delivered at a lower degree of volatility with the orange chart not descending below SPY’s green chart during abrupt market fluctuations as was the case in mid-November and the beginning of December.

https://static.seekingalpha.com/uploads/2021/12/26/49663886-16405368204352078.png

Source: tradingview

This is explained by the fact that NUGO charges higher fees and seeks long-term capital appreciation through a concentrated growth portfolio primarily investing in U.S. stocks with market capitalizations of at least $1 billion. The investment team also looks for metrics like attractive earnings growth, strong relative valuation, attractive cash flows, and significant long-term returns.

Furthermore, unlike traditional ETFs NUGO makes use of a “proxy portfolio”, instead of publishing its portfolio holdings on a daily basis. Instead, it discloses the daily holdings of a portfolio transparency substitute (which the fund managers refer to as the “Proxy Portfolio”). This is designed to reflect the economic exposure and risk characteristics of the actual portfolio on any given trading day, allows for the efficient trading of Fund shares, and shields the identity of the Fund’s full daily portfolio holdings.

Conclusion

Looking ahead, the volatility grappling the market is likely to continue in the first quarter of 2022 due to inflationary pressures becoming more evident. To this end, one of NUGO’s constituents, payment processor MasterCard (MA) has taken a hit recently on concerns of rising COVID cases causing a dent in travel and related services. This is due to people tending to swipe their cards more often when changing destinations, thus generating transaction income for MasterCard. Now, the fact that many flights have been canceled on both sides of the Atlantic as Omicron spreads rapidly means less transaction revenue.

Still, I see the exposure to semiconductor names like NVIDIA (NVDA) to be a huge positive for NUGO due to the usage of chips in everything from datacenters, solar panels, electric vehicles, 5G, and crypto mining activities. Along the same lines, that 12% exposure to Microsoft (MSFT), on which most Wall Street analysts are very bullish and forecasting a 10% upside is another positive for the Nuveen ETF which should make it to the $29-30 level by the third quarter of 2022 as inflation fears subside gradually. Finally, I am also bullish because of the massive reallocation of assets being directed towards NUGO from Nuveen’s parent company I evoked earlier.

 

Metaverse – SAND and MANA Price Predictions for 2022

One of the biggest trends in the cryptocurrency market this year is the metaverse. The metaverse didn’t gain much attention earlier this year but burst into the scene in the second half of 2021 as investors took advantage of the change in dynamics.

SAND and MANA Rise by Thousands of Percentages

While most of the attention in the market goes to the biggest coins such as Bitcoin and Ethereum, they are usually outperformed by some smaller coins. SAND, the native token of The Sandbox platform, and MANA, Decentraland’s native token, are some of the best performers in 2021.

MANA and SAND have added thousands of percentages to their values since the start of the year, and they are now amongst the top 100 cryptocurrencies by market cap. Their adoption didn’t kick-off at the start of the year, but they grabbed attention towards the end of 2021.

Perhaps the major catalyst behind MANA and SAND’s rally is social media giant Facebook’s rebranding to Meta, indicating that it will expand its portfolio to enter the metaverse space. The move prompted massive adoption of metaverse-focused tokens such as SAND, MANA and several others.

From the start of the year, MANA was trading below the $1 mark, briefly climbing above that threshold in May. However, the coin rallied in October following Facebook’s announcement, rising to its all-time high above $5 within a few weeks. Over the past 52 weeks, MANA’s price is up by more than 4,000%, outperforming numerous coins in the process.

Start trading MANA now with Crypto.com

In November, Tokens.com, a Canadian investment firm that focuses on decentralized finance (DeFi), purchased virtual real estate on the Decentraland platform for roughly $2.5 million. The sale was one of the biggest in the history of the metaverse space. Popular gaming hardware company GameStop also announced earlier this month that it would start accepting MANA, SAND and a few other cryptocurrencies as means of payment for its products.

SAND is not left behind in terms of adoption. The token’s price has surged by thousands of percentages since the start of the year and is now one of the top 100 cryptocurrencies by market cap. SAND has benefited immensely from Facebook’s entry into the metaverse space, with its price up by more than 900% since the announcement.

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MANA and German sports apparel manufacturer Adidas announced its partnership with The Sandbox last month as it became the latest corporate entity to venture into the metaverse space. Also, in November, The Sandbox launched its Metaverse Alpha, an open multi-week Play-to-Earn event where players would have the opportunity to explore The Sandbox Metaverse.

Another huge development that saw SAND rally towards the end of the year was the adoption by PwC. PwC Hong Kong, a subsidiary of Pricewaterhouse Coopers, announced a few days ago that it had purchased land in The Sandbox metaverse. PwC Hong Kong intends to construct a Web 3.0 advisory hub in the metaverse, which will provide numerous professional services that include accounting and taxation. Heading into 2022, SAND is trading close to the $7 mark, outperforming numerous coins over the past 12 months.

What Does 2022 Hold for Metaverse Tokens?

The metaverse sector is in its early days, and many experts believe that 2022 holds even higher potential for projects in this area. LinkedIn CEO and co-founder Reid Hoffman recently told CNBC that there would be massive investment and development in the metaverse space over the coming years. According to Hoffman, the metaverse space has been around for a while, stating that the internet is an early version of the metaverse.

The adoption of metaverse projects is expected to grow further in the coming year. According to analysts at investment bank Morgan Stanley, the metaverse could become an $8 trillion market if it can host the next generation of social media, streaming and gaming platforms.

SAND and MANA are two of the leading metaverse projects with a shared market cap of under $30 billion. If the metaverse market grows at the projected rate, then MANA and SAND could record further growth in the coming months and years.

MANA and SAND’s Technical Forecast for 2022

SAND is trading above its 200-day EMA. Source: FXEMPIRE

SAND’s technical indicators show that the coin is one of the best performers in the cryptocurrency market at the market. SAND is trading above its 200-day moving average of $1.76, while the MACD line is above the neutral zone. The RSI of 71 shows that SAND is currently heading into the oversold region. At press time, SAND is trading above the $6 level. Analysts at WalletInvestor predict that SAND’s price could double in 2022 and reach the $13 mark before the end of next year.

MANA’s MACD line is above the neutral zone. Source: FXEMPIRE

MANA’s technical indicators show that the coin is also performing well. The coin is trading above its 200-day moving average of $1.59, while the MACD line is around the neutral zone. The RSI of 52 also shows that it is in the neutral zone at the moment. At press time, MANA is trading around $3.7 per coin. The token’s price could rally by nearly 140% in 2022 as WalletInvestor analysts predict that MANA could trade around $8 by the end of next year.

The metaverse space is one of the most exciting areas in the cryptocurrency space, and more investors will be keeping an eye on it in the coming year.

Earnings Calendar Quiet Next Week: What to Expect in the Markets in 2022

With stocks heading into what has historically been a good time of year for stocks, investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus variant to see how it affects the U.S. economy and company earnings in 2022. The following is a list of earnings slated for release December 27-31, along with a few previews. Although next week’s earnings are unlikely to have much of an effect on major market movements, it is sufficient to gauge investors’ sentiment.

Earnings Calendar For The Week Of December 27

Monday (December 27)

TICKER COMPANY EPS FORECAST
QIPT Quipt Home Medical $0.01

 

Tuesday (December 28)

TICKER COMPANY EPS FORECAST
CALM Cal-Maine Foods $0.28
NEOG Neogen $0.17

 

Wednesday (December 29)

TICKER COMPANY EPS FORECAST
FCEL Fuelcell Energy $-0.02
NG Novagold Resources $-0.03

 

Thursday (December 30)

TICKER COMPANY EPS FORECAST
CRON Cronos Group $-0.09
IBRX ImmunityBio $-0.2
SAFM Sanderson Farms $3.8
MKC McCormick $0.8

 

Friday (December 31)

No major earnings are scheduled for release.

What to Expect in the Markets in 2022

The year 2021 is drawing to a close and analysts and investors are already looking forward to the year 2022. In a year in which the S&P 500 has returned more than 15% for the third straight year, investors have to wonder whether there will be any more upside in the stock market over the coming year.

“We expect solid economic and earnings growth in 2022 to help U.S. stocks deliver additional gains next year. If we are approaching—or are already in—the middle of an economic cycle with at least a few more years left (our view), then we believe the chances of another good year for stocks in 2022 are quite high. We believe the S&P 500 could be fairly valued at 5,000–5,100 at the end of 2022, based on an EPS estimate of $235 for 2023 and an index P/E between 21 and 21.5,” noted Ryan Detrick, CMT, Chief Market Strategist, LPL Financial.

“Prospects for above-average economic growth and accompanying earnings gains in 2022 point to another potentially good year for stock investors. While the pandemic is not completely behind us as the COVID-19 Omicron variant spreads rapidly (though with a high proportion of mild cases), and there are several other risks to watch, particularly inflation, stocks have historically done well in mid-cycle economies. We do not expect 2022 to be an exception,” LPL Financial’s Detrick added.

According to a stockmarket.com report, three FAANG stocks will be closely watched next year. In the context of the broader stock market’s recovery, tech stocks are once again in focus. Among the most successful stocks in the sector, the FAANG stocks shine brightest as S&P 500 companies with a tech component make up a large portion of the index. In case you’re not familiar, this group of stocks includes Meta Platforms (formerly known as Facebook), Amazon, Apple, Netflix, and Google’s parent company Alphabet will be in focus in 2022.

“More volatile equity markets in 2022: At face value our global macro forecasts suggest a continued benign backdrop for equities in 2022 with strong nominal (and real) GDP growth, moderating inflation through the year and no rate hikes from any of the G3 central banks. However, underneath the surface we think there are a number of reasons to suggest that global equities’ serene progress over the last 18 months will become somewhat more volatile going forward as earnings growth slows, bond yields rise, and corporates continue to juggle the challenges of disrupted supply chains and elevated input costs. We think that these issues weigh most heavily on the US equity market but are more optimistic elsewhere, especially in Europe and Japan, where our risk/reward frameworks still look quite appealing,” noted Michael J. Wilson, equity analyst at Morgan Stanley.

“Underweight US stocks: Slower EPS growth and higher starting valuations versus global peers leave us underweight the S&P, where our target of 4400 implies 5% downside potential. Risk/reward looks more appealing for Europe and Japan: We are overweight Europe and Japan (8% and 12% upside potential, respectively), where we see the best EPS growth for 2022 and where valuations have already reset to more attractive levels. We remain neutral on EM and China for now. Recommendations: Potential for sector and style dispersion feels more limited than usual. We are overweight financials across all regions and positive on energy in Europe and EM. Consumer discretionary is a high-conviction underweight in the US,” Morgan Stanley’s analysts added.

We wish you a happy, healthy New Year!

Meta’s Incoming CTO Wants Expansion Into NFTs and DAO

Social media giant Facebook made a push to enter the metaverse space two months ago when it rebranded its corporate name to Meta. However, the company might be looking to go even further in the coming year.

Meta is Seeking Blockchain Expansion

A recent report from The New York Times revealed that Meta’s incoming chief technology officer (CTO) Andrew Bosworth wants the social media giant to expand its presence in the cryptocurrency space.

According to the report, Bosworth wants Meta to explore further into the nonfungible token (NFT) space. He also wants the social media giant to explore decentralized autonomous organizations (DAOs) and expand its presence within the blockchain sector.

Bosworth is not new to the concept as he is currently in charge of Meta’s augmented and virtual-reality drives. He is expected to become Meta’s CTO over the coming weeks and has already made it clear the direction he wants to take.

The New York Times obtained this information as it was issued an internal post earlier this week. The note said although Bosworth wants to be cautious, he wants Meta to adopt the technologies before other leading companies in the world do so.

He said, “My overall guidance is to target a deep compatibility with the blockchain. There aren’t many places where I expect us to depend on it exclusively yet, but if we see an opportunity to work jointly with entrepreneurs in the Web 3.0 space, I expect it will be worth the effort.”

Meta is Changing its Stance Towards Cryptocurrencies

Facebook banned cryptocurrency-related adverts on its platforms a few years ago. However, the company has changed its stance in recent months, and it is now becoming pro-cryptocurrencies.

In October, Facebook officially rebranded to Meta in a bid to become a metaverse-focused company. The company went a step further earlier this month by lifting its ban on cryptocurrency-related adverts.

At the time, Meta said it would recognize an additional 27 regulatory licenses from advertisers, up from just three previously. Thus, allowing several cryptocurrency companies to advertise their products and services on Facebook and Instagram.

Amazon Could Be The First Among FAAMG to Launch a Crypto Token

A recent Amazon advert has got the crypto world buzzing. The retailer advertised for a lead position in digital currencies and blockchain. The news excited crypto enthusiasts who couldn’t stop speculating on the move’s meaning. Some went as far as suggesting that Amazon teased its entry into the crypto space.

This development saw the firm scramble for a clarification. It refuted that it was entering the crypto sector. But Its denial did little to quell the growing speculation. If anything, it left more answers than questions. Chief among these questions is what the idea means for Amazon’s crypto interests.

It poses questions about the retailer’s crypto push compared to other FAAMG members. The other members of the quintet are Facebook, Apple, Microsoft, and Google. Could some factors give Amazon the advantage over them in their bid to launch crypto tokens? This article assesses why Amazon could become the first of the FAAMG to launch a crypto token.

How Could Amazon Become the First FAAMG to Issue a Crypto Token?

The growth of crypto payments has sent many industry players back to the drawing board. They’ve had to reconsider placing cryptocurrencies in their operations. The FAAMG quintet hasn’t lagged in this either. That said, in the crypto adoption race, Amazon seems to have the edge over the other four. Here are the top reasons why it could pioneer in launching a crypto token.

It Has a Functioning Digital Asset Already

Amazon isn’t a newbie in the crypto sector. Its interest in the area goes back to 2013. Then, the company launched AmazonCoins, a virtual currency used by its customers. Can use them to buy Kindle-based apps and games.

The token goes for about $0.01 and has wide acceptance within Amazon’s ecosystem. Should the company decide to issue a native token, it already has a prototype to work with. Developing a token is a time-consuming venture. So since Amazon has a functional currency in use, transforming it into a token will be effortless. Unlike the rest, Amazon wouldn’t have to start from scratch.

It’s a Trusted Global Brand

According to a recent Morning Consult study, Amazon is the fifth most trusted brand in the world. Although Google and Microsoft ranked ahead, they’ve faced accusations of data mining. Facebook also continues to face the same allegations.

Amazon may also mine data, but in contrast, it allows users greater freedom in what they’d want to share. One of the cryptos’ selling points is confidentiality. On this score, it’s easy to see why the public would accept Amazon’s token compared to the rest.

Its AWS Platform is a Key Player in the Crypto Space

Another factor playing to Amazon’s advantage is its Amazon Web Service (AWS). AWS is the firm’s computing arm providing BC service known as the managed blockchain. Many global firms have been renting access to the network rather than building their own.

AWS is a perfect fit for launching the Amazon token should the company decide to do so. For one, it’s a proven BC system backed by the trust of thousands of global firms. So, it makes total sense that deploying a crypto token would be an easy thing to do.

Amazon’s Deep Involvement with Ethereum

The firm is already a key player in the crypto universe. Amazon supports a quarter of the global Ethereum (ETH) workload. This is a justifiable fact as ETH is second only to Bitcoin (BTC) in market share. But ETH is more than a currency; it’s a whole financial ecosystem.

Other players in the industry are still developing their BCs. ETH is evolving to include more functionalities. And with it, so has AWS’ significance within the crypto space. When Amazon launches its token, it’ll use AWS’ experience and reputation. It will thus reach the masses.

Amazon is Investing in its Blockchain and Crypto Teams

Amazon’s advert came out as a dead giveaway on its crypto project. Why else would they want to hire for such a position? Again, it follows CoinDesk’s February report on Amazon’s “digital currency” project in Mexico. Furthermore, the firm has in the recent past announced over 70 openings for BC experts. What’s clear is that Amazon is beefing up its BC and crypto teams. It’s doing so to make its presence in the crypto space permanent.

It Holds Patents to Crypto Domains

In 2017, Amazon acquired three crypto-related domains. These are:

  • AmazonEthereum.com
  • AmazonCryptocurrency.com
  • AmazonCryptocurrencies.com

It has also indicated an interest in Proof of Work and Merkle Trees cryptosystems. The move gives it a head start over the other four.

Amazon Has an Extensive Network of Loyal Customers

Statista reports by Q1 2021, Prime – its premium membership platform -had 200 million members. The membership renews at $119 annually. Members enjoy certain privileges from the retailer. Besides their loyalty, prime members are early adopters. Thus, they will readily embrace an Amazon token upon launch.

It Has Always Been an Industry Disruptor

Amazon has a reputation for disrupting industries. And AWS has enabled firms to cut third parties from their functions. There’s no reason why it can’t use the platform for its crypto offering.

What Do The Developments at Amazon Mean?

Despite Amazon denying that it’ll be accepting cryptos, their statement speaks otherwise. The emphasis, in their view, is the denial of the timeline. It isn’t their interest in accepting cryptocurrencies. Major tech companies are growing their interest in cryptocurrencies. And there’s no doubt that Amazon will embrace them sooner or later too.

The Drive is Reputational

Here, there are several points worth mentioning. First, it’ll install crypto payments or tokens in its cloud and intellectual products.

Banks provide major online stores with quite favorable terms. So, crypto payments do not solve any of their most pressing problems. Accepting crypto for such e-commerce platforms is more reputational than economic.

Amazon is Creating its Ecosystem

Secondly, Amazon is more interested in accepting payments through its token. That is, they’re creating their ecosystem within the existing platform. The ecosystem is already there, and the token will fit in easily. It’s easy to assume that Amazon’s plans to accept crypto payments extend into BTC and ETH at most. But not the whole list of cryptocurrencies, as City AM had reported.

Are There Downsides To Amazon’s Crypto Entry?

Amazon’s entry into crypto is good, even commendable. But it may not be without its downsides. The firm has come in for criticisms on how it operates.

Firstly, critics speak of its monopolistic tendencies. In the past, it has used patents as an anti-competitive measure. A monopoly with the might that Amazon has would spell disaster for the crypto space.

Secondly, it has previously practiced price discrimination. It apologized and offered refunds for affected customers following the fiasco. There’s no telling if the firm won’t go back to the same discriminatory measures.

Final Thoughts

When you’re Amazon, the public scrutinizes your every move. It wouldn’t matter even if it’s filling up an opening in one of your departments. Recently the firm announced that it was recruiting a blockchain and crypto lead. The successful candidate would drive the retailer’s vision and strategy in that space. The news sent the crypto world into a frenzy speculating on what the move meant.

So, Amazon denied that it was preparing to accept crypto payments. But the denial did little to quell those speculations. Some crypto enthusiasts contend that Amazon is coy about its crypto interests. They pointed out that it can’t lag as other tech giants embrace the technology.

Further, they posit that it has a headstart over the other members of the FAAMG in the race for crypto adoption. For now, let’s wait and see what Amazon’s next move will be. But, what’s not in doubt is that its adoption of cryptos is a matter of time.

Instagram is Currently Exploring NFTs, CEO Reveals

The nonfungible token (NFT) space is one of the fastest-growing within the cryptocurrency industry, attracting major companies and celebrities in recent months. The sector is expected to record further growth over the coming months and years.

Social Media Giant is Entering the NFT Space

Instagram CEO Adam Mosseri has revealed that the social media giant is actively exploring the NFT space. The Meta-owned social media platform is the latest big company to enter the budding NFT industry.

Mosseri said, “Nothing to announce yet, but we are definitely actively exploring NFTs and how we can make them more accessible to a wider audience. I think it’s an interesting place that we can play…and also a way to hopefully help creators.”

This isn’t the first time Instagram is entering the NFT space. Earlier this year, the company hosted a panel for NFT creators in a bid to attract talent to its social media platform. Instagram designed the event to help creators grow their following and monetize their platforms.

Instagram’s desire to go deeper into the NFT space doesn’t come as a surprise as its parent company Facebook rebranded to Meta two months ago, a move that underlined its desire to explore the NFT and metaverse sector.

NFT Space Continues to Attract Big Companies

The past few months have seen numerous large companies enter the NFT space. Last week, Microsoft and Warner Bros became the latest companies to invest in the NFT space after backing startup Palm NFT Studio.

Other leading companies such as Adidas, Nike, Marvel, DC Comics, and several others entered the NFT sector area this year. The sector has also attracted numerous celebrities since the start of the year.

NFTs have become very appealing to music stars, movie actors and athletes of various sports. Former US first lady Melania Trump also launched her first NFT last week. The adoption is expected to continue as the sector is just starting to grow and grab people’s attention.

Instagram isn’t the only social media company that is expanding into the NFT space. Social media platform Parler announced earlier today that it would expand its business into nonfungible tokens.

Jeff Gluck of CXIP Talks NFT’s, the Metaverse, and What It All Means for Digital Ownership

We’ve seen some interesting terms suddenly become mainstream in the last few years.  While “social distance” and “lockdown” are sadly among them, two far more interesting terms were extremely niche in 2018 and are now in news headlines daily:  “NFTs” and “metaverse” are becoming embedded in the social consciousness and are here to stay.

These will likely be two elements that help drive our culture and will be so prevalent that when looking back ten years from now, we will have a hard time picturing the world before their widespread use.

The Intersection between NFTs and Metaverse

But the real question is, how will NFTs and metaverses affect our lives?  How will we interact with each other, what will they replace, and how will they cause us to see the world differently?  At the center of it all is the concept of ownership.  NFTs allow the digital property to become more valuable because they can prove its uniqueness.

However, the concept of an NFT is currently only experiencing the most obvious use cases, but there are many other potential uses.  Especially as mainstream society begins to spend time in the metaverse, digital ownership will become even more important, as digital theft isn’t restricted by distance, and a lock on your digital house doesn’t mean as much as it does in the physical world.

We spoke to CXIP’s Jeff Gluck about the current state of NFTs, why they are much more than simply digital receipts, and how the future will need to address the changing concept of ownership.

Who are you, and how did you get into the world of NFT’s?

For the past 15 years, I’ve been an intellectual property lawyer focused on protecting and enforcing creators’ rights. My practice area has revolved around infringement litigation and representing creators when big corporations use their work without permission. When the NFT space began to take shape, I noticed a lot of confusion around IP issues and became fascinated with this new frontier and helping creators entering this space.

There seems to be a lot of criticism against NFTs as not really creating any value but rather being overpriced digital receipts. So what problem do NFTs solve?

To understand the power of NFTs, it requires a fundamental understanding of the blockchain and how it can be transformative in virtually every segment of commerce. NFTs and the underlying smart contract tech empower users to transact and interact with each other in a free, open, and decentralized way. As a result, institutional intermediaries become irrelevant and old-fashioned.

So far, we have seen NFTs mainly finding success when used to represent art ownership. Do you see that as the best use case for NFTs? What other usage of NFTs, if any, do you see on the horizon?

Art NFTs are the first use-case, and this is barely the first inning. Eventually, everything will be represented as an NFT. Real Estate, for example, will be bought and sold via NFT technology.

NFT Marketplaces Boom and Facebook’s Metaverse

What makes CXIP different from the seemingly hundreds of other NFT platforms popping up every day?

Many NFT marketplaces are popping up every day. CXIP is not a marketplace. We don’t sell NFTs. Instead, we provide creators with no-code self-service NFT minting in a marketplace-agnostic environment and provide them with their own creator-owned smart contracts. We are a tool, an infrastructure layer, used for minting (creating) NFTs across the ecosystem, which is compatible with any marketplace.

There has been a massive increase in interest in digital ownership since Facebook’s shift over to a Metaverse future with Meta. What roles do you see NFTs playing in the metaverse?

NFTs will become the primary asset class in these new worlds as metaverses expand. They hold value not just because of the art or the communities being built around them but also because they will fill virtual worlds and become desired just like physical assets. Every digital asset and property in a metaverse is represented as an NFT. Facebook will only be successful if they build a truly open and decentralized platform.

Do you feel, at this stage, that people truly understand what they are buying when they purchase NFTs? 

I do. For the most part, participants in the space at this stage understand the concept of NFTs and the importance of the underlying technology.

If NFTs truly are the “future,” what is the biggest externality (whether positive or negative) that we will see as a result?

A rebalance of power in favor of the people and galvanize communities around various initiatives. For example, we recently saw a DAO come together to purchase the Constitution, and another DAO recently formed with the intent of acquiring an NBA team. These are individual people coming together and forming communities to accomplish things that have never been possible before Web3.

Moving Forward

As more and more blockchain-based platforms are launching and gathering speed, it seems that 2022 may be the year the industry gains mainstream adoption.  NFTs have an easy-to-understand concept, along with analogs of certain use cases (for example, an NFT can be similar to a trading card or other collectible), making them a natural candidate to lead this adoption.  And with Facebook’s Metaverse and other metaverses to follow, addressing digital ownership will become a common conversation next year.

DappRadar’s Industry Report Highlights Massive Growth in 2021

The cryptocurrency market grew to become a $3 trillion industry this year. The adoption was spurred by growth in various areas, including decentralized finance (DeFi), nonfungible tokens (NFTs) and the metaverse.

NFT Trading Volume Tops $20 Billion

The crypto market had experienced massive growth this year. However, one of the key areas remains NFTs. According to the DappRadar Industry Report for 2021, NFT trading volume for the year surpassed $23 billion.

The report said, “Undoubtedly, this year’s highlight, nonfungible tokens (NFTs) reached an all-time high of $23 billion in sales as celebrities, sports teams, and big brands entered the market, ranking marketplaces like OpenSea, Atomic Market, and Solanart among the most popular dApps. Riding on the hype generated from Facebook’s rebranding to Meta, virtual land sold for as much as $2.5 million apiece, marking a 500% price appreciation, while the floor market cap for the top 100 collections hit an estimated $16.7 billion.”

Another area that recorded huge growth was blockchain-based gaming. The blockchain-based games generated more than $4 billion for the NFT sector, the report added. DappRadar, Head of Finance and Research Modesta Masoit said, “We’ve seen crucial progression in the dApp space this year, placing us on the cusp of mass adoption. While 2020 was ‘The Year of DeFi,’ 2021 is certainly ‘The Year of NFTs,’ with gaming thrown in in bulk over the last quarter. As these three categories converge, 2022 will, I expect, come to be known as ‘The Year of the Metaverse,’ with a project supporting and helping navigate this complex, cross-chain and cross-category paradigm stealing the spotlight.”

DeFi and the Metaverse are Not Left Behind

Decentralized finance is at the heart of the crypto performance this year. The total value locked in DeFi protocols grew by more than 700% from 2020, surpassing $200 billion this year. Ethereum remains the leading DeFi blockchain. However, some blockchains such as Avalanche, Terra and Solana have taken a huge chunk of Ethereum’s market share.

The metaverse space gained popularity towards the end of the year after social media giant Facebook rebranded to Meta. This saw the market cap of the metaverse-focused projects reach an all-time high of $3.6 billion.

Finally, blockchain companies attracted huge investments this year. The report pointed out that the blockchain industry witnessed a record-breaking year, with $27 billion in fresh funding poured into cryptocurrency and blockchain companies.

The market could experience further growth next year as the industry as a whole continues to go mainstream.

Best Oversold Stocks to Buy for December 2021

Let’s face it, stocks have been under a lot of pressure lately. Markets are reaching oversold levels.

At my research firm, MAPsignals, we track oversold markets by following the Big Money Index (BMI). It tracks Big Money buying and selling in stocks. Look how it’s at the lowest level since the pandemic in March 2020:

Chart, histogram Description automatically generated A lot of this selling is institutional activity. And inside of this sea of red are great stocks getting sold unfairly…more on that in a bit. The five stocks we see as nearing oversold levels are: APPS, CELH, FB, UPST & SQ.

At MAPsignals, we believe Big Money trading can alert you to the forward fundamental picture of a stock. We want the odds on our side when looking for the highest quality stocks.

Up first is Digital Turbine, Inc. (APPS), which is a digital advertising specialist.

Even though great companies’ stocks can be volatile, like APPS this year, they’re worthy of attention. Check out APPS:

  • 1-month performance (-24.1%)
  • Historical Big Money signals

Just to show you what our Big Money signals looks like, have a look at the top buy signals Digital Turbine has made the past few years in the chart below – the blue bars show that APPS was likely being bought by a Big Money player, according to MAPsignals.

When you see a lot of them, like APPS did in 2020 (when it hovered around 1/6 of its current price), I call it the stairway to heaven:

Source: www.MAPsignals.com

But, what about fundamentals? As you can see, Digital Turbine’s numbers have been strong:

  • 3-year sales growth rate (+66.2%)
  • 3-year earnings growth rate (+183.5%)

Next up is Celsius Holdings (CELH), which is an energy drink maker.

Check out these technicals for CELH:

  • 1-month performance (-19.3%)
  • Recent Big Money signals

Let’s look long-term. These are the top buy signals Celsius has made since 2015. The Big Money may have found a new gem:

Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Celsius has had rock-solid revenue growth, which could be more important than earnings growth since it’s a small company:

  • 3-year sales growth rate = (+54.1%)
  • 3-year earnings growth rate = (-23.06%)

Another growth name is Meta Platforms Inc. (FB), formerly Facebook, which is a social media and advertising giant.

Strong candidates for growth usually have Big Money buying the shares. Meta has that. Also, the stock has dipped a bit recently, which could be an opportunity:

  • 1 month performance (-4.0%)
  • Historical Big Money signals

Below are the Big Money signals Meta has made since 2015. That’s the JUICE!

Source: www.MAPsignals.com

Now let’s look under the hood. Meta’s sales growth is impressive. I expect more growth in the coming years:

  • 3-year sales growth rate = (+28.5%)
  • 3-year earnings growth rate = (+27.3%)

Number four on the list is Upstart Holdings, Inc. (UPST), which is a cloud-based artificial intelligence banking platform.

Here are the technicals important to me:

  • 1 month performance (-38.0%)
  • Historical Big Money signals

Below are the Big Money signals for UPST since it’s 2020 trading debut:

Source: www.MAPsignals.com

Let’s look under the hood. Upstart Holdings has been growing nicely:

  • 3-year sales growth rate = +60.3%
  • 3-year earnings growth rate = +18.3%

Our last growth candidate is Block, Inc. (SQ), formerly Square, which is a top payment processing platform.

Check out these technicals:

  • 1-month performance (-26.8%)
  • Historical Big Money signals

Block is a high-quality stock since it’s made my Top 20 report:

Source: www.MAPsignals.com

Now look under the hood. Sales have been growing quite well, and I expect earnings to pick up too:

  • 3-year sales growth rate = (+64.5%)
  • 3-year earnings growth rate = (-0.7%)

The Bottom Line

APPS, CELH, FB, UPST & SQ represent the top oversold stocks for December 2021. Strong fundamentally sound stocks seeing near-term sell signals make these stocks worthy of extra attention.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in APPS, CELH & UPST in managed accounts and APPS & SQ, in personal accounts.

Investment Research Disclaimer

https://mapsignals.com/contact/

 

Apple Set to Post Strong 2022 Returns

Dow component Apple Inc. (AAPL) sold off in Tuesday’s session despite a widely publicized Bank of America Securities upgrade. The contrary price action suggests the stock is overbought and in need of a pullback, following a 15% 8-day buying spike into Monday’s all-time high at 182.13. The tech icon has been the strongest performer in the venerable index this month, defying broad-based volatility triggered by the Omicron outbreak in Southern Africa.

Expanding into Virtual Reality

The stock is underweight compared to the SP-500 index, raising the potential for further analyst revisions when the calendar flips into 2022.  Looking further ahead, excitement should build in reaction to “Apple VR”, an augmented reality/virtual reality headset that could be released as early as the fourth quarter, or the start of 2023. That product should command a sales premium compared to Meta Platform Inc.’s (FB) Oculus system while giving the struggling VR segment a much-needed boost.

BofA analyst Wamsi Mohan upgraded Apple from ‘Neutral’ to ‘Buy’ ahead of Tuesday’s opening bell, noting “we now expect a stronger iPhone upgrade cycle in F23, driven by the need for higher connectivity where AR becomes the killer app for 5G. (In addition), we model higher growth in Services revenue as we expect Apple to be able to charge more for more immersive AR/VR enabled Apps, as well as increased traction with a broader installed base in other categories, including advertising”.

Wall Street and Technical Outlook

Wall Street consensus has been pristine for years, now standing at a ‘Strong Buy’ rating based upon 21 ‘Buy’, 4 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $90 to a Street-high $210 while the stock is set to open Wednesday’s session on top of the average $174 target. This mid-range placement suggests that Apple is fully-valued at this time and unlikely to book substantial upside until we get closer to the Jan. 26 earnings release.

Apple mounted the February 2020 peak at 81.81 in June 2020 and entered a powerful uptrend that stalled just below 138 after the stock split four-for-one in August. Price action carved a broad rising wedge pattern into December of this year and broke out, lifting to an all-time high earlier this week. The current downturn could test breakout support in the low 160s, potentially offering a low risk buying opportunity, ahead of another year of exceptionally strong returns.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Facebook Metaverse FACEMETA Token Rallies by Over 50%

Social media giant Facebook rebranded to Meta a few weeks ago in a bid to enter the metaverse space. However, some developers are now taking advantage of the development to promote their tokens.

FACEMETA Leverages Facebook’s Popularity

The cryptocurrency market has been underperforming in recent weeks. However, some coins have performed well over the past few days. FACEMETA, the native token of the Facebook Metaverse project, has soared by more than 50% over the past 24 hours.

The project leveraged the name of social media giant Facebook and its recent entry into the metaverse space to gain attention from investors. Facebook Metaverse is a Binance Smart Chain (BSC) project that is basically a task-based play and win model.

According to the developers, investors who own a certain amount of FACEMETA tokens are eligible to participate in the game. The developers added that the in-game elements in the missions are designed to increase the time spent in the game and will include extra missions.

The Facebook Metaverse project is not similar to the social media giant Meta. However, it has been leveraging its popularity to promote its project.

FACEMETA Rallies by Over 50%

The FACEMETA token is one of the best performers in the market over the past 24 hours. The coin rallied by nearly 56% to reach its all-time high price of $0.00000001337 a few hours ago. The rally came despite the broader cryptocurrency underperforming, with Bitcoin still struggling below the $50k level.

However, FACEMETA’s rally has cooled down over the past few hours and is trading at $0.00000000785 at press time. The rally could have been fueled by speculators rather than serious investors.

Some of the investors would have sold the project, leading to the huge price dip in the past few hours. There is no clear indication of how the project will proceed from here. However, with the bears still in control, FACEMETA could record further losses soon.