Make a Killing with Cryptocurrency, Without Trading Cryptocurrency

You read all the stories about the new cryptocurrency millionaires, and you’ve missed it. Is it too late for you to make money? And, even if it’s not too late, every regulator, and even people who have founded some of the top cryptocurrencies, tell you it’s a dangerous game and that many of the coins are just scams.

You’d never put your money into such a risky trade. Heck, the exchanges and brokerages that handle your money / trades have been hacked, had money stolen, and some even shut down overnight disappearing with investor money.

So, let’s assume you don’t have the time to navigate the minefield of cryptocurrency  (which is a minefield worth finding time to navigate in my opinion, and Nate’s post is a good place to start). There are still ways to make money from cryptocurrency…and from stock warrants (see #2 below):

1. By investing in companies that either supply  cryptocurrency tools, use blockchain technology (the tech upon which cryptocurrency is based), or in some way support and profit from the cryptocurrency ecosystem.
2. AND, if you’re interested in the daily news in cryptocurrency, there are ways to make a LOT of money, in short periods of time, in stocks / warrants listed on stock exchanges you know and love (or at least know).

1. Cryptocurrency Ecosystem Stocks

We’ve all heard the story of the guys who got rich during the California gold rush. While some prospectors hit it rich, the real winners were the companies supplying the picks and shovels to do the work. Nvidia (NVDA) supplies the picks and shovels for mining cryptocurrency.

Mining cryptocurrency takes computing power, which NVDA provides. It’s clear from the surge in the stock price that there is a great deal of demand for Nvidia picks and shovels.

As long as the crypto-craze continues there should be a steady demand for NVDA products.

InVidia is one example of a stock benefiting from cryptocurrency activity, but If you don’t want to go the route of a single stocks for cryptocurrency exposure you can build your own cryptocurrency portfolio, or buy into one of the new blockchain ETFs.

While they are not focused just on cryptocurrency – the SEC doesn’t want a named “Cryptocurrency ETF” at this point because of all the hype around cryptocurrency right now – they do focus on the tech underlying cryptocurrency.

It’s not a horrible way to get exposure, but it’s also not the best way given that some of the companies in the funds, like Intel (INTC) and Microsoft (MSFT), bring much more exposure to other tech besides blockchain. So, your “blockchain” returns will be very watered down.

2. Cryptocurrency News Stories

So, let’s talk about quick cryptocurrency returns, without trading crypto.

On January 9th, Kodak announced they would team with Wenn Digital to introduce a cryptocurrency to track photo ownership rights. Whether this becomes a profitable business for Kodak or not, who knows, and at this point, for this trade, we don’t really care. (Although at first glance it does appear to be a legitimate use case for a cryptocurrency.)

If you are able to check in on the crypto news of the day you would have seen this story, but most likely the stock would have already moved up substantially on the day.

The stock moved from $3 to $7.65 before closing at $6.80. But, even if you had bought the high of the day, $7.65, the stock opened at $12.50 the next day (before trading even higher), for a cool 63% overnight return. Not bad.

If this type of trade appeals to you, how would you have liked to have made either 262% or 314% in that same overnight trade?

Because that’s how much the Kodak warrants were up overnight from the high on January 9th. You can check out the charts here KODKWS and here KODKWSA.

Even though the warrants never went in the money, the move in the stock caused much larger percentage moves in the warrants than the stock. And, had you been able to buy the warrants at better prices than the high of the day on the 9th (I gave the absolute worst case scenario in the percentage gains), you would have made even steeper gains overnight than those above. Cryptocurrency like returns!

AND all of these gains would have been made while never opening a cryptocurrency account, never trading a cryptocurrency, never trying to understand whether a cryptocurrency is legitimate or not, and not even having the ability to trade options (another way to leverage this type of trade) in your brokerage account. The warrants trade just like stocks and are available to trade in any account where you have stocks.

All it takes is a little time and paying a little attention to cryptocurrency announcements and the impact they can have on a stock (and it doesn’t hurt to check for warrants on any stock you trade;).

Have you had success in trading a stock that has had cryptocurrency or blockchain news? Leave a comment below and let us know how you did it.