Bitcoin And Foreign Exchange, FX Volatility, Risk

Bitcoin's price is much more volatile than EUR/USD, USD/JPY foreign exchange, foreign currency pairs.

Bitcoin's volatility, price risk is even greater than USD/RUB or USD/TRY FX crosses.

Although Bitcoin is widely regarded as a cryptocurrency, it is officially designated by the Commodities Futures Trading Commission as a commodity.

Apparently, CFTC thinks that due to Bitcoin's high energy consumption, Bitcoin is similar to energy commodities.

In the foreseeable future I forecast Bitcoin's volatility or price risk to remain far above that of EUR/USD, USD/JPY and USD/GBP.

In 5 years', time with the entry of even more hedge funds, asset managers and pension funds into the cryptocurrency space I expect Bitcoin's risk to be much less than the foreign exchange USD/RUB or USD/TRY FX pairs.

Bitcoin And Cryptocurrencies' Adoption On Wall Street

Wall Street is too slow in adopting Bitcoin and crypto, in my humble opinion.

Bitcoin and other cryptocurrencies are the future of fin-tech, even the present and basically all of finance in the future will be fin-tech.

Yes, Wall Street investment banks are offering Bitcoin future, but did not start underwriting Initial Coin Offerings and were too slow to embrace the concept.

Yes, crypto is too illiquid for the liking of the big institutional investors like asset managers, hedge funds and pension funds and ultra rich individuals which are the typical clients of Wall Street investment banks.

This highbrow approach, of "We, Wall Street and our clients are the biggest, greatest and invincible" could lead to large market share and market capitalisation, value that is losses.

At least that is how I see it.

Cases in point are Blackberry, Kodak, Nokia smartphones, etc.

Why Goldman Sachs Seems Undervalued?

Many Wall Street analysts and investors see Goldman Sachs Inc as undervalued compared to its Wall Street peers like Morgan Stanley, JPMorgan Chase, Bank of America and Citigroup, according to traditional valuation metrics like Price/Earnings, Price/Sales, Price/Book ratio.

The difference is especially stark with Morgan Stanley Inc, which is the closest think to investment bank  currently, in terms of revenue distribution at least and thus directly more comparable to Goldman Sachs Inc.

In my personal opinion the huge 1MDB scandal is the main reason why investors seem to distrust Goldman.

What is more, if you check out Goldman Sachs Inc's internet site, in its executive directors list, revenue producers are hardly seen.

Some analysts think Goldnman Sachs is resting on its old laurels.

I think Goldman Sachs should become a more aggressive risk taker in its investment banking business, drive even more into the direction of private equity, equity underwriting, Mergers and Acquisitions which are all traditional strengths of the Goldman Sachs' franchise.

New avenue of growth could possibly be private banking, I think. Goldman Sachs has always targeted more actively corporations and institutional investors.

Now that Credit Suisse is undergoing a major crisis and UBS is far from its traditional strength, private banking could make Goldman Sachs' capitalisation quickly grow and start catching up with Morgan Stanley's.

Artificial Intelligence, AI And Bitcoin

Bitcoin's production algorithm - the blockchain is a model from Artificial Intelligence, AI a hashing tree, branching processes.

Actually tree processes, branching processes are a very important part of AI and a way to model nonlinearity and chaos.

Tree models enable a process to scale quickly.

When Could Possibly Tech Stocks Crash?

Technology stocks suffered a circa 30 % fall on average since November 2021.

They recovered quite bit of the lost ground however.

Big investment banks like Morgan Stanley are predicting a fall of 26 % for the Standard and Poor's 500 index in the next few months.

Actually, only by raising the interest rates levels mainly driven by Federal Reserve federal funds rate hikes I doubt the Nasdaq Composite will suffer a 60 % fall like in the dot com boom and subsequent bust.

According to my opinion, only when around 5 trillion USD of the 10 trillion USD of excess liquidity, aka the 10 trillion USD created, printed by central banks is withdrawn, market participants can witness a fall of the major indices of 50 % + from their recent highs.

It is not easy to be in the place of the leaders of global central banks.

Times are interesting, without a doubt.  

Bitcoin Price Relationship With the USD

 

Bitcoin is sometimes described as USD 2.0

A global reserve currency.

Bitcoin is still far away from global reserve currency status.

That said, however, the inherent freedom and distributed 'command' and 'control' centres of Bitcoin, much like the internet itself are slowly paving the way for a progressively larger role of Bitcoin in global finance.

For now the EUR/USD exchange rate is usually inversely related to Bitcoin price. In the last 1-2 years and since the beginning of 2023 especially, this inverse relationship broke down and Bitcoin's price has risen while the USD has appreciated towards the EUR since the beginning of 2023.

It will be interesting to watch, whether the current tumultuous times speed up Bitcoin's adoption.

Globally.

Palantir Valuation. Mergers And Acquisitions Rumours/Speculation.

Palantir Inc or just Palantir is currently valued at 17 billion USD.

After Palantir reported its 4th quarter 2022 and full year 2022 financials on 02 / 13 / 2023, rumours started circling various media outlets that Palantir could be a potential acquisition candidate, aka Palantir could sell itself to another corporation.

According to analysts, this explains the stock price jump after the earnings anouncement.

I personally think that Palantir's intrinsic value is somewhere between 40 billion USD and 50 billion USD.

The above is an interval estimate, because Palantir is unprofitable on a yearly basis. Palantir reported 33 million in net profit for the 4th quarter 2022 . 

So there is a lot of quite uncertain, unrealised potential, unlocked call option value, that is in Palantir's market capitalisation.

There have been reports of dubious selling practices regarding Palantir, but Palantir Inc is arguably the largest corporation with a scalable artificial intelligence, AI product.

And yes, Palantir is involved into military services selling, which could bring trouble/controversy and subsequently decrease Palantir's intrinsic value.

But people seem to be 'inclined' to wage war, and if it is not Palantir Inc, another company will produce the goods and services for people to wage war amongst themselves. Which is a pity, really!! 😢😡

EBAY Valuation

EBAY Inc, the online merchandising site's current market capitalisation on the Nasdaq is 24.61 billion USD.

In my personal opinion, EBAY Inc's intrinsic worth is 150 billion USD.

Yes, the Price/Sales of Amazon is similar to EBAY's, but EBAY is profitable and its net profit margin is in the double digits, circa 20 % on average for the last 5 years.

And EBAY has been consistently profitable. It even distributes 1.94 % annual dividend yield.

All in all, I think EBAY is one of the most undervalued large companies in the US technology sector.

Moderna Valuation. 23rd of February 2023

Moderna's current market capitalisation on the Nasdaq bourse is approximately 55 billion USD.

According to my estimates, Moderna's intrinsic worth is 140 billion USD.

Moderna reported yesterday fiscal year 2022 earnings.

The coronavirus COVID 19 revenue boost is fading.

However, I still think Moderna is deeply undervalued, because Moderna is at the forefront of the  messenger RNA technology, medicine's latest and most advanced and most promising technology.

Tesla Valuation. 23rd of February 2023

I believe Tesla's intrinsic value is 120 billion USD at the current state of the electric vehicle production technology. 

This compares with Tesla's current market capitalisation of circa 629 billion USD.

Base, ferrous metals are the main production cost in car manufacturing, especially this is valid for electric vehicles.

Without subsidies, Tesla is losing money.

Elon Musk is playing for time, so Tesla can achieve a elelctric car production breakthrough that enables profitable electric vehicle production. 

This partly explains the Twitter purchase.

It took the Internet http protocol more than 60 years to become mainstream, so tech startups like Yahoo, Google and Amazon can commercialise it and start making money via the World Wide Web or Internet for short and the global society can benefit from communication.

Bitcoin Is Rising While The Stock Market Is Falling. In The Last Two Weeks, At Least.

Since 20th December 2022 up until now the stock market has risen, Bitcoin and crypto also rose along.

However, in the last 5-10 trading days, Bitcoin's price is rising, while the Nasdaq Composite Index, especially is falling.

This speaks in favour a theory/opinion I expressed on this blog previously that Bitcoin and cryptocurrencies investing could actually prove a good diversifier for equities investing. In the last trailing calendar mont for example, Bitcoin's price in USD is up 5.77 %, while the Nasdaq Composite rose 1.13 % in the same time span.

Until now, Bitcoin and crypto's prices fell or rose when the Nasdaq Composite fell or rose respectively. Bitcoin seemed like a leveraged play on the Nasdaq or technology stocks in general.

However, as fas as I am concern crypto and especially its bedrock Bitcoin has an idiosyncratic competitive advantage over tech stocks. 

Bitcoin is fin-tech itself. Bitcoin could prove USD 2.0. Bitcoin could become a 100 % fully effective means of exchange, store of value and unit of account or money in 100 % of its functions.

Bitcoin, I think is the greatest financial innovation since money transfers. This may sound exaggerated, but what Bitcoin provides is freedom -> independent, distributed, unsupervised validation, which makes both financial and production manufacturing processes more efficient.

Yes, crypto is a libertarian idea, a freedom concept. But that is why it could actually work, I think.

And change the world. For the better.

Microsoft Valuation. 21st Of February 2023

Microsoft's intrinsic value is 1.2 trillion USD, according to my estimates and  calculations. 

Microsoft's current market capitalisation currently stands at 1.92 trillion USD on the Nasdaq.

I think Microsoft, being a mature company, yes in the hot technology sector, but still a large, developed company does not make enough in net income and revenue a year to support a 1.92 trillion USD valuation/market capitalization.

Market participants seem to be extrapolating that Microsoft is going to grow its revenue by 12 % a year, year on year, for the next 10 years + and keep or slightly increase its stellar net profit margin of circa 30 % currently.

In the current tenuous political and economic environment, the above assumption is simply unrealistic, I think.

 

Can Bitcoin Disrupt Wall Street?

 

In 5-10 years Bitcoin really can make significant inroads into the bread butter financing business of the top 5 Wall Street investment banks, namely Citigroup, Bank of America, Goldman Sachs, JP Morgan Chase and Morgan Stanley.

And the investment firms that have embraced Bitcoin and cryptocurrencies or crypto for short would take a not insignificant market share from the bulge bracket Wall Street investment banks.

The big banks on Wall Street have always overlooked the smaller technology startups and small firms in general, because, according to the leading investment banks, small firms cannot produce large ticket single Mergers and Acquisitions, IPO or debt underwriting transactions.

An untaken niche, which crypto could scale up very quickly.

NVIDIA Valuation. 19th February 2023

 

As far as I am concerned, NVIDIA Inc, the graphics processing units or chips manufacturer, has an intrinsic value of 310 billion USD.

This compares to NVIDIA's current market capitalisation of 526 billion USD, which only in November last year 2021 was around 800 billion USD.

Yes, artificial intelligence or AI and cloud computing is the future and NIVIDA is a frontrunner with its computer chips in both AI and the cloud, but the current environment of tumultuous political times, inflation, higher prospective interest rates levels simply does not substantiate a higher value for NVIDIA, in my humble opinion.

Another factor for that is the falling revenue and net profit margin percentage for the last reporting quarter by NVIDIA.

Dropbox Valuation 19th February 2023

 

Dropbox's market capitalisation stands at circa 7.7 billion USD.

I think Dropbox's intrinsic value is 30 billion USD.

Dropbox's revenue for 2022 is 2.325 billion USD, growing at 5.9 %.

Dropbox has over 700 million registered users compared to the circa 3 billion monthly average users of Facebook, which is part of META Inc. META's market capitalisation stands at 448.3 billion USD.

Cloud computing is the future and Dropbox has strong positions in the consumer cloud.

Artificial Intelligence or AI leverages the global economy, including the cloud and Dropbox is making big strides in AI.

In short, Dropbox seems quite undervalued both on its present revenue and earnings, but also on its future growth prospects.

Alibaba Group Valuation

Alibaba Group, the Chinese internet commerce and other internet services group is currently valued at 264.78 billion USD on the New York Stock Exchange.

Alibaba's revenue for the calendar 2022 is circa 124 billion USD and is growing at 18.93 % compared with end year 2021.

The revenue for the last reported quarter by Alibaba Group, which is the 3rd quarter of 2022 is growing at 3.23 % year on year, however.

Alibaba Group's net income for 2022 is close to 10 billion USD and at Price/Earnings ratio of circa 27 Alibaba Group looks undervalued.

Chinese stocks have been hurt by the strained political situation between the USA and China, the regulatory scrutiny of the Government of the People's Republic of China focused on the technology sector in 2021 and during most of 2022 and the COVID 19 situations, among other factors.

I would surmise that many Chinese publicly listed companies are undervalued.

According to my estimates, the internal intrinsic value of Alibaba Group is 740 billion USD.

Crypto As a Wall Street Disrupter

One of the main reasons big businesses like American Telephone and Telegraph, IBM, Yahoo, Blackberry(RIM previously), Nokia, Yahoo get basically 'destroyed' by more nimble young(in the beginning) competing technology startups like Microsoft, Alphabet(previously Google Inc), Apple(its iPhone business was a new business line, a tech startup in a sense) etc. are because of the arrogance of the existing multibillion USD yearly revenue market dominating companies like the aforementioned.

What was previously thought of as a niche market area - personal computers(IBM thought that there would be room for only a handful supercomputers in the world), internet search, mobile phones(the famous quote by a Nokia executive that smartphones are a only a small niche market) 'unexpectedly' becomes the future.

Artificial Intelligence, AI , Bitcoin, cryptocurrencies are now thought of as small services, at least by the majority of big business.

Wall Street, the large investment banks in particular, as far as I see it are severely underestimating the Bitcoin and cryptocurrencies, in general, threat. By issuing their own cryptocurrencies companies are able to finance their projects via crypto tokens without necessarily paying (gigantic) fees or working with the leading top 5 investment banks Goldman Sachs, JPMorgan, Morgan Stanley. Bank of America, Citigroup.

Not to mention the inroads that Bitcoin is making as a means of store of wealth, money transfers and payments, that is.

One day Wall Street can wake up and realise it has fallen behind young and nimble competitors that have embraced Bitcoin and crypto early on.

Yahoo, Blackberry and Kodak are instructive cases what can happen, if a large corporation falls behind in technology, mainly because of hubris and arrogance.

Personally, I like Wall Street, mainly its integrity business, value creation part. I have always dreamt of working in the New York or London offices of the top 5-10 bulge bracket investment banks. 😀