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Tech Stocks and Digital Assets: New Normal Investment Vehicles

Despite the high volatility and market swings we have experienced throughout the first half of 2020, one sector that has undoubtedly performed and recovered better than others is technology equities. In the past few months, we’ve also seen a new and rising asset class, cryptocurrency, continue to rebound back resiliently. This raises the ultimate question: which one is more lucrative?

NASDAQ (NDX) lists some of the most well-known technology stocks and is home to the FAANG (Facebook, Apple, Amazon, Netflix, and Google), which has risen 14.61% year-to-date (YTD.) Prominent tech industry leaders and groundbreaking innovators such as Tesla and Apple have even managed to create new all-time-highs despite the uncertainties in the world market.

The digital asset leader Bitcoin, however, has stacked up a massive 30% YTD gain in comparison, while gold offered 14.41% YTD offering similar performance to the NASDAQ.

The SCN30 Index kicked off the year with 100 basis points and has now reached 154 points with the ATH at 205 points. The 54% increase throughout 2020 has proven that large-cap alternative coins are outperforming both Bitcoin and the equity markets.

The numbers have similarly proven that technology stocks, along with digital assets and gold, have come out of the COVID-19 crisis stronger than ever. There is no doubt that technology companies such as biotech and internet-based tech companies have reaped the most benefits from the outbreak. Nevertheless, when delving deeper into the tech sector, we find that not every company has equally benefited from the pandemic. Prices across the board, however,  might be getting an additional boost from the resultant excess of liquidity from aggressive quantitative easing measures in the US. 

Bitcoin and crypto assets, on the other hand, are the direct beneficiaries of the crisis where person-to-person contact is limited to the minimum. Contactless and internet payments have been growing in popularity since the virus can be transmitted on shared object surfaces.

Even though Bitcoin is still far from a new ATH and with NASDAQ recently creating a fresh new record with FAANG, both assets can be considered sound investments in this age featuring a new normal.

Bitcoin Technical Analysis

Traders might start to lose patience as Bitcoin continues to trend in a sideways manner for an extended period of time. It has been two months since the mid-march COVID-19 crash but Bitcoin is still unable to stand above the $10,500 mark to create a prominent higher-high.

A suggested trading strategy would be to capitalize on opportunities in the trading channel between $8,800 to $10,500. Trading in and out of this range could offer a maximum of 20% profitability. Bollinger Band is another popular tool often used in the range-bound sideways trading.

The mid-term goal for Bitcoin still remains to break above $10,500, which would help to demonstrate a clear uptrend. The current sideways pattern can be considered as price consolidation storing energy for a massive breakout in either direction. 

Disclaimer: This analysis is the view of the author’s alone, and does not in any way represent trading advice. all traders should trade at their own risk.

You may also want to read: Latest U.S. Initial Jobless Claims at 1.51M – Goldman Sachs Warns Stocks with China Exposure is at Risk

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