The cryptocurrency crash has surpassed the decline in the Nasdaq after the dot-com bubble burst back in 2000, according to a key index.
While the Nasdaq Composite Index fell by 78 per cent from its peak, the MVIS CryptoCompare Digital Assets 10 Index – which tracks cryptocurrencies such as bitcoin and ethereum — has collapsed by 80 per cent since January.
The best-known cryptocurrency, bitcoin, has lost half the value it reached at its peak in December. (Still, those who got on board by the start of 2017 are still well ahead — see graph below).
More than two dozen ASX-listed small cap stocks are associated with cryptocurrency — either directly through crypto holdings or “mining” operations or consulting — or via crypto’s underlying technology, known as blockchain.
Blockchain stocks are regarded as more credible because the technology has applications beyond digital money — though investors have tarred them both, perhaps unfairly, with the same brush.
Back in January, three blockchain/crypto stocks were generating revenue: DigitalX, Mobecom and Yojee.
None has escaped the share price decline — falling by two-thirds to three-quarters since then. But they have continued to generate revenue and remain ideally well-placed if the sector rebounds.
DigitalX (ASX:DCC) offers multiple services including corporate advisory, ICO management, blockchain development, investor education and news services. The company has launched several of these since it was suspended in April and then reinstated.
It quickly opened a funds management division and launched two crypto news websites in April: Multipliercrypto.com and coin.org.
Last week DigitalX announced it was developing an “Initial Coin Offering (ICO) issuance platform” called FutureICO in a joint venture with First Growth Funds (ASX:FGF).
An ICO is like an initial public offering — but instead of offering shares, an issuer offers digital tokens that can be traded on cryptocurrency platforms or swapped for services.
AT the end of June, DCC had $US5.4 million in cash and $3.8 million in crypto.
Mobecom (ASX:MBM) offers multiple technological products beyond the realm of cryptocurrency and blockchain.
It announced a placement in June to raise $1.9 million along with a deal with another technology company, Lakeba Group, to develop its blockchain and cryptocurrency exchange platform for airBux – a crypto currency that works similar to shopping rewards programs.
Mobecom has said airBux will be launched in 2018 though they haven’t mentioned a starting date beyond “six months” back in June.
Mobecom has $1.83 million in cash and generated $556,000 in revenue in the June quarter.
Yojee (ASX:YOJ) offers blockchain technology for logistic companies.
This year it’s announced a number of commercial deals.
In January it signed an agreements with Sinotrans Integrated Logistics Australia to operate as their logistics software partner. Then it entered into deals with United Parcel Service (Asia) in March, with DB Schenker in May and Riverwood Logistics in July — all of whom are market leaders.
It reported annual revenue at $704,000, nearly triple the $240,000 recorded in the same period last year.
Whether or not thesecrypto/blockchain stocks will rebound is uncertain.
But if there is a rebound, those still generating revenue and forming agreements in dark times should be ideally placed to perform better than those who are not.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.