Pareteum Doubles as Crypto Proxies Ride Bitcoin Coattails Higher
Bitcoins rally has pushed investors to invest in companies rather than investing in the cryptocurrency itself.
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(Bloomberg) -- Bitcoin’s rebound from a five-day rout has drawn investors back to U.S. stocks related to cryptocurrency and blockchain technology.
Pareteum Corp. more than doubled after saying it will add blockchain support to its billing and settlement services, enabling it to process bitcoin, ether and litecoin. Riot Blockchain Inc. jumped 20 percent, while LongFin Corp. added 38 percent. Both had fallen more than 30 percent in the past four days as bitcoin plunged from a record. The biggest cryptocurrency rose 15 percent to $15,998.50 at 3:09 p.m. in New York.
Bitcoin’s more than 1,500 percent rally this year has prompted investors to snap up shares in companies often seen as a safer alternative to investing directly in the cryptocurrency itself. When the digital coin tumbled last week, the proxy stocks slumped as well.
Still, the trend that’s seen investors pour into all things crypto became a frenzy, as obscure microcap companies reoriented to focus on some aspect of the craze, resulting in astronomical stock gains sparked simply by a name change.
The phenomenon reached a peak last week when Long Island Iced Tea Corp. shares rose 238 percent after the company rebranded itself Long Blockchain Corp. The company’s stock fell 9.1 percent Tuesday. It’s still up more than 150 percent since the name change.
Bitcoin Investment Trust, a structured note that tracks the price of the digital token, jumped 22 percent. The publicly traded vehicle’s price exceeded the value of the bitcoin it holds by almost 100 percent three days ago.
On Track Innovations Ltd. rose 8.7 percent, while Seven Stars Cloud Group Inc. added 10 percent and Digital Power Corp. advanced 6.3 percent. Overstock.com Inc. and Xunlei Ltd. also gained.
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--With assistance from Julie Verhage
To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net, Courtney Dentch in New York at cdentch1@bloomberg.net.
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Samuel Potter
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