Greater-est fools discovered…
Following yesterday’s launch of “KodakCoin” and Eastman Kodak’s explosion higher, ‘investors’ continue to pile their hard-earned gambling chips into the stock this morning.
KODK is now up over 300% since the company unleashed “a photocentric cryptocurrency to empower photographers and agencies to take greater control in image rights management.”
Who’s buying? That’s easy… (as Bloomberg notes)
The answer just might surprise you. Turns out, some experienced day-traders are trying to ride the surge of buying that invariably follows companies that suddenly reinvent themselves as blockchain ventures. That’s enough, market watchers say, to bring in high-frequency traders and computer algos.
And to these players, what really matters isn’t so much that crypto is real, but that the share-price moves — and the quick profits — are.
“The interest in these stocks is so strong because many traders like me are so hungry for the increased volatility,” said Jim DePorre, a professional day trader and founder of sharkinvesting.com. “I know that there are still traders willing to jump in, so who cares if the stock has questionable value?”
The spikes in volume have probably also attracted various algorithmic buyers that weren’t necessarily looking for the next crypto-related trade, according to Tucker Balch, co-founder of Lucena Research.
“My hypothesis is that momentum is initiated by retail traders or pump and dump and then algos are hopping on the bandwagon.”
That may leave investors vulnerable to bad actors trying to game the system and the market feeling a little like the Wild West, according to Michael Covel, author of “Trend Following” and “The Complete Turtle Trader.” But it’s a small price to pay if cryptos ultimately prove to be legit.
“Con artists will always try to ride the new new thing,” he said. “But if cryptos are for real, and keep growing into dynamic liquid markets, honest players, including momentum, will jump in to ride trends up and down.”
In the mean time, traders like DePorre couldn’t care less what kind of money is in on the blockchain name-change game — dumb money, fast money or otherwise — as long as there’s enough money willing to bet on it.
“As long as there is confidence that other traders are still willing to trade them,” he said, “there is no reason to stay away.”
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