As the company name suggests, they invest Cryptology asset group (WKN: A2JDEW) into various companies from the world of blockchains, tokens and digital currencies. The stock took a good beating after the start of the recent crypto winter. In July, however, things picked up sharply. That’s why I took a look at what’s happening with the stock now and concluded that Cryptology stock is a cautionary tale.
Tailwind for Cryptology share
Behind Cryptology are dazzling personalities, including Dr. valid Jörg Werner, the gray eminence of the crypto world. With his law firm Dr. Werner & Partner is a key player in the crypto country Malta for the further development of the legal framework. Or crypto guru Mike Novogratz, who repeatedly draws attention to himself with abstruse Bitcoin price targets. As well as Christian Angermayer, the Austrian billionaire whose investment company Apeiron Investment Group is primarily known for its investments in psychedelic drugs to treat psychosis.
Over the past few years, Cryptology has invested large sums in a portfolio of young companies in the crypto world. Most of the protégés are heavily dependent on trading activity and enthusiasm for digital currencies. Therefore, the price of Cryptology shares fell almost in line with Bitcoin.
Confidence in decentralized finance (DeFi) systems and crypto trading has been seriously shaken over the past few months. But not sustainably, according to CEO Patrick Lowry: “[…] we firmly believe that as severe and painful as the current downturn feels, this is just a temporary setback within a long-term megacycle of blockchain technology and cryptocurrency growth,” he wrote to shareholders a few days ago.
Nor is it involved in any of the recent scandals surrounding bankrupt exchanges and collapsing stablecoins. Rather, one is essentially a bitcoin infrastructure provider and thus focuses on designers, not speculators. In connection with the insignificant debt, Cryptology presents itself as a solid investor in a future industry.
The focus is thus on the weekly published estimate of the book value (“Net Asset Value”, or NAV for short). And management has always valued it at over EUR 5 per share, most recently with an upward trend (5.62 EUR as of 20 July). In relation to the share price of EUR 5.08 (July 22), there seems to still be a comfortable buffer despite the price explosion.
What investors should consider before buying cryptology stocks
The biggest question to ask is the content of the stated NAV. To do this, you need to familiarize yourself a little with the portfolio values.
For example, the indirect stake in EOSIA, the company behind the EOS blockchain, is interesting. Next to that we see there Northern data (WKN: A0SMU8 ), a public company that builds high-performance data centers for Bitcoin mining and some other applications. Or the neo-broker nextmarkets and the Bullish trading platform owned by the Block.One portfolio.
The individual assessments are done in very different ways. For Block.One, their own NAV calculation is used, which is said to be conservative. At Northern Data, the volatile market price comes into play. For the parts that are not listed on the stock exchange, the evaluations from the most recent investment rounds are used.
However, these are associated with many uncertainties. After all, most young crypto players are still burning money, so they have to swing from investment round to investment round. In an environment of rising interest rates and increasing regulation, it may become difficult to raise new money in the future.
And even if Cryptology takes the initiative to inject more funds at a higher value, there is no guarantee that shareholders will ultimately get any of it back. A few years ago, for example, new brokers were popping up like toadstools. Today there is more of a market shake-up.
And whether the Northern Data shares will find their way back up after the price has gone into the quarter is doubtful. Finally, energy-intensive “mining” of bitcoins is increasingly being banned internationally.
A broad bet on the crypto world
Anyone addicted to Cryptology invests in a variety of platforms and only to a small extent in cryptocurrencies. First of all, it’s a good thing. Nevertheless, everything rises and falls with the enthusiasm for this market segment.
And while we firmly believe in the future of blockchain and digital currencies, it is far from certain that Cryptology’s holdings will play a leading role in it. The competition is huge. Therefore, I would not buy at the current greatly increased price level.
But if you want to spice up your portfolio with some crypto hype, the Cryptology stock is still one of the more solid options.
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Ralf Anders owns none of the shares mentioned. The Motley Fool does not own any of the stocks listed.