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Screenshot of a breaking news alert e-mail from Q2 2017
Shares of global FX brokerage house Gain Capital Holdings Inc (NYSE:GCAP) are soaring by more than 25% today after a bullish report issued by a lightly read ‘special situations’ analyst named Richard Pearson seems to have lit a spark among investors.
Not surprisingly, the spark is cryptocurrency trading.
GAIN Capital, parent company of the global Forex.com and UK-centric City Index online broker brands, as well as institutional-focused GTX, announced at the beginning of December that it was launching leveraged cryptocurrency trading at City Index, with plans to roll out Bitcoin trading via Forex.com to select markets early in 2018. We would note that many of GAIN’s competitors already offer leveraged Bitcoin trading as well as other crypto products including Ethereum, Dash, Ripple and Bitcoin Cash. Some offer it with more leverage than the maximum 4x offered by City Index.
The report by Pearson’s MOX Reports website is entitled “Long $GCAP – Bitcoin rollout could send Gain Capital sharply higher“. It claims that GCAP shares (which closed yesterday at $7.80) could rise to $18-$23 per share, and that “crytpo mania” could potentially send the shares even higher.
Mr. Pearson’s MOX Reports issues detailed reports on different companies every few weeks. Before releasing his report on GAIN Capital today, his most recent report was on November 21, to short a company called ShotSpotter which provides gunshot detection systems.
As at the time of writing (20:50 GMT), about 10 minutes before markets close on the second last trading day of 2017, GCAP shares are up 28% to $9.96 – also a new 52-week high for the stock. The move up is being done on very high trading volume in GCAP shares, with 8.75 million shares trading hands versus an average daily volume of under 500,000 shares.
The action in GCAP shares is a good example of how volatility and manic interest in Bitcoin and its crypto cousins is affecting areas of finance outside of cryptocurrencies. Having perceived blockchain or crypto exposure can help drive a stock for no good reason whatsoever.
For example, we recently reported that shares of Binary Options platform provider TechFinancials Inc (LON:TECH) more than quadrupled after the company basically dumped its main business, the OptionFair binary options brand, and declared that it was going to focus on “solutions for the rapidly growing blockchain-based products and technologies market“. Last week the SEC suspended trading in shares of The Crypto Company after a 2,700% rise in that company’s valuation to more than $11 billion.