TGIT: Bitcoin, Bananas and Blackwell—the Makings of a Melt-Up?

Nvidia's blowout earnings, bitcoin's new highs, art-market exuberance, economic moats, strangles, IBIT options, Uber traders, prediction portals and more.

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Thank goodness it’s Thursday! The excitement is palpable. The post-election rally continues with the S&P 500 making new highs on Monday with year-to-date returns of 25%! This is starting to feel crazy. While we don’t want to throw cold water on this scorching hot market, we’re sensing the makings of a melt-up. Consider these three Bs ... 

Blackwell chips. Demand for Nvidia’s newest $70,000 AI chip is “staggering,” according to the company’s chief financial officer, who turned in a blowout earnings report yesterday. While the company warned it would take several months to meet the demand for Blackwell, Nvidia (NVDA) reported 94% year-over-year growth in revenue to $35 billion, with profit exceeding $19 billion. (More below.) 

Bitcoin. The digital currency continues to forge new highs with the help of a crypto-friendly incoming administration and this week’s record-setting launch of options trading on a bitcoin exchange-traded fund (ETF). Expect the price to breach $100,000 in short order. (More below.)

Bananas. Not to be outdone by stocks and bitcoin, the art market asset class provided the ultimate metaphor for irrational exuberance last night at Sotheby’s in New York. A banana duct-taped to a wall sold for $6.24 million. The buyer is a China-born crypto entrepreneur, the auction house confirmed. Of course he is. 

Amid the mania, Russia marked the 1,000-day milestone of its invasion of Ukraine by firing a barrage of missiles at the capital. It followed Kyiv’s first use of long-range American ATACMS missiles supplied by the Biden administration. Moscow seized on the incident to accuse Western powers of heightening tensions in the conflict. President Vladimir Putin responded by expanding Russia's nuclear doctrine, specifically adding provisions for nuclear retaliation against non-nuclear states that receive support from nuclear-armed allies—a move clearly aimed at Ukraine's Western partnerships. Today, Ukraine officials claimed Russia’s latest assault on Kyiv included its first use of a non-nuclear intercontinental ballistic missile (ICBM) with multiple warheads. 

Against this backdrop, we don’t want to be a buzzkill but call us a little suspect of the sustainability of this rally. In the meantime, who doesn’t love a market melt-up? 

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Editorial Director

Nvidia, one of the trailblazers in AI, just delivered another stellar quarter. But the forward guidance raises some questions. Our analyst has the answers. Read Full Story

100,000
The number of $70,000-Blackwell-chips Nvidia is expected to ship in Q4, "which we believe is near the low-end of investor expectations.”

— Raymond James analyst Srini Pajjuri

The Justice Department asked yesterday that the courts require Google to divest its Chrome browser following an antitrust ruling against the company. This legal action, originating during Trump's first term but continuing under Biden's administration, marks a significant test of tech antitrust policy.  Google plans to appeal, ensuring the case will be extended beyond the current presidential term. While Trump historically threatened tech companies and his Attorney General nominee supports breaking up Big Tech, he also ran on a deregulatory agenda that attracted Silicon Valley donations.

While the potential Chrome divestiture could fetch $20 billion, it would disrupt Google's advertising business, which relies on browser user data for targeted promotions. 

Have you noticed how often CEOs and investors talk about moats lately? One business maven keys his investing to “economic moats” that safeguard marketshare and ensure ongoing profits. The other calls them “lame.” We’ll tell you which is which, and we’ll show you why. Read Full Story

Applied Digital (APLD) is making news with its purpose-built data centers for artificial intelligence. It’s noteworthy because of explosive growth in revenue, a 90% stock price surge in the last six months and a major endorsement from Nvidia (NVDA). Is this small-cap stock still a buy, or do the risks outweigh the rewards? Read Full Story

In the latest installment of tastylive's Rising Star, trading legend Tom Sosnoff interviews a former Uber driver and construction superintendent who made the transition to full-time trading in his mid-20s. Starting in 2017 with covered calls, Mark Anderson eventually committed to trading full-time after being laid off during COVID. He focuses on high-frequency 0DTE (zero days to expiration) options trading, executing 150-200 trades daily. Using a systematic approach with credit spreads and longer-dated hedges, he's grown his account to $1.5 million in two years. For more of Anderson's story and trading technique, watch the video. 

The iShares Bitcoin Trust ETF (IBIT), which is BlackRock's Bitcoin exchange-traded fund, made its options trading debut yesterday and saw nearly $2 billion in exposure through 354,000 contracts. That placed it in the top 1% of all options products and helped drive bitcoin to a new record of more than $94,000, with call options far exceeding puts. Analysts suggest the options activity directly influenced bitcoin's price surge through market makers' hedging activities. With over $44 billion in assets and trading volume rivaling the S&P 500 ETF, IBIT offers investors pure bitcoin exposure. Here's everything you need to know. Read Full Story

Strangles, a trading strategy that combines a short put and a short call in the same expiration, are featured regularly on tastylive. They take advantage of time, volatility and sideways price movement, but how do you manage them if they go wrong? In his latest installment of Life Cycle of a Trade, Nick Battista checks out the rolls and management of a Draftkings (DKNG) strangle, making some savvy adjustments to turn a loss into a win.

Trump Media & Technology Group (DJT) is said to be negotiating to acquire digital asset marketplace Bakkt Holdings (BKKT), signaling Trump's growing interest in cryptocurrency. Bakkt, originally formed by Intercontinental Exchange and led by Kelly Loeffler, a Trump inaugural committee co-chair, saw its shares jump over 160% on the news, reaching a market cap of about $400 million. 

DJT appears financially capable of the purchase, with $372 million in cash as of Q3. The potential acquisition might be aimed at mimicking Elon Musk's super-app strategy, potentially leveraging Bakkt's payment infrastructure to expand DJT's digital ecosystem.

Vitalik Buterin's vision of "information finance" is gaining credibility after prediction markets like Polymarket and Kalshi accurately forecasted the Trump-Harris election outcome. The Ethereum co-founder believes AI will revolutionize betting markets, enabling them to make efficient predictions even with minimal trading volume. This isn't new territory—betting markets have consistently outperformed traditional polling, drawing on the "wisdom of crowds" and efficient market hypothesis. As these platforms evolve, we anticipate they’ll be used to report news and sentiment in real-time.

We saw that play out election night. Hours before network and cable news called the presidential outcome, Polymarket and Kalshi had Trump trading above the 90% probability level. And we’re seeing it now in a variety of open markets. Take Trump’s nomination of Matt Gaetz as Attorney General. While the talking heads debate the outcome and Trump lobbies Republican senators for votes, Kalshi's market on the AG nomination provides a valuable real-time outlook on the probability of the outcome. (Spoiler Alert: It's not looking good for Gaetz.)

But even traders and active investors who don't trade prediction markets should be referring to Kalshi and other "iterative" forecasting platforms that employ the delphi-method. We predict they’ll become an essential information source for insight into economic, financial and political outcomes that may affect portfolios.

Spotify is Finally Profitable 🎶

Last week, Spotify (SPOT) shares surged over 8% in extended trading, and they’ve more than doubled in value since the start of 2024. Based on Q3 results, the Sweden-based music streaming platform could achieve a full year of profitability for the first time and reach $1.5 billion in annual operating profit.

The company's global Premium Subscriber base grew to 252 million paying users this past quarter, up 12% year over year. It now has 6 million net subscribers, which is a million ahead of guidance. Premium Subscriber growth translates to Premium Revenue of $3.861 billion in Q3. Spotify also posted quarterly operating income of $499 million. 

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