Bitcoin Shop Inc. (OTCMKTS:BTCS) Unable to Keep Gains, Crashes Once More

For quite a while the company tried to develop interactive LED systems but apparently it led them nowhere and a little more than a month ago they executed a reverse merger with BitcoinShop.us, LLC. Under the terms of the deal they changed their name and on March 5 started trading under the new ticker BTCS. In a PR dated February 19 the new entity was rahter prematurely dubbed as a potential “Amazon of Bitcoin”.

Well, take just one look at the chart and it becomes painfully obvious that something is horribly wrong with the company. This Monday the stock surged upwards and recovered by close to 57% just to suffer another crash during yesterday’s trading. BTCS was cut by more than 21% and dropped down to $0.53 per share.

Admittedly if you take it by itself a share price above half a dollar should be extremely positive for the majority of penystocks but for BTCS that is not the case. At the start of February the stock managed to run from $1.30 to a high of $5.25 in just four sessions. This means that the current market price represents a drop of close to 90%. For the 5 months prior to the change in business the company was consistently trading above a dollar or at the moment the stock is down by more than 50%.

A lot of the negative momentum can be attributed to the recent fiasco that happened with the largest Bitcoin exchange Mt. Gox and its file for bankruptcy. It appears that trading with an unregulated currency has been associated with some rather huge risks. 

But the disastrous chart performance of BTCS is largely caused by their own actions. On February 5 they did a 1-for-300 reverse stock split that shrank the number of outstanding shares to exactly 762 805. So, many traders started wondering where the massive number of shares exchanged on the market was coming from. Just for the last three session BTCS shifted 2.2 million shares on Friday, 1.9 million this Monday and 1.6 million yesterday. 

It turned out that as part of the merger owners of BitcoinShop.us, LLC received an aggregate amount of 100 million shares. For now BTCS has not revealed its their financial state after the merger but they have stated that sales for the fourth quarter of 2013 have increased from 88 to 1266. We don’t know how much revenues have these sales generated but the annual report for 2013 should be filed by the end of the month. Until then be extremely careful when trading their stock and do your own due diligence. 

Another pennystock that tried to ride the Bitcoin hype was Alumifuel Power Corp. (OTCMKTS:AFPW). Priced well into the triple zero price ranges until recently AFPW surged on the day of the announcement and closed at $0.0019. The next PR from the company revealed that they will also be looking for opportunities in the marijuana industry but it had the exact opposite effect. On that day AFPW crashed by 22% to $0.0017. At the moment they are sitting at $0.0015 per share.