If there is one thing to learn about Canadian penny stock traders, it's that they love to chase stocks high after the best money has already been made. Even more than U.S. traders. That has become apparent when looking at Bluesky Digital Assets Corp. (BTC.CN) (BTCWF). In ran from $0.05 to over $0.80 in Canada last week before pulling back into the $0.30's. It's currently in the $0.60's at just after 11am Eastern on Monday, leaving it with a market cap of around $17 million. There were rumors that it ran based on some confusion around the growing popularity of the social media platform also named Bluesky. But it's main bread and butter is BlueskyIntel, a business intelligence and web engagement platform for businesses looking to get into AI and blockchain technologies. It's expected to launch in January. To simplify it, we feel that it's kind of like a Wix for AI and blockchain based on Bluesky's corporate presentation, and will be a SAAS business model to ideally generate profitability. It's a decent business model and idea, but it's not clear to us how this small cap out of Canada plans to dominate this industry when Silicon Valley dollars will almost certainly come up with their own solutions.
Contrast this to our recent pick Blockmate Ventures Inc. (MATE.V)(MATEF). At $0.10, MATE has an $11 million market cap. Its 55% owned Hivello DePIN platform is slated to launch in December, along with its token. Bluesky has a tighter float which is conducive to greater spikes and more volatility, but that's already offset with the higher price and the (in our opinion unjustified) greater valuation. In every other way, MATE presents a far better investment opportunity than BTC:
- Hivello has been able to raise capital through the private equity market, with the latest $3.5 million at $30 million U.S. valuation in the latter stages of completion. That means Hivello has managed to attain a valuation outside of the Canadian penny stock market. MATE's 55% stake implies a per share CAD price of over $0.20 and that excludes the potential valuation bump once the Hivello token starts trading. It's trading at half the price it should be based upon a verified third party valuation of Hivello from experienced institutional crypto investors who are willing to hand over a check at that price. In contrast, we don't know how much BlueskyIntel is actually worth because there is no third party investment outside of the Canadian smallcap markets.
- A follow up to the previous point, Bluesky has been raising capital. The latest raise of just under 5 million shares recently closed at $0.05, with warrants at $0.065. This is substantial dilution for those who are buying in at over 10 times the price just a few days later. In contrast, MATE's share count has remained steady at 111 million for over a year as the last capital raise through the public vehicle took place in mid-2023. Bluesky might have the lower share count, but once the capital raises come off their lock, it will have a lot more selling pressure.
- The previous point is backed up by substantial insider selling seen on Bluesky. The COO and President Anthony Pearlman has sold nearly half of his shares on the run up:
- While BlueskyIntel seems like a decent idea, as a SAAS model, it will face an uphill battle to profitability. We find Hivello's DePIN model that enables users to participate in crypto projects and get paid inherently superior in today's economic climate. For Bluesky to make money, it has to convince businesses to hand over money for its services. Hivello enables its users to MAKE money and takes a cut of the earnings. Everyone with access to spare computing power who wants to make a few extra dollars a day will be a potential target. In a climate that's very favorable to that type of model given the gig economy and rising prices of groceries and housing costs. Contrast that to the climate BlueskyIntel's target market is facing - small business closures and rising input costs. As Bluesky is asking for money, it's subject to competition from similar (and presumably more well financed) solutions. There is nothing stopping someone from using Hivello, making money there, then making additional money on another DePIN project that isn't run on the Hivello platform. There are no competitors in the same way Bluesky faces competition.
- Finally, investors in MATE are actually engaged in what the company is doing. They know about Hivello, the arbitrage opportunity through the private equity raise and the business model. They actively talk about these opportunities on the message boards. They can hype the company's prospects without hyping the stock. They are what we would classify as "smart" money. In contrast, BTC is absolutely inundated with dumb money right now or dishonest day traders posing as diamond-handed longs. The rocket ship crowd that just talks about stock prices and their half-assed technical analysis. They're not talking about BlueskyIntel or its coming release in January. They are ignoring or laughing off the insider selling. There is also misinformation out on the stock. Bluesky is NOT the social media platform. Bluesky ISN'T currently mining crypto. But that doesn't matter to someone who is FOMOing in at $0.60 hoping for a $1.00. Well, it doesn't matter until the hype is gone then they have to face the reality of what they actually own and how much it's actually worth.
Bluesky appears to be a perfectly named company with the perfect CSE symbol that is trading purely on hype. Blockmate is a real investment in the crypto space. Smart money will be coming into MATE and taking profits on BTC while there is profits to be had. It's up to each trader if they want to be smart money or dumb bagholders. Because BTC is almost certainly headed down. Or if the market is so strong that BTC still gains from here, MATE is going to catch up and have the far better returns from this point forward. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1016 followers on here as well as 120 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.
Disclosure: We are long MATE.V