Overstock shares look attractive as cryptocurrency play

Overstock has been hitting the headlines of late, with their planned cryptocurrency mobile wallet app, tZERO, expected to cause shockwaves through the industry. Available on iOs, and later Android, the tZERO app allows users to buy, store, and sell cryptocurrencies. This will initially only offer bitcoin and ether, yet further expansion into alternative coins is planned.

Overstock as a crypto play

Overstock has historically been a more traditional internet retailer, with the company selling home goods online. However, with the company seeking to sell that legacy side of the business, we are seeing a shift towards areas such as cryptocurrencies. This allows for a greater exposure to the price of bitcoin, with some seeing the recent rise in price as driving greater demand for the firm. The bitcoin chart below highlights the incredible three-month rise, with the price trading around 180% higher than that seen at the beginning of April. This recovery should boost investor confidence and raise participation as the fear of missing out continues to drive prices higher.

Ultimately, the crypto offering from Overstock is beneficial for two key reasons. For one thing, tZERO is being advertised as unhackable, with private keys stored within a users’ smartphone itself. This would ensure that an account cannot be hacked digitally. The company also allays fears over lost passkeys or phones, with tZero’s private key recovery system allows users to restore access to their funds. This package will certainly appeal to many, and we have seen a substantial rise in Overstock shares in response.

Have we seen the bottom?

The chart below highlights both the longevity of the Overstock share price decline, and the upside they have experienced of late. The downtrend does still remain intact, with a break through $23.33 required to negate that bearish sentiment. However, we can also see that momentum still has further to run, with the stochastic just halfway into its range at 46. The recent upturn comes from a historically significant area of resistance, between $4.97 and $9.75. With a descending trendline also coming into play around the same area, there is a good chance we have seen a bottom for the firm.

The four-hour chart highlights the short-term trend, with a clear pattern of higher highs and higher lows. With that in mind, the key is to remain above the most recent swing low, with a bullish outlook remaining unless we see such a break. Thus, for now a bullish outlook is in play for Overstock shares until we break below $12.20.