Mar 1, 2024 at 03:06Bitcoin mining stocks have seen a significant decline, dropping by over 27% in the past three trading days, despite a recent surge in Bitcoin prices that almost reached $64,000.
Analysts point out that a similar divergence occurred twice in 2023, presenting a favorable opportunity to purchase mining stocks at a discounted rate. This trend has prompted discussions among market observers about the potential causes behind the downturn.
Since February 27th, major Bitcoin mining companies such as Marathon Digital Holdings and Riot Platforms have experienced declines of 18.5% and 21.9%, respectively, according to data from Google Finance. CleanSpark and TeraWulf have also been hit hard, falling by 27.5% and 25.4%, respectively.
In contrast, Bitcoin’s price surged from approximately $51,000 to a yearly high of $63,700 before slightly retracing to its current level of $61,350. This discrepancy has led some, like gold advocate and cryptocurrency skeptic Peter Schiff, to speculate on potential trouble ahead for Bitcoin.
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One investor, identified as Chris, shared his experience on social media platform X, stating that he initially invested in CleanSpark but reconsidered his position as Bitcoin approached $65,000, deciding to sell his shares in mining companies.
Mitchell Askew, the head analyst at Blockware Solutions, believes that the most plausible explanation for the divergence is investor caution surrounding the upcoming halving event. The halving, scheduled for April 20th, will cut Bitcoin miner rewards in half, potentially impacting profitability.
Askew highlighted previous instances where similar divergences led to profitable opportunities to acquire mining stocks at a discount. He emphasized that such fluctuations are normal given the volatility of these assets.
Jaran Mellerud, founder and chief mining strategist at Hashlabs Mining, anticipates a critical period for publicly listed miners in the U.S. following the halving. However, Askew remains confident that miners with low energy costs and modern hardware are well-prepared for the event and will not face significant risks of becoming unprofitable.
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