Cryptocurrency miners and their stocks, part 3
Back in 2022, I wrote two posts where I took a look at the publicly traded companies that were doing business in the cryptocurrency industry, mainly miners. I focused my attention on the following companies:
- Hive Digital Technologies, HIVE
- Hut 8 Corp, HUT
- Marathon Digital Holdings, MARA
- Riot Platforms, RIOT.
Part 1 was written right in the middle of a bear market when the general stock market mood was grim, however FTX and Luna hadn’t collapsed yet and there was more downside to come. And then part 2 was right at the end of 2022, with the FTX collapse in the books, and the outlook at the time remained grim.
I have been meaning to write part 3 for a long time but never seemed to find time for it. The latest bull market in the industry has given me the push I needed to sit down and write this article. So, let’s dive right in and see what’s been happening with our favorite mining stocks!
Note: my goal here is to look strictly at the price charts and see what the markets might be telling us about these companies. I do not delve into fundamentals or try to come with explanations as to why the price is what it is.
Market Conditions
As we sit in April of 2024, the stock market and cryptocurrencies are back in the bull market territory. No more 80% drops, no more “deep red” imagery. In fact, Bitcoin has hit a new all-time high recently:
It has risen 309% since my last post on this topic. A rather impressive feat considering how bleak the situation looked for Bitcoin and the whole cryptocurrency space at the time.
Fear and Greed indicator has been at the greed level for a long time now:
Nasdaq and S&P500 have been putting in new all-time highs as well.
The overall market is definitely in a bullish mood, but what about our mining stocks? Are they riding the same wave, or are they charting their own course?
Most mining stocks not participating
Curiously, the picture is less than rosy for the mining stocks. I will go one by one through HIVE, HUT, MARA, and RIOT and show you how each looks. The order is alphabetical and is not meant to indicate my preference or any kind of other order.
HIVE
It’s a good size recovery from the bottom but what matters is that the stock price has failed to reach new highs, and is showing a troubling behavior of falling under the 200 day simple moving average price. The stock price is even failing to put in new highs and is consistently putting in lower highs. The bottom is still holding, but if this one breaks to the downside, the $1 level is not that far off.
HUT
Almost identical picture to HIVE:
The same recovery from the lows, but failure to put in any kind of highs, in fact putting in lower highs and living under the 200 day simple moving average price.
MARA
Now, here’s where things get interesting. MARA seems to be the standout performer among our mining stocks:
First of all, the recovery is much more pronounced. It has gained ~500% from the bottom when the part 2 of this series was written. That’s actually more than the BTCUSD has and almost 4x more than the previous two miners.
It also was able to put in a new 1-year high price multiple times and put in a series of higher highs and higher lows, showing much better behavior than the previous mining companies we observed.
The recent progress has stalled, but at least the price is above the 200 day moving average and so far following the ascending channel rather nicely.
RIOT
This one doesn’t look as bad as the first two but not as good as MARA:
Recovery from the bottom is almost at 300%, close to what BTC did. And the stock did manage to put in a new one year high. At the same time the negative features are what appears to be a series of lower highs and potentially breaking down through the ascending channel. And it just went under the 200 day moving average price at that point. I would categorize this one as a stock at a critical point in its short term life.
Discussion
When you compare a commodity price action to its mining company price action, they should be very much coupled. For instance, if you see Gold price moving up, you can check pretty much any gold miner stock and it will be moving up together with it. This is not the case with cryptocurrency miner stocks anymore with the exception of MARA.
I put each ticker in a table format and get the exact breakdown of what the price did since the part 2 was published on December 25th, 2022:
As I had mentioned, each stock has gained considerably since the low, but that is of less importance. You would expect to see the prices to rise as the price of the “commodity” these companies mine has exploded in price as well. What is curious to me how much they are under-performing BTCUSD. Again, MARA behaved differently and matched Bitcoin and more.
If we also take a look at a different time period and pick November 1st, 2023 as our reference point — for many this was basically the start of the current BTCUSD price advancement where it has gained essentially 100% - here is what each miners did:
Huge under-performance by everyone, except MARA again. It has matched what BTCUSD did and then some.
Conclusion
I have to admit, I didn’t see BTCUSD recovering its previous high, let alone setting a new one. But here we are, and it’s been fascinating to watch how the mining stocks have reacted. While most of them have struggled to keep up with Bitcoin’s impressive gains, MARA has proven to be the exception, bucking the trend and mirroring the commodity it mines.
I’m curious to see why one is performing better than the other and will spend sometime looking at what others have to say here. If anyone reading this has a take on it, I would love to hear it. I am guessing spot bitcoin ETFs and bitcoin halving that’s coming are mostly responsible for this.
Let’s see how this will develop as the time goes along.
