• Sun. Aug 14th, 2022

If History Repeats Itself, Bitcoin Miners Could Rebound

ByHazel R. Lang

Jul 7, 2022

As bitcoin struggles to maintain the psychologically important price of $20,000, it’s no surprise that bitcoin miners have been among the most repudiated stocks in what has been a miserable first half of 2022 for the whole market.

Among other issues plaguing bitcoin miner stocks, growth stocks are out of favor. Exchange-traded funds, such as VanEck Digital Assets Mining ETF (DAM), paint this picture. However, there is some hope for the DAM and its components.

Granted, bitcoin miners are a struggling asset class right now. Investors are worried about lower revenue and possible margin calls due to the price crash of the biggest digital currency. As a result, some bitcoin miners are flooding exchanges with cryptocurrency supply to bolster their cash positions and ensure their survival. Still, DAM could be positioned for better performance if history repeats itself.

“Bitcoin (BTC) visiting the $20,000 range after a year and a half has made mining – the most important job in the ecosystem – an expensive affair. However, if history were to repeat itself, the BTC investors could witness another epic bull run that previously helped Bitcoin reach an all-time high of $69,000,” Arijit Sarkar reported for Cointelegraph.

Translation: The last time things were this bleak for bitcoin miners from a revenue perspective was about a year ago. From there, bitcoin prices — and miner stocks — soared through the end of the year.

“Despite mixed feelings about the recovery of the crypto ecosystem, retail investors have increased their investment efforts amid the bear market as they realize their long-term dream of owning a full BTC (1 BTC). The global recession, geopolitical tensions, the fall of crypto-economies like Terra, and the ongoing COVID-19 pandemic are currently preventing the Bitcoin ecosystem from unlocking its true potential,” according to Cointelegraph.

DAM, which tracks the MVIS Global Digital Assets Mining Index, was not there for this run, as ETF VanEck debuted in March. However, the bulk of the fund’s 25 holdings were. This could indicate that DAM has the right leverage for a potential bitcoin miner bounce.

Additionally, research firm Arcane Crypto states, “Argo, CleanSpark, Stronghold, Marathon, and Riot are the miners best positioned to support the crypto winter. At the same time, major player Core nearly matched its operating costs to its total revenue,” Cointelegraph added.

Riot, Marathon, and CleanSpark combine for over 17% of DAM’s roster. Argo holds 4.54% of the fund’s weighting.

For more news, insights and strategy, visit the Encryption channel.

Opinions and predictions expressed herein are solely those of Tom Lydon and may not materialize. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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