- Bitcoin price has formed a bullish flag pattern on the daily chart.
- The daily chart points to another 23% jump to the 50% Fibonacci Retracement.
- Bitcoin mining stocks like RIOT, MARA, and HUT will likely bounce back.
Riot Platforms (RIOT), Marathon Digital (MARA), and Hut 8 Mining (HUT) stock prices had a mixed performance in October even as Bitcoin made a strong breakout. MARA shares dropped to a low of $7.24, which was 64% below the highest point this year.
Similarly, Riot Platforms shares dropped to a low of $8.60, also 58% below the YTD high. Hut 8 Mining stock price tumbled by over 62% from the YTD high. This happened as Bitcoin surged from a September low of $24,800 to over $35,200. Historically, Bitcoin mining stocks tend to move in the same direction as BTC.
Bitcoin price has formed bullish patterns
A likely catalyst for these Bitcoin mining stocks is that BTC has formed extremely bullish patterns. First, as shown below, Bitcoin price moved above the important resistance level at $31,780. This was a crucial level since it was the highest swing on July 13th.
The coin also jumped above the ascending trendline that connects the lowest level since November 23rd. Most importantly, Bitcoin moves above the 50-day and 200-day Arnaud Legoux Moving Averages (ALMA). All these are bullish signs.
At the same time, Bitcoin has formed a bullish flag pattern. This pattern is characterized by a long straight line and a flag-like pattern. In most periods, this is one of the most bullish signs in the market.
Bitcoin price is also approaching the 38.2% Fibonacci Retracement level. Therefore, there is a likelihood that Bitcoin will continue surging as buyers target the 50% Fibonacci Retracement point at $42,150. This price is about 23% above the current level.
Impact for Bitcoin mining stocks
Therefore, all this will have an impact on the price of Bitcoin mining stocks like Riot Platforms, Marathon Digital, and Hut 8 Mining. My expectation is that these stocks will bounce back in November if Bitcoin rises.
While these stocks retreated in October, all of them bounced back in the latter part of the month as Bitcoin surged.
There are other potential catalysts for both BTC and mining stocks. First, there are signs that the SEC will approve a Bitcoin ETF in September. If that happens, demand for Bitcoin from institutional investors will likely rise. Besides, supply for Bitcoin in exchanges has continued falling.
Second, there is a likelihood that the Federal Reserve will end its rate hikes in the coming months. The Fed is expected to maintain rates unchanged between 5.25% and 5.50% in this month’s meeting.
