- Bitcoin mining stocks dropped below an important support level.
- It moved below $25,000 on Thursday as the selling pressure continued.
- Tether lost its peg against the US dollar temporarily.
Bitcoin mining stocks drifted downward on Thursday after Bitcoin price moved below its final short-term support level. Marathon Digital stock dropped by more than 3% and reached a low of $9.33. It is stuck in the same range where it has been at in the past three months.
Similarly, Riot Platform’s share price dropped to $9.48, the lowest level since April 10th of this year. It has crashed by over 33% from the highest level in 2023. Meanwhile, Hut 8 Mining stock price dropped to $2 while Argo Blockchain shares retreated to $1.17.
Bitcoin price loses key support
The main reason why Bitcoin mining stocks retreated is that the plot thickened in the crypto industry after BTC price dropped below the key support I wrote about here. Bitcoin price dropped below the important support at $25,300, which was along the seven-month trendline. It had struggled to move below this support several times this month.
Most importantly, Bitcoin price dropped below the support at $25,000, which is a crucial psychological level. Therefore, this decline meant that there were more sellers left in the market, meaning that the coin could now crash to the next psychological point at $20,000.
There are three main reasons why the Bitcoin price dropped hard this week. First, like stocks, the coin dropped because of the Federal Reserve. While the Fed left interest rates unchanged at 5.25%, it pointed to more increases later this year.
This tone was more hawkish than what analysts were expecting. Still, one of the most respected investors, Doubleline Capital’s Jeff Gundlach, believes that the Fed will not follow through.
Tether loses its peg temporarily
Bitcoin price also declined after Tether lost its peg against the US dollar. This de-pegging was attributed to the supply imbalance in Curve’s 3Pool. Ideally, the pool requires that stablecoins like USDT, USDC, and Dai have a rate of 33.3% in its platform.
On Thursday, Tether’s share jumped to 70%, signaling that there was too much selling pressure. Still, I believe that the peg will stabilize.
Finally, there are regulatory challenges in the cryptocurrency industry after the SEC sued the biggest players in the sector.
Bitcoin mining stocks outlook
As I wrote in this article, mining stocks like Riot, Marathon, Argo Blockchain, and Hut 8 Mining tends to have a close correlation with Bitcoin. This means that they usually rise when BTC is rising and vice vesa.
Therefore, I believe that they will continue falling for now until Bitcoin manages to stage a well-defined recovery. Until this happens, these stocks will either continue falling or remain stuck in a tight range.
On a positive side, these companies’ business is safe considering that they focus on Bitcoin, which is widely seen as a digital commodity and not a financial security.
