- Argo Blockchain stock continued to underperform on Monday.
- Bitcoin price dropped to the important support at $29,000.
- The company recently diluted shareholders by selling new shares.
Argo Blockchain share price gapped lower on Monday as cryptocurrencies retreated. The stock retreated to a low of 10.35p, the lowest level since June 21st. It has dropped by more than 45% from the highest level this month.
Crypto prices retreated
Argo Blockchain stock price has had a difficult month in July as concerns about the company continued. The situation worsened last week when the company decided to dilute its shareholders by raising capital.
Argo Blockchain announced that it would raise over 5.75 million pounds from investors by selling shares. It will use these funds to pay some of its debt, which stood at over 59.1 million pounds.
The stock declined for two main reasons. First, investors always hate it when companies dilute their shares since it is often seen as the opposite of stock repurchases. Second, the stock dropped because it was already underperforming other Bitcoin miners before the capital raise.
In all, there are serious concerns about the future of Argo Blockchain, a company that reported a $9 million Q1 loss. It had lost more than 194 million pounds in the last financial year.
Another challenge is that Bitcoin has lost momentum recently. After rising to over $31,000 earlier this month, Bitcoin has now dropped to ~$29,000, as I wrote here. It failed to move above that level in July even after the Ripple vs SEC verdict.
Argo Blockchain, like other Bitcoin mining companies, makes most of its money when interest rates are rising. However, the company’s financial woes have seen it underperform its rivals like Riot Blockchain, Cipher Mining, and Marathon Digital.
Argo Blockchain share price forecast
The daily chart shows that the Argo Blockchain stock price made a down gap after announcing its dilution plan. It has now moved slightly below the 25-day and 50-day moving averages, which is a sign that bears are prevailing.
The MACD has formed a bearish crossover while the histogram has moved below the neutral line. Further, the Negative Volume Index (NVI) has remained below the 255-day moving average.
Therefore, the stock will likely continue falling as sellers target the next key support level at 5.83p, the lowest level on June 19th. The stop-loss of this trade is at 13p.
