- Bitcoin mining stocks have been in a consolidation phase recently.
- Bitcoin price has remained stubbornly above $26,000 since last week.
- The risk for these stocks is that BTC is forming a death cross pattern.
Bitcoin mining stocks moved sideways last week as investors reacted to the decision by Franklin Templeton to apply for a Bitcoin ETF. Riot Platforms stock price was trading at $10.73 on Monday, a few points above this month’s low of $10.11.
A closer look at other Bitcoin mining stocks like Marathon Digital (MARA), Cipher Mining, and Argo Blockchain had a similar price action. All these shares have dropped by more than 40% from their highest levels this year.
These stocks retreated because of Bitcoin price action. After soaring to the year-to-date high of $32,000 a few months ago, Bitcoin has stabilized at $26,000. Last week, it moved briefly below $25,000 and then bounced back after Franklin, a $1.5 trillion fund manager, applied for a spot Bitcoin ETF.
There will be two likely catalysts for Bitcoin in the coming weeks. First, the Federal Reserve will deliver its interest rate decision on Wednesday. Analysts believe that the bank will deliver a hawkish pause and warn that it could resume hiking rates later this year.
As I wrote here, Bitcoin and other altcoins react to the actions by the Fed. They tend to rise when the Fed is slashing rates and vice versa. For example, they all plunged in 2022 as the bank started its rate hikes. Therefore, Bitcoin mining stocks like RIOT and MARA will react to the Fed decision.
The other important event that will move these stocks is the action by the Securities and Exchange Commission (SEC). A decision to approve a spot ETF will likely lead to more inflows in Bitcoin and boost their stocks.
Analysts believe that the SEC has no choice but to approve these funds. For one, the agency suffered a major loss in a US court recently. The lawsuit was filed by Grayscale, and argued that the SEC erred in dismissing its application to convert GBTC into a spot ETF.
The biggest risk for RIOT, MARA, and Argo Blockchain stocks is that Bitcoin price has formed a death cross while its volume has been falling. As shown above, the 50-day and 200-day moving averages have made a bearish crossover, signaling that Bitcoin could slump soon.
These stocks have a good correlation with Bitcoin prices. This bearish breakout will be confirmed if the price moves below the important support at $25,190. A break below that level will see it drop to $20,000. On the other hand, a move above $28,155 will see it continue rising.
