- Hut 8 Mining, Riot Platforms, and Marathon Digital shares jumped and then retreated.
- The initial rally happened as Bitcoin price jumped to over $28,500.
- There are risks to the American economy as the bond rout continues.
Hut 8 Mining (HUT) and Riot Platforms (RIOT) stock prices jumped on Monday as Bitcoin and other cryptocurrencies soared. Riot stock soared by more than 10% to a high of $10.91 and then retreated to $9.88. On the other hand, Hut 8 Mining shares popped to a high of $2.23 and then ended the day at $2.
Bitcoin mining stocks retreat
Other Bitcoin mining stocks like Argo Blockchain, Cipher Mining, and Marathon Digital also jumped and then retreated. The initial surge happened after Bitcoin price surged from last month’s low of $24,800 to a high of over $28,500, its highest level in two months.
As I have written before, mining stocks do well when the Bitcoin price is rising for two reasons. First, they all have huge Bitcoin holdings in their balance sheets, which are affected by its price movements. Second, these companies make more money when they sell their mined Bitcoins to exchanges and other customers.
Bitcoin mining stocks are facing numerous risks that could push their prices lower in the near term. For one, after surging to over $28,000, Bitcoin price has pulled back to $27,500. While the coin has formed a head and shoulders pattern, there is a likelihood that the sell-off could intensify.
US bond rout continues
The other big risk is on the ongoing bond rout in the United States. Data shows that the 10-year Treasury yield jumped to 4.70% for the first time since 2007. Similarly, the 30-year yield has surged to the highest point in more than a decade.
As a result, the biggest bond ETFs have all plunged in the past few months. As I wrote here, the iShares 20+ Year Treasury Bond (TLT) plunged to $86.50, its lowest point since 2014. Similarly, the Vanguard Long-Term Treasury ETF (VGLT, has slumped to $54, ~45% below its all-time high. The current price is the lowest it has been in years. The Vanguard Total Bond Market ETF (BND) has also crashed.
Meanwhile, the iShares Russell 2000 ETF (IWM), where some Bitcoin mining stocks belong, has dropped in the past three straight months. All these are signs that investors are losing confidence in the American bond and equities market.
Therefore, there is a likelihood that the Hut 8 Mining, Argo Blockchain, Cipher Mining, and Marathon Digital stocks will remain under pressure for a while. Most importantly, while Bitcoin rose to over $28,000, the reality is that it has remained in this range in the past few months.
