- Bitcoin mining stocks like Riot Platforms and Marathon Digital shone in 2023.
- Bitcoin price surged by more than 150% in 2023.
- In the short term, these stocks could retreat as BTC formed a double-top pattern.
Argo Blockchain, Riot Platforms (RIOT), and Marathon Digital (MARA) stock prices had a strong performance in 2023 as Bitcoin and altcoins rebounded. RIOT shares jumped to a yearly high of $20.62, which was 540% above its lowest point in 2022.
Similarly, MARA shares jumped to a high of $27.72, 808% above its post-FTX collapse low. Argo Blockchain, one of the most embattled Bitcoin mining stocks, soared to a high of $3.50, up from the December 2022 low of $0.3248.
Other Bitcoin mining stocks also had a great year. Some of the most notable names were Bitfarms, Cipher Mining, and Hut 8 Mining. They jumped by more than 300%, becoming the top performers in the Russell 2000 index.
This performance was obvious since these companies do well when the crypto market is doing well. Bitcoin price soared by over 150% while the total market cap of all cryptocurrencies more than doubled.
A higher Bitcoin price is important because it helps them make more money when they sell their coins to exchanges and other buyers. Also, these companies generated strong unrealized gains since they hold vast amounts of Bitcoin in their balance sheets. As a result, some of these companies worked to reduce their debt and boost their free cash flows.
Bitcoin mining stocks will be in the spotlight in 2024 as traders react to three key tailwinds. First, the most obvious tailwind is that the Federal Reserve will start cutting interest rates since inflation is falling and the economy is slowing.
Second, there is the tailwind of a spot Bitcoin ETF approval. If this happens, analysts believe that Bitcoin price will continue rising. And with the supply of Bitcoin in exchanges falling, there is a likelihood that these companies will sell their holdings at a premium.
The other tailwind is the Bitcoin halving that will take place in April. In theory, halving should be a bad thing for miners since it will reduce their block rewards. However, the benefit is that it could compensate for this with higher prices. Bitcoin miners have done better after all the past halvings.
In the short term, however, these stocks could be vulnerable now that Bitcoin has formed a dreaded bearish pattern. On the daily chart, the coin has formed a double-top pattern at around $44,980 and whose neckline is at $40,162. In most cases, this pattern usually leads to a bearish breakout.
If this happens, it means that Bitcoin price will drop below the neckline at $40,162 and move to the next support at $38,000.
On the positive side, Bitcoin and other cryptocurrencies could take part in the so-called January Effect. This is a theory that states that some financial assets do well in January as investors return from holidays. The January Effect could see Bitcoin price jump above the double-top resistance at $44,987.
