Cryptocurrency-related stocks are at significant risk as Bitcoin forms risky patterns pointing to more downside. Coinbase stock price has already crashed by 24% from its highest point this year and is hovering at its lowest point since May 20th.
Bitcoin mining stocks have retreated
Similarly, MicroStrategy (MSTR) stock has dived by over 31% from the YTD high while Marathon Digital (MARA) has collapsed by 42%. Other Bitcoin mining companies like CleanSparK, Cipher Mining, Bitfarms, and Core Scientific have also moved into a bear market after falling by over 20% from their YTD high.
All these stocks thrive when Bitcoin is doing well. For example, most of them soared to a multi-year high in March as Bitcoin soared to a record high of $73,600.
This performance happens because BTC is the main driver for the crypto industry and when it soars, other altcoins do well. Bitcoin mining companies generate higher profits when Bitcoin is in an uptrend as well while Coinbase and other exchanges see more activity.
Bitcoin price forms bearish patterns
Bitcoin price.chart
The biggest risk for stocks like COIN, MSTR, and MARA is that Bitcoin is on a dangerous path that could push it below $50,000 in the near term. As shown above, the coin has formed a quadruple-top chart pattern whose neckline is at $56,400.
This pattern is a sign that buyers are afraid of buying Bitcoin above the key resistance point at $72,200 as we saw earlier this month. In most cases, this pattern is one of the riskiest ones in the financial market.
At the same time, Bitcoin has crashed below the 50-day and 100-day Exponential Moving Averages (EMA). It is also hovering at the 23.6% Fibonacci Retracement level.
Therefore, the coin could continue falling, especially if sellers push it below the neckline at $56,400. If this happens, the next point to watch will be the psychological point at $50,000 followed by the 50% retracement point at $44,000.
Such a crash will lead to more downside for Bitcoin mining stocks like Riot Platforms, Cipher Mining, and Marathon Digital.
This performance will likely happen because of a lack of catalysts in the crypto industry. Bitcoin halving has already happened, the SEC already approved Bitcoin ETFs and the Fed shows no signs of starting to cut interest rates. Bitcoin ETFs are also seeing outflows, pointing to weaker demand.
