Riot Platforms (NASDAQ: RIOT) stock price surged on Monday, alongside other Bitcoin mining companies like Marathon Digital, Core Scientific, Cipher Mining, and CleanSpark. Reaching a high of $11.50, the stock saw its highest point since April 25th. The surge in Riot Platforms shares was linked to the recent upward movement in the price of Bitcoin. Bitcoin itself had plummeted to a low of $53,700 earlier in the month but has since rebounded to a crucial resistance level at $65,000.
One of the catalysts for Bitcoin’s price action was Germany’s move to transfer over 50,000 Bitcoins to exchanges, a significant step in its liquidation process. Despite dropping to $53,700, Bitcoin’s performance during this sell-off exceeded expectations. Additionally, the positive sentiment towards Bitcoin and other cryptocurrencies was boosted by recent events, such as the Donald Trump shooting incident at a rally in Pennsylvania. With Trump leading in most polls for the next election, many speculate that his victory would bode well for the cryptocurrency industry, given his expressed support and substantial crypto portfolio.
Another factor influencing the upward momentum in Bitcoin and Riot Platforms stock is the dovish statement from Jerome Powell, indicating that the Federal Reserve would consider cutting interest rates if the labor market deteriorates further. With recent data showing a rise in the US jobless rate to 4.1% in June, coupled with falling inflation, analysts anticipate rate cuts starting in September. Cryptocurrencies tend to perform well in a dovish environment, as seen earlier this year when optimism around rate cuts boosted their value.
However, despite the recent positive trends, several risks remain for Riot Platforms stock. The company is expected to release its financial results on July 31st, with analysts predicting a slowdown in revenue due to lower prices and production levels. The decline in Bitcoin mining output, with a 45% drop in coins mined from June 2023 to June 2024, could also impact the company’s profitability. Furthermore, the ongoing Bitcoin recovery might be short-lived, potentially leading to a double-top pattern and a subsequent decline in prices.
Technical analysis of Riot Platforms stock shows a bounce back from the $9 level earlier in the month, remaining above the key upper trendline and the 50-day moving average. However, the Relative Strength Index (RSI) is approaching the overbought level, indicating a possible correction in the stock price. The stock could resume a downward trend and retest the descending trendline at $10, potentially falling to the lower side of the ascending line. Investors should remain cautious of potential risks despite the recent surge in Riot Platforms stock price.
In conclusion, Riot Platforms stock price has seen a significant rebound, fueled by the upward movement in Bitcoin and positive market sentiment. However, risks remain, including potentially weak financial results, declining Bitcoin production, and the possibility of a dead cat bounce in the cryptocurrency market. Investors should closely monitor the developments in both Bitcoin and Riot Platforms stock to make informed decisions in the volatile market environment.
