Shares of riot blockchain, hive blockchain, bit digital and bitfarms all fell

Time:2022-01-01 Source: 913 views Trending Copy share

What happened
Shares of several crypto mining stocks fell today along with the broader cryptocurrency market for no obvious reason other than broader trends that have been playing out over the last month. Shares of Riot Blockchain (NASDAQ:RIOT) fell 8.5% today, shares of the Canada-based Hive Blockchain Technologies (NASDAQ:HIVE) fell 9.4%, shares of Bit Digital (NASDAQ:BTBT) fell more than 5.3%, and shares of Bitfarms (NASDAQ:BITF) fell 11.7%.

So what
Being in the business of mining cryptocurrencies like Bitcoin (CRYPTO:BTC), most crypto mining stocks tend to move in correlation with the broader crypto market, which is struggling over the last month, with the price of Bitcoin down about 16.5%.

Bitcoin had seemed to be rallying over the past few days, with the price up to $52,000, but it started to fall last night, a move that then continued today. Bitcoin traded around $47,720 as of 4:10 p.m. ET. The sharp decline over the past 24 hours resulted in $300 million in forced liquidations on crypto futures contracts.

Although many believe Bitcoin to be a potential hedge against inflation, so far investors have treated the world's largest cryptocurrency like a lot of growth and tech stocks that have also struggled over the last month. When the Federal Reserve indicated that it would speed up the tapering of its bond-buying program and potentially raise interest rates multiple times in 2022, investors began to heavily sell off tech and growth stocks.

"It's still a fringe investment because I don't think people really understand what they want it to do," Victoria Greene, founding partner and chief investment officer at G Squared Private Wealth, told Bloomberg, referring to Bitcoin. "Is it offsetting inflation, is it holding value, is it an investment you just want it to go up, or is it an actual currency you want to use to buy things?"

Additionally, as we've seen with equities, crypto investors also may be tax-loss harvesting, in which they exit some of their losing positions to offset some of their capital gains taxes. The discovery of the omicron COVID-19 variant just before Thanksgiving has only added fuel to the flames over the last month. 

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