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Bitcoin mining stocks experienced a resurgence in Wednesday’s pre-market session, driven by the recent rebound in BTC. Shares of Riot Platforms saw an increase of over 1%, while Marathon Digital, the largest miner in the sector, climbed by 1.65%. Other companies, including CleanSpark (CLSK), Iris Energy (IREN), Core Scientific (CORZ), and TeraWulf (WULF), also saw gains of over 1.5%.
Bitcoin Price Rebound
The rise in these stocks is linked to the ongoing Bitcoin price action. After hitting a low of $53,520 last Friday, Bitcoin surged to over $59,390 by Wednesday. This rebound occurred despite mixed signals within the industry.
On one hand, the German government continued transferring Bitcoins to exchanges in anticipation of a future sell-off, adding 5,013 more coins to Kraken, Coinbase, and Cumberland on Wednesday, leaving over 18,000 coins remaining. Concurrently, wallets connected to Mt.Gox have started moving coins, increasing the supply on exchanges.
Positive Signs for Bitcoin
On the positive side, there are indications that Bitcoin ETFs are seeing inflows. Nine ETFs added 4,601 coins on Tuesday, valued at over $263 million. Some of the top performers included funds from Blackrock, Fidelity, Ark Invest, and Bitwise.
Additionally, data from CryptoQuant indicates a significant outflow of over 35,000 coins from BitMEX this week. Historically, such events are often precursors to a substantial Bitcoin price increase.
“The recent outflow of 35,486 $BTC from BitMEX should not be ignored. Historically, such events on BitMEX are predictable signals that precede Bitcoin price increases.” – By @joao_wedson
Bitcoin’s price also rose following comments from Jerome Powell, head of the Federal Reserve, indicating a willingness to cut interest rates if inflation continues to fall. Recent data showed a decline in both headline CPI and PCE numbers for May.
Risks to Bitcoin Mining Stocks
Despite the positive momentum, there are two key risks that could impact Bitcoin mining stocks. First, recent data shows that many miners are producing fewer Bitcoins due to the halving event.
Marathon Digital produced 590 coins in June, a 40% decline from the same month in 2023 and a 4% drop from the previous month. TeraWulf produced 136 coins in June, down from 144 coins in the previous month. Other companies, such as CleanSpark and Cipher Mining, also reported decreases in Bitcoin production.
Second, there is a risk that the ongoing Bitcoin recovery could be a dead cat bounce, a situation where an asset in a downtrend experiences a brief rebound. This is a possibility as Bitcoin has formed a significant double-top pattern, a common reversal signal.
If the BTC price recovery falters, Bitcoin mining stocks are likely to resume their downtrend. Stay informed and explore more updates on Global Crypto News.
