Dec 20, · Read more: A hedge fund chief who oversees $2 billion breaks down why we're in for a 61% stock-market crash over the next months - and shares 3 Author: Emily Graffeo. Dec 22, · So what. Bitcoin hit its all-time high over the weekend, while the stock market was closed. Since cryptocurrency-miner stocks tend to follow the price of bitcoin up and down Author: Jon Quast. Nov 21, · Why is Bitcoin Going Down / Up Summary. Bitcoin’s price is defined by the last trade conducted on a specific exchange. Price goes up when buying pressure increases, and goes down when selling pressure increases. There are several major factors that can cause the price to go up or down such as: Media hype / FUD; Loss of trust in fiat currencies.
Why bitcoin market is going downBitcoin May Be Down, but These Cryptocurrency Miner Stocks Are Soaring Today | The Motley Fool
The first: the policy response to the global pandemic, specifically from the US government he said. And the second trend: the "digitalization of everything. Visit Business Insider's homepage for more stories. Read the original article on Business Insider. Indices in This Article. Dow Jones 30, Currency Exchange Rates. Currency Converter.
Find News. The movement of these stocks could have a very simple explanation: Stocks don't trade on the weekends. By contrast, cryptocurrencies like bitcoin can be bought and sold 24 hours a day, seven days a week. Bitcoin hit its all-time high over the weekend, while the stock market was closed. Since cryptocurrency-miner stocks tend to follow the price of bitcoin up and down, it's only logical to see them going up today now that the stock market is open.
To be clear, we can rule out alternative catalysts. None of these companies reported news, and I couldn't find new coverage from prominent stock analysts. Furthermore, there's no reason to believe Marathon, Riot Blockchain, and Bit Digital stocks are going up from a short squeeze.
According to data from Nasdaq , each stock has minimal short interest people betting against these stocks and all can be covered in one day. Without getting too technical, suffice it to say this isn't a ripe short-squeeze situation. Here's why cryptocurrency miner stocks follow the price of bitcoin: The bitcoin network is run by a decentralized network of computers that keep track of transactions.
You could even set up your own computer to do this if you wanted, but you'd be competing against much faster and more powerful computers. These compete against each other to process transactions the fastest, and new bitcoin is awarded to the winner. This is the cryptocurrency mining process. Mining bitcoin has a real cost to it. Miners pay for their spaces, equipment, and electricity. While each company's cost structure is unique, they've all struggled to make a profit in recent years.
Over time, the cost to mine bitcoin goes up; if the price of bitcoin doesn't go up fast enough, it's not profitable. Consider recent financial data from Bit Digital. It reported results for the third quarter of on Dec.
In other words, its business basically broke even. The price has since more than doubled, increasing Bit Digital's opportunity to profit. Marathon, Riot Blockchain, and Bit Digital all generate revenue by mining bitcoin. Because the price of bitcoin has more than doubled since September, these companies should start bringing in more revenue and have a shot at higher prices. That's why these stocks go up with bitcoin. Investing legend Warren Buffett once said, "A horse that can count to ten is a remarkable horse -- not a remarkable mathematician.
I personally think this applies to cryptocurrency miners. Don't get me wrong, I like some cryptocurrencies, and I even bought bitcoin and Ether. I see it as a simple case of supply and demand. Specifically, the supply of bitcoin is limited -- and recently we've seen a surge in demand from corporate entities. This increasing demand coupled with limited supply could keep pushing bitcoin prices higher. So I do believe cryptocurrency prices can continue to rise. I'm just not sure that bitcoin miners are the best way to invest in this trend.