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There was significant movement in crypto-related stocks on Thursday. Unfortunately for shareholders of crypto mining companies, the movement in this space consisted of widespread sell-offs.
Some people really took it on the chin that day. Marathon Digital Holdings (NASDAQ:MARA)For example, the company’s stock price ended down nearly 13%.Worse wear was the equivalent riot platform (NASDAQ: Riot), decreased by almost 16%.The landing between the two was much smaller bit farms (NASDAQ:BITF); The company’s stock price endured a decline of more than 13%.
New crypto securities have become all the rage
The main reason was the new spot on the market Bitcoin (Cryptocurrency: BTC) The exchange-traded fund (ETF) began trading on Thursday. Investors flocked to these new products. All told, as of that afternoon, $4.6 billion worth of that money had been transferred. It can be reasonably concluded that at least some of these transaction parties have withdrawn funds from Bitcoin mining stocks in a reallocation move.
This wasn’t just a novelty. Spot Bitcoin ETFs already have a significant presence in the market, with all 11 stocks under review by the Securities and Exchange Commission (SEC) approved for trading yesterday. Therefore, they are not only new, different and attractive, but also give investors more options.
Crypto bulls have been focusing on spot crypto ETFs since they have been largely invisible to the companies offering them. There was widespread speculation that at least a few would be approved earlier this year. Many investors and observers were surprised that all applicants were given the green light for new securities. The general expectation was that at least some companies would not get regulatory approval.
Another factor moving away from mining stocks on Thursday is that they are all heavily (or completely) focused on creating new Bitcoin. So far, only spot Bitcoin ETFs are on the market. No company has yet achieved approval to create a spot ETF targeting one or more altcoins. As such, the Bitcoin world will likely be keeping an eye on this shiny new toy for some time before it becomes considered a standard type of crypto investment.
unjust punishment
I feel this opens up a profit opportunity for Bitcoin mining stocks. That’s because the value of the coins that Bitcoin mining stocks rely on is actually increasing (at a decent, if not incredible rate). There was nothing the miners developed on their own to withstand the drilling operations they endured Thursday. Therefore, a double-digit decline is unwarranted and does not seem sustainable.
That said, investments related to cryptocurrencies involve above-average risk, as even the most high-profile coins and tokens can be highly volatile. As always, caution is the key here.
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Eric Volkman has a position in Bitcoin. The Motley Fool has a position in and recommends Bitcoin. The Motley Fool has a disclosure policy.
Why Bitcoin Mining Stocks Plunged Thursday was originally published by The Motley Fool
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