Crypto mining stocks such as MarathonDH, RiotBlockchain, HiveBlockchain and Hut8Mining extended their declines into 2022, but Wall Street analysts are still upbeat on the sector’s outlook. By Aoyon_A $MARA $RIOT $HIVE $HUT $SDIG $IREN $RIGZ
The miners, whose shares are heavily correlated to the price of the coins they prod, are reflecting declines across the crypto market. Bitcoin, the largest cryptocurrency by market cap, fell more than 5% Wednesday alone after minutes of the U.S. Federal Reserve meeting in December pointed to a possible interest-rate increase in March, which is sooner than many had expected. Ether, the second-largest, slid almost 7%. Both declined further today.
“While market excesses are clearly taking a beating with the anticipated rise in interest rates, we firmly believe current valuations have nothing to do with fundamentals and more due to the lack of institutional buy-in to this relatively obscure new sector,” Christopher Brendler, an analyst at investment bank DA Davidson, said in a research note.
The miners are still extremely profitable and gross margins remain “super healthy” despite a rising network hashrate and the sharp decline in bitcoin price, Brendler wrote. “With the stocks at these levels, the miners offer a superior risk/reward to the underlying BTC as we see limited downside from here, barring a complete BTC collapse sub $10K,” he said.
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