Bitcoin‘s BTC/USD recent surge since late January has sparked concerns among crypto investors about a potential correction. In this context, economist Peter Schiff highlighted a potential red flag on Monday: the underperformance of bitcoin mining stocks compared to the strong performance of Bitcoin itself.
What Happened: Schiff pointed out the ongoing weakness of bitcoin mining stocks.
“They are getting killed even as Bitcoin is up big and other Bitcoin-related stocks are hitting record highs,” he said. “If I was long Bitcoin I would be worried about this divergence. It could be a sign of trouble ahead for Bitcoin itself.”
Several major bitcoin mining stocks, including Marathon Digital Holdings, Inc. MARA, Riot Platforms, Inc. RIOT, HIVE Digital Technologies Ltd. HIVE and Bit Digital, Inc. BTBT, CleanSpark, Inc. CLSK, all experienced premarket losses on Tuesday, following declines on Monday.
Even Core Scientific, Inc. CORZ, which bucked the downtrend on Monday, fell in premarket trading.
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Schiff’s comments suggest he interprets the weakness in bitcoin miners as a potential leading indicator of a future correction in the price of Bitcoin.
Why It’s Important: After a sharp decline in January, bitcoin mining stocks saw a resurgence riding the wave of the Bitcoin rally. However, their performance has remained volatile.
In January, Bernstein analysts attributed the subdued investor interest in these stocks to a reluctance to use them as a proxy for Bitcoin, according to CoinDesk. At the time, the analysts recommended using the weakness as a buying opportunity, anticipating a rally in Bitcoin following the approval of a spot Bitcoin ETF.
In premarket trading, the Valkyrie Bitcoin Miners ETF WGMI was down 5.29% at $16.10, while Bitcoin was up 2.25% at $66,691.74.
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