Bitcoin (BTC) mining corporations have suffered in 2022 because of the crypto bear market. Nonetheless, their shares collectively noticed a pointy rebound on July 6, elevating hopes that traders have began to purchase the dips.
One of many intraday winners was Bitfarms (TSE: BITF), which surged by over 24% to shut at $1.29.
Bitcoin miners’ income down 70% from peak
The rallies come as a breather in what has been a foul 12 months for mining shares. An almost 60% year-to-date plunge in the BTC price and a rise in “mining difficulty” have pushed the miners’ daily revenues lower by over 70% from their November 2021 peak of $62 million.
The outcome is bad for all the mining stocks, including the ones mentioned above. For instance, BITF is still down 86% from its peak in pre-market trading on July 6 despite a 24% rebound in the previous session.
Similarly, MARA, CORZ, and CBIT have been trading 80%–93% below their record highs in November 2021, showing a far deeper drawdown than Bitcoin, whose price has dropped 67% in the same timeframe.
“Short covering” to trap bulls?
Bitcoin mining stocks risk further downside, however, given a potentially lengthy bear market led by macro dangers.
Thus, the sharp rebound witnessed throughout the Bitcoin mining shares could possibly be as a result of “quick protecting” or traders shopping for the dip, in accordance with Balmy Investor, a pseudonymous analyst.
Fast June observations. Engaged on Q2 report with @hashrateindex. ☘️
— Balmy_investor ⛏️ (@balmy_investor) July 6, 2022
Masking shorts entails shopping for again the borrowed underlying asset to shut a brief place at a revenue or loss. That sometimes results in frequent rebound strikes, particularly throughout a bear market, the place bulls are liable to being trapped.
As an illustration, the MARA inventory chart under reveals a number of instances of short-lived upside runs throughout an total bearish cycle.
In the meantime, “oversold” bounces are sometimes triggered when an asset’s relative energy index (RSI) slips under 30, which many conventional technical analysts take into account a purchase sign.
The RSI readings of Marathon Digital Asset Holdings, Core Scientific, Cathedra Bitcoin, and Bitfarms have been under 30 as of July 6.
The views and opinions expressed listed below are solely these of the creator and don’t essentially mirror the views of Cointelegraph.com. Each funding and buying and selling transfer entails threat, it’s best to conduct your personal analysis when making a call.