With bitcoin struggling to maintain the psychologically important $20,000 price point, it’s not surprising that bitcoin miners were among the most repudiated stocks in what was a miserable first half of 2022 for the broader market.
Among the other issues weighing on shares of bitcoin miners is growth stocks being out of favor. Exchange traded funds, such as the VanEck Digital Assets Mining ETF (DAM), paint that picture. However, there is some hope for DAM and its components.
To be sure, bitcoin miners are currently an embattled asset class. Investors are fretting about declining revenue and possible margin calls owing to slumping prices of the largest digital currency. As a result, some bitcoin miners are flooding exchanges with supply of the cryptocurrency to bolster their cash positions and ensure survival. Still, DAM could be positioned for better showings if history repeats.
“Bitcoin (BTC) visiting the $20,000 range after one and a half years made mining — the most important job of the ecosystem — a costly affair. However, if history were to repeat itself, BTC investors may witness another epic bull run that previously helped Bitcoin reach an all-time high of $69,000,” reported Arijit Sarkar for Cointelegraph.
Translation: The last time things were this gloomy for bitcoin miners from a revenue perspective was about a year ago. From there, bitcoin prices — and miners’ shares — soared through the end of the year.
“Despite mixed sentiments about the recovery of the crypto ecosystem, small-time investors are found to have increased their investment efforts amid the bear market as they fulfill their long-term dream of owning one full BTC (1 BTC). Global recession, geopolitical tensions, falling crypto economies like Terra and the ongoing COVID-19 pandemic currently hold the Bitcoin ecosystem from unleashing its true potential,” according to Cointelegraph.
DAM, which follows the MVIS Global Digital Assets Mining Index, wasn’t around for that run, as the VanEck ETF debuted in March. However, the bulk of the fund’s 25 holdings were. That could signal that DAM has the right amount of leverage to a possible bitcoin miners rebound.
Additionally, research firm Arcane Crypto says, “Argo, CleanSpark, Stronghold, Marathon and Riot are the best-positioned miners to sustain the crypto winter. At the same time, major player Core has nearly matched its operational costs to its total revenue,” added Cointelegraph.
Riot, Marathon, and CleanSpark combine for over 17% of DAM’s roster. Argo commands 4.54% of the fund’s weight.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.