While money (the thing itself) knows no politics, its production and distribution are often soaked in it. While Bitcoin isn’t a functioning currency, many consider it an antidote to “bad money.” Perhaps that accounts for its 3.85% spike earlier in the week.
What Fueled Bitcoin’s 3.85% Spike?
A certain presidential contender (on a social media network owned by that contender) expressed his desire for all remaining Bitcoin to be mined in the United States.
He positioned this as a strategic move (and last line of defense) against central bank digital currencies (CBDCs). Furthermore, he stated that domestic Bitcoin mining would help the US become energy-dominant.
A Tale of Two Miners: CleanSpark and Riot Platforms
90% of all Bitcoin has been mined. This presidential candidate wants the remaining 10% to be mined in the U.S. Moreover, he met with executives of both firms to discuss the potential launch of this initiative.
So, if he wins his seat in the White House in November and makes good on his promise, what might this mean for the two leading Bitcoin mining companies in the US—CleanSpark Inc. (CLSK) and Riot Platforms (RIOT)? Could this be among the biggest trading opportunities in the coming year?
CleanSpark: The Invisible Underdog?
While Riot Platforms (RIOT) happens to be the more popular of the two Bitcoin miners, CleanSpark, the clear underperformer, and underdog happens to be trading at a significantly higher PE Ratio of 119.92, according to StockCharts’ Symbol Summary tool.
CleanSpark’s relative performance against Bitcoin ($BTCUSD) and Riot Platforms (RIOT) is dismal, as shown in the panel below the chart (see chart). Yet it started trading at a high multiple relative to its earnings. Its SCTR score, however, has risen above 90, signaling bullishness across multiple timeframes and indicators.
CHART 1. WEEKLY CHART OF CLSK. A clear underperformer, its PE Ratio and SCTR score are flashing warning signs for potential upside.
Also, the StockCharts Symbol Summary shows CLSK popping up on several bullish scans (see below).
The biggest driver for this particular stock is likely to be this year’s election outcome. That’s still several months away, but, if you do want to get in early on a trade that’s reliant on the outcome, the following are the levels to watch:
- For any bullish thesis to remain valid, CLSK must stay above the support line (see red dotted line), resting just below $14.00.
- This support level coincides with the most recent swing lows and highs (resistance) in 2023, 2022, and 2020.
- For the uptrend to continue beyond the current congestion level, CLSK must break and close above resistance at $24.00, marking its current swing high and October 2021 high.
- If CLSK surges past $24.00, then the next level of resistance appears clear up to $42; however, this is a trade based on politics and geopolitics, perhaps more so than fundamentals of technicals, so bulls will have plenty of homework to do once they’re in the trade.
And, if you’re wondering how CLSK has performed earnings-wise, Symbol Summary gives you that info as well (see below).
And it looks pretty decent.
Riot Platforms (RIOT): Popular But Problematic
Riot Platforms is the more popular of the two and the better performer.
Like CleanSpark, Riot Platforms is severely underperforming Bitcoin, to which it was once correlated (see lower panel of chart). But unlike CleanSpark, RIOT’s woeful SCTR score of 20.8 (top panel) is on the extreme negative side of the spectrum.
CHART 2. WEEKLY CHART OF RIOT. Lots of technical headwinds above. Plus, it holds an incredibly weak SCTR score. So much for the popular stock?
The following is what to look out for:
- RIOT is currently hovering at the bottom end of the trading range—the support level at $8.60.
- A break below this level would be enough to invalidate any bullish bias.
- For an uptrend to take place, RIOT would have to close above $18.75 at the least, and it would have to do so on high momentum.
- Note that above this level, there are several more levels of technical resistance (see dotted blue lines) which may serve both as profit targets and headwinds (for those looking to hold on to RIOT for the longer term).
Fundamentally, RIOT has a few problematic issues.
While trading with a low PE Ratio of 13.60, which can be promising, depending on how you look at it, its StockCharts Symbol Summary also tells a story of how its earnings beats and revenue misses contrast from CleanSpark.
In short, its quarterly revenue reports don’t look so hot compared with CleanSpark.
Traders Poised to Pounce on Both Stocks
This year, the high targets for Bitcoin range from $80,000 to $90,000, driven by institutional investment, the halving of Bitcoin, a more favorable regulatory environment, and, now, negative sentiment regarding the development of a digital dollar (CBDC).
Depending on the results of the coming election, the latter may intensify, sending Bitcoin, CleanSpark, and Riot Platforms to much higher valuations. In short, the political environment can rapidly change the fundamental and technical conditions surrounding these stocks. Pay close attention if you want to take advantage of this potential run, as traders may jump the gun on either or both.
The Takeaway
Wrapping things up, the recent 3.85% spike in Bitcoin’s value can be attributed to a presidential contender’s promise to ensure the remaining 10% of Bitcoin is mined in the U.S., positioning it as a defense against central bank digital currencies.
This potential political shift could significantly impact the U.S. Bitcoin mining industry, particularly CleanSpark Inc. and Riot Platforms. If you want to buy shares of either, you should closely monitor political developments and key support and resistance levels for potential entry points.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.