Riot Platforms (NASDAQ: RIOT) stock price has been on a downward spiral over the past few days Bitcoin And other cryptocurrencies followed suit. Shares hit a low of $11.48 in the pre-market session. This means that the stock has fallen more than 20% from year-to-date highs, which means it has gone into a bear market.
Is it safe to buy dip?
Riot Blockchain is one of the largest bitcoin mining companies in the world. It competes with the likes of Argo Blockchain and Marathon Digital, among others. Therefore, these companies, like others in the mining industry, have a close correlation with the price of the underlying asset.
This explains why Riot Platforms’ share price has skyrocketed this year. Between the lowest point in 2022 and the year-to-date high, RIOT shares rallied by over 338%, making it one of the best performing stocks in the market.
Therefore, in order to predict whether Riot Blockchain stock price will bounce back, we need to understand why bitcoin is falling and whether it will bounce back soon. as i wrote in Article, The main reason for the crash is that there has been a surge of rapid liquidations over the past two days.
Liquidation occurs when brokers and exchanges forcefully close positions on leveraged positions. Hence, this usually puts pressure on the prices.
Another reason for this happening is that bitcoin recently climbed above the key $30,000 resistance level. Historically, cryptocurrencies tend to be slightly volatile when they move above or below a key support or resistance level.
Another reason is that several regional banks, including Western Alliance Bancorp, posted strong results. Its inflows increased by more than $3 billion. Thus, the risks of a banking crisis are seen as having been mitigated. In a note, the Bernstein analyst said:
“Any potential dislocation, whether on the bank credit side, or on the sovereign side… puts bitcoin squarely on par with gold as a safe-haven asset.”
Therefore, it is likely that the price of bitcoin will rally in the coming months as the Fed begins to pivot.
Riot Platforms stock price forecast
The daily chart shows that RIOT share price formed a shooting star pattern on Wednesday. In technical analysis, this pattern is usually a bearish signal. The stock has bounced above the 25-day and 50-day exponential moving averages.
It remains slightly above key support at $10.53, which is the highest level since August 11. Therefore, I suspect that the shares will drop to the key support level at $10.53. The stock will then resume the bullish trend as buyers target the year-to-date high of $14.51.
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