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Why Riot Blockchain beat the market today

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Why Riot Blockchain beat the market today

What happened

The wealth of Riot Blockchain (NASDAQ: RIOT) are intimately related to the asset that the company is actively producing, Bitcoin (CRYPTO: BTC). With Bitcoin’s gains on Tuesday, guess which of the cryptocurrency’s biggest miners rose in tandem? Riot’s share price closed the day up nearly 6% on the improvement in its crypto-founder.

So what

Bitcoin was trading quite well throughout the day. As of early Tuesday night, it was up just over 1%, so investors were feeling pretty good about Riot.

The upward movement in the latter’s share price was almost entirely due to this. Other than the voting results of a not-so-exciting annual general meeting, the company had nothing else to report on its operations.

With Bitcoin’s performance on Tuesday – along with the rise of other top coins and tokens such as Ethereum and Solana – some might even be cautiously optimistic that the crypto winter is entering a permanent thaw.

Now what

I don’t think such optimism is warranted – at least not yet. There are still too many uncertainties about geopolitical developments (war in Ukraine, rise in Sino-American tensions, etc.). In times of uncertainty, investors tend to seek out “safety” assets. Riot, which is essentially a large-scale Bitcoin mining operation, barely qualifies. And if you’re one of the many people who believe we’re going to raise interest rates even further, such moves also tend to favor more established, less speculative investments.

It’s a situation too early to tell with the crypto rally – if we can really call it that – on Tuesday. Fortunately, Riot stock benefited from the mini bull run, but there is no guarantee that the cryptosphere will continue to have such bullish trading periods.

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Eric Volkman has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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