If you have been spending time on Twitter recently, you might have noticed increased excitement and conversation surrounding Bitcoin. That's because the popular cryptocurrency is once again trading above $30,000 and appears to have formed an uptrend on the year after putting in two consecutive higher lows and higher highs.
Of course, Bitcoin has a long way to go before it even nears its ATH at $64,000, set back in 2021. But for now, the positive momentum has given the crypto bulls something to cheer about. And that excitement has spilled over into two popular crypto stocks, Riot Platforms (NASDAQ: RIOT) and Marathon Digital Holdings (NASDAQ: MARA).
At its peak, in late 2021, the price of a single Bitcoin traded for as high as $64,000 before topping out and falling over 50% to current levels of about $30,000. The two Bitcoin mining companies, MARA and RIOT, briefly achieved market capitalizations of over $10 billion during that period. While both companies' value is far off their ATHs, their share prices have more than impressed lately, as optimism and excitement have returned to the sector. The only question is, will the momentum in both stocks continue or fail?
Marathon Digital Holdings (MARA)
MARA is a Las Vegas-based digital asset technology company. The company specializes in blockchain-based mining and produces digital assets such as Bitcoin.
Shareholders of MARA have a lot to smile about this year, with the stock up 406% year-to-date. It hasn't looked back after the stock broke above critical resistance near $10. Since breaking out, shares have soared over 73% in the last month. The stock has formed an impressive upward channel, with buyers supporting prices closely. However, as the stock pulls into support of the channel, it will be essential to note whether buyers continue to support the stock so firmly or if sellers take control on a support break.
Analysts see a potential downside in the name with an average price target of $11.63, implying a 31% downside. Based on eight analyst ratings, four have the stock at Buy and four at Hold. Institutional ownership in the stock has increased by $68 million in the last 12 months, bringing the current institutional ownership to 31.51%. There has been a slight positive change to insider ownership in the previous 12 months, with three insiders purchasing stock for a total of $497,600. The current insider ownership for MARA is 0.58%.
Riot Platforms (RIOT)
RIOT is a U.S. blockchain technology company that strives to be the premier provider of Bitcoin mining services in North America. The company offers cryptocurrency mining hardware, hosting services, and proprietary software.
Shares of RIOT have staged a remarkable recovery from their lows this year, with the stock up 439% year-to-date. Shares broke above critical resistance at $14 at the beginning of the month, helping to push the stock up 75% over the last month.
As the stock pulls back after staging an impressive breakout, it will be important to see whether it can find support in the uptrend. If the stock can find support and put in a higher low, shares could quickly move back above $20.
Like MARA, analysts see a downside on RIOT with a current rating of Moderate Buy and a consensus price target of $13.82, implying a 24.74% downside. Eight of the nine analyst ratings have RIOT at Buy and one at Hold. Over the last 12 months, RIOT has seen net institutional inflows of $104 million, increasing institutional ownership to 40%. During the same period, insider ownership decreased to 5.66% after $11 million of insider selling.
Should You Invest?
Given the impressive upward momentum and return both stocks have experienced on the year already; investors shouldn't look to chase the up move in either stock. Instead, waiting for the stock to pull back and signal that buyers have stepped up to create higher support would be an ideal potential entry point.
At the end of the day, MARA and RIOT's fortunes hinge heavily on the performance of Bitcoin and crypto regulations, so those looking to invest need to stay alert, as sentiment can quickly change with the price of Bitcoin.
