Bitcoin (BTC) mining companies have suffered in 2022 due to the crypto bear market. Nonetheless, their stocks collectively saw a sharp rebound on July 6, raising hopes that investors have started to buy the dips.
One of the intraday winners was Bitfarms (TSE: BITF), which surged by over 24% to close at $1.29.
Similarly, Marathon Digital Asset Holdings (NASDAQ: MARA), Core Scientific (NASDAQ: CORZ), and Cathedra Bitcoin (CVE: CBIT) rose by over/around 12.5%, 16.22%, and 15%, respectively.
The rallies come as a breather in what has been a bad year for mining stocks. A nearly 60% year-to-date plunge in the BTC price and a rise in "mining difficulty" have pushed the miners' daily revenues lower by over 70% from their November 2021 peak of $62 million.
The outcome is bad for all the mining stocks, including the ones mentioned above. For instance, BITF is still down 86% from its peak in pre-market trading on July 6 despite a 24% rebound in the previous session.
Similarly, MARA, CORZ, and CBIT have been trading 80%-93% below their record highs in November 2021, showing a far deeper drawdown than Bitcoin, whose price has dropped 67% in the same timeframe.
Bitcoin mining stocks risk further downside, however, given a potentially lengthy bear market led by macro risks.
Thus, the sharp rebound witnessed across the Bitcoin mining stocks could be due to "short covering" or investors buying the dip, according to Balmy Investor, a pseudonymous analyst.
#Bitcoin mining stocks bounced strong today, with very little change in #BTC price. Likely some short covering, and some investors moving in to buy oversold levels.Quick June observations. Working on Q2 report with @hashrateindex. ☘️
Covering shorts involve buying back the borrowed underlying
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