Lost in the turmoil of the risk asset correction taking place so far in 2022 could be a huge opportunity to get on board the Bitcoin train at a deep value stop.
According to a recent CoinDesk piece, analysts are starting to make the case for a possible short squeeze in Bitcoin.
As noted in the piece, “…the crypto Fear & Greed Index is starting to rise from extreme lows, indicating more bullish activity. And in the bitcoin futures market, there are signs of a pending short squeeze, which occurs when prices unexpectedly rise, forcing short sellers to exit positions.”
Generally speaking, when a key sentiment measure hits “extreme bearishness”, it indicates a high likelihood of strong participation by short sellers. And when that same index starts to rise back out of that state, it’s like a vice closing on those shorts until the pain becomes too much, and then the scramble begins to cover, forcing the price higher.
But Bitcoin might not be the best way to play this scenario.
The vast majority of the stocks with strong ties to the cryptocurrency marketplace have been beaten down with BTC over the past two months. And many of these names have a higher beta than even Bitcoin, suggesting they could bounce back even more dramatically on a crypto squeeze.
With that in mind, we take a look below at some of the most interesting stories in the space for your review.
Marathon Digital Holdings Inc. (Nasdaq:MARA) is a digital asset technology company that engages in mining cryptocurrencies, with a focus on the blockchain ecosystem and the generation of digital assets.
MARA is well known as a central player in the mining narrative, having emerged as a key mining operation before BTC took back off the upside in 2020 after its key endorsement by PayPal Holdings Inc. (Nasdaq:PYPL).
Marathon Digital Holdings Inc. (Nasdaq:MARA) recently announced that the Company has appointed Ashu Swami as chief technology officer. Swami will be responsible for overseeing and expanding the Company’s technical operations, ensuring rigorous security measures are met across the organization, and providing technical guidance.
“Although Marathon is already established as one of the leading bitcoin miners in the world, we believe it is critical to add technical leaders to our team who can help propel Marathon to the next level through consistent innovation,” said Fred Thiel, Marathon’s chairman and CEO. “Over the course of his career, Ashu has developed diverse expertise that are uniquely pertinent to Marathon’s current and future growth plans, and we believe that his proven track record of helping organizations stay on the cutting edge of bitcoin mining technology will prove valuable to our organization. On behalf of our entire team, I would like to officially welcome him to Marathon.”
And the stock has been acting well over recent days, up something like 7% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -33%.
Marathon Digital Holdings Inc. (Nasdaq:MARA) managed to rope in revenues totaling $51.7M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 6091.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($315.6M against $3.9M).
ISW Holdings (OTC US:ISWH) was perhaps the speculative darling in the crypto space last year, powering from mere pennies per share to nearly $4 per share in the fall before pulling back to a buck per share. Even at that point, it was still up something like 900% for the year.
Even more to the point, ISWH is actually up since early December 2021 – over a three-month period during which Bitcoin and the vast majority of stocks in the crypto space were taken out the woodshed for a brutal thrashing. In other words, ISWH is still outperforming the space. As legendary investor William O’Neill frequently taught, relative strength among peers in a sector or industry is one of the most important characteristics to embrace in stock picking.
ISW Holdings (OTC US:ISWH) has been driving this relative strength through new partnerships and the company’s interesting model, which is a hybrid between proprietary cryptocurrency mining operations and a rapidly growing mining hosting operation benefitting from a big power access footprint at its primary Southeastern US site.
The most important partnerships the company has put together include Bit5ive LLC, North America’s largest provider of collective management services and mining equipment, and Bitmain Technologies, the world’s leading producer of cryptocurrency mining hardware and a leading global cryptocurrency mining firm.
The upshot is the company’s high-performance self-contained POD5 mining pods and its current project to pair 56,000 Bitmain mining rigs with 200 megawatts of power.
In fact, according to a recent update from the company, following the full deployment and activation of all 200 MW of power, ISW will reportedly have the opportunity to increase its facility to 500 MW of power, allowing for a significant further expansion in hosting and mining potential. That would conceivably put the company in charge of one of the largest crypto mining operations around.
ISW Holdings (OTC US:ISWH) is currently trading at a market cap of less than $90 million. That’s probably why the stock is holding up better than others in the space like MARA, which is carrying a cap more than 25 times as big even after falling more than 50% lower during the same three-month period.
Bitfarms Ltd. (Nasdaq:BITF) bills itself as a global Bitcoin self-mining company, running vertically integrated mining operations with onsite technical repair, proprietary data analytics and Company-owned electrical engineering and installation services to deliver high operational performance and uptime.
Bitfarms boasts of a diversified production platform with five industrial scale facilities located in Québec, one in Washington state, and one in Paraguay. Each facility is over 99% powered with environmentally friendly hydro power and secured with long-term power contracts.
Bitfarms Ltd. (Nasdaq:BITF) recently provided a Bitcoin (BTC) production and mining operations update for January 2022. The commencement of operations in January at its 10-megawatt (MW) farm in Paraguay increased total farms in production from six to seven and total capacity to 116 MW.
“As we execute on our growth strategy of expanding into new geographies and leveraging our presence in these regions, Paraguay is of particular strategic importance,” said Emiliano Grodzki, CEO of Bitfarms. “Bringing our Paraguay farm online marks the start of our commercial operations in South America. The first of our two South American development projects, bringing the Paraguay farm online furthers our goals of achieving 3 exahash per second (EH/s) by the end of the first quarter of 2022 and 8 EH/s by the end of 2022.
And the stock has been acting well over recent days, up something like 4% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -30%.
Bitfarms Ltd. (Nasdaq:BITF) reported over $121 million in sales on a trailing twelve month basis in its last quarterly financial data. In addition, the company boasts total assets in excess of $300 million against only minor total debt levels.
Other key cryptocurrency stocks include Overstock.com Inc. (Nasdaq:OSTK), Block Inc. (NYSE:SQ), Canaan Inc. ADR (Nasdaq:CAN), and Bit Digital Inc. (Nasdaq:BTBT).
