Riot Blockchain (RIOT) and Marathon Digital (MARA) are among the leading crypto mining companies and both have accumulated large holdings in Bitcoin (BTC-USD). The companies make money when they can sell Bitcoin for more than the cost of mining it. However, the plunging cryptocurrency market has complicated these companies’ business models.
Riot and Marathon stocks fell more than 10% on June 13 amid an intense crypto selloff that pushed Bitcoin below levels not seen since 2020. The stocks have plunged about 80% year-to-date.
Rising interest rates and recession fears have turned many investors away from investments perceived to be more risky bets, such as crypto, which has in turn weighed on crypto-related stocks. Additionally, troubles with the so-called decentralized finance (DeFi) platforms have also weighed on investor sentiment toward crypto.
For example, the decision by crypto lending platform Celsius to halt withdrawals seemed to send more chills down the spines of investors already shaken by the recent meltdown in the Terra crypto system.
Can Crypto Stocks RIOT and MARA Recover?
The crypto sector has a history of boom and bust, implying that the current crisis will pass. However, it is hard to tell how long this tumultuous time will continue.
There may be more selloff in stocks and crypto ahead as the Fed is expected to become more aggressive in the next rate hike, considering inflation remained at historic highs in May. However, one can expect investors to adjust to the reality of rising rates, thus ending the era of easy money. As investors overcome their fear about the economy, there could be a rush to buy the dip in undervalued stocks. RIOT and MARA are among the crypto stocks likely to draw great interest.
What Does Wall Street Think of Riot and Marathon?
The stock has a Strong Buy consensus rating, based on four Buys with the average RIOT price target of $25, which implies 437% upside potential to current levels. TipRanks data shows that financial blogger opinions are 61% Bullish on RIOT, compared to a sector average of 70%.
Similarly, Marathon Digital also has a Strong Buy consensus rating, based on five Buys. The average MARA price forecast of $28 implies 318% upside potential to current levels. TipRanks data shows that financial blogger opinions are 81% Bullish on MARA, compared to a sector average of 66%.
Key Takeaway for Investors
When the rush to buy the dip ensues, Riot Blockchain and Marathon Digitals could turn out to be strong candidates, considering that Bitcoin is generally believed to have a bright long-term future.
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