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MicroStrategy (NASDAQ: MSTR), ProShares Bitcoin Strategy ETF (BITO), and Grayscale Bitcoin Trust (GBTC) prices drifted upwards in the pre-market session on Monday as the Bitcoin rally continued. MSTR and BITO soared by more than 6%.
Similarly, Bitcoin mining stocks like Marathon Digital (MARA), Riot Blockchain (RIOT), and Argo Blockchain rebounded. MARA shares jumped by more than 7% while Riot Platforms gained by over 8.6%. Other mining stocks like Cipher and Hive Digital also jumped.
Bitcoin price has jumped
There were two main reasons for this price action. First, Bitcoin price has formed an inverted head and shoulders pattern, which is one of the most bullish signs in the market. It moved above the neckline of this pattern at $27,522 on Monday as it jumped to over $28,500. Bitcoin has soared by more than $3,000 from its lowest level in September.
Companies like MicroStrategy and mining stocks do well when Bitcoin is in a strong upward trend because of their huge stake in the sector. For example, while MicroStrategy is a technology company, it is well-known for its Bitcoin holdings. It recently added to its holdings by buying coins worth over $150 million.
Similarly, Bitcoin mining stocks have both huge Bitcoin holdings in their balance sheets and generate most of their revenue by selling the coins. BITO, on the other hand, tracks Bitcoin futures, which have a close correlation with BTC.
As I wrote in September, Bitcoin has been quite stable despite the rising risks in the market. It survived the collapse of MT. Gox, FTX, Three Arrows Capital, Celsius, and Voyager Digital. Bitcoin has also not crashed to zero as the Federal Reserve has pushed interest rates to the highest level in more than 2 decades.
US averts government shutdown
These stocks have also surged as the US averted a much-waited government shutdown. In a surprise move, Speaker Kevin McCarthy partnered with Democrats to pass a bill to fund the government for 45 days and avoid a shutdown.
The bill removed one of the biggest risks that most investors were expecting last week. Therefore, American futures like the S&P 500 and Nasdaq 100 futures continued rising. The Dow Jones rose by more than 167 points while the S&P 500 index rose by more than 0.50%.
Still, there are risks to the ongoing rally. For one, while Bitcoin price has jumped, it still remains in a narrow range where it has been at in the past few months. It has struggled to move above the year-to-date high of $32,000.
The post MSTR, BITO, MARA, RIOT stocks soar as BTC forms inverted H&S appeared first on Invezz.
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