Why Bitmine Immersion Technologies Stock Tumbled by Nearly 11% Today
Key Points
Cryptocurrencies aren't doing well these days, nor are stocks tightly associated with them.
Bitmine is one of the top corporate Ethereum holders -- this isn't exactly an enviable position these days.
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On Thursday, an ongoing cryptocurrency rout and an analyst's deep price target cut put the hurt on Bitmine Immersion Technologies (NYSEMKT: BMNR). The crypto company's shares sank by almost 11% in value that day, a far steeper fall than the 1.6% drop endured by the S&P 500 index.
Down on crypto
The gloom that has settled on the Cryptoverse in recent days extended to Bitmine, which is a holder of digital currency -- most notably its favored asset, Ethereum.
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This is all well and good when such assets are thriving, but currently that's not the case. Increasing fears that the Federal Reserve (Fed) won't cut interest rates in December are leading many investors to ditch all manner of cryptocurrencies. Like others, Ethereum has taken it on the chin, so it's little wonder those folks are increasingly downbeat about Bitmine.
Compounding this was that price target chop, enacted by B. Riley's Fedor Shabalin on Thursday morning. The analyst took an axe to his Bitmine fair value assessment, reducing it to $47 per share from his previous $90. Interestingly, this doesn't make him a Bitmine bear, as he maintained his buy recommendation on the stock.
Time to mine a bargain?
Cryptocurrencies are always volatile plays, as are the companies that invest in them. Of the major blockchains, though, I'd say Ethereum has above-average potential due to its utility (and renown) as a suitable platform for decentralized applications (dApps). Considering that, I'd say the Bitmine sell-off on Thursday feels a bit overblown and might present a "buy on weakness" opportunity.
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Eric Volkman has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.
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